The Walmart-owned retailer blamed Brexit uncertainty and a slump in consumer confidence for a fall in demand for non-food lines.
Like-for-like sales rose in the latest quarter, but the company has reported a fall overall for the first half of the year, with sales down 3%. Sales suffered by comparison with last year, when trading was boosted by hot weather and the World Cup. The timing of Easter this year also affected sales in the second quarter.
Asda chief executive Roger Burnley said: “If ever a case study on the impact the mood of the nation has on UK spending habits were needed, this quarter has provided it. Consumer confidence levels are at an almost six-year low – due in no small part to the ongoing uncertainty around Brexit and amplified by the impact of weather and tracking against national sporting events in the same period last year. As a result, our non-food business has been challenged during the period, however we’re satisfied that our food business has continued to perform well, and our online growth continues to outpace the market.”
Profits were squeezed as demand for higher margin non-food products was weak, while the business also focused heavily on holding prices down.
Walmart president and CEO Doug McMillon said the latest results “reflect the challenges faced by shoppers in this market as the uncertainty surrounding Brexit continues to loom”.