Asda have seen a slump in sales, highlighted in their quarterly trading update, which has been caused by political uncertainties and tough market conditions.
Walmart (NYSE: WMT) own Asda currently, and Asda join a list of British supermarkets who have seen a decline in recent trading performance.
Shares of Walmart are trading at $120, spiking 1.56%. 14/11/19 13:14BST.
The British Supermarket industry has been hit by a few shocks over the years, and recovery for the Big Four looks tough in a cut throat market.
Firms such as Marks and Spencer (LON: MKS) and Sainsbury’s (LON: SBRY) have seen falling sales and profits in their respective quarterly update.
Tesco (LON: TSCO) have also been hit hard, but have responded with non price competition in releasing their new ClubCard Plus only a few weeks back.
The Big Four have been hit by increasing competition from overseas rivals such as Lidl and Aldi, who offer similar quality products at substantially cheaper prices.
Asda reiterated political uncertainties as a hinderance to strong business performance, saying that Britain’s speculative relationship with the European Union has negatively affected spending patterns.
Sainsbury’s attempted to takeover Asda earlier this year in April, in a £7.3 billion deal. However, this deal was blocked as it did not win the approval of regulators and competition authorities.
Asda said its gross profit rate fell, reflecting price markdowns in clothing following a slow summer season versus last year.
The fall in gross profit rate, plus increased operating expenses, meant operating income was also lower.
“This quarter has afforded consumers little respite from political or economic uncertainty and this has shown in their spending,” said Chief Executive Roger Burnley.
As the general election approaches us quickly, many firms including the British Supermarkets will be hoping that Brexit negotiations speed up to allow fluid business trading.
Three years on after the June 2016 Referendum, many businesses are in the same position now as they were three years ago where so many uncertainties cloud Britain’s status with the EU.