Like-for-like sales at Asda fell 0.4% in its second quarter to July 31 while total sales grew in the low single digits.
Doug McMillon, chief executive of Asda’s US parent company Walmart International said Asda’s gross margin as a percentage of sales increased in the second quarter on a mix shift towards higher margin George clothing and general merchandise.
He said: “George had a particularly strong quarter, with strong sales of World Cup related merchandise and our 100 day quality guarantee. Customers continue to respond well to our guarantee, and we continue to see this as a unique competitive advantage in the market.”
Asda has suffered since the beginning of the year when former boss Andy Bond admitted that the retailer had become too promotional. It since launched its Price Guarantee promising shoppers it would be the cheapest grocer, or that it would refund the difference. It also took the decision to focus on every day low prices rather than promotions. Earlier this year it reported its first negative like-for-like sales for five years.
McMillon added: “Asda’s customers are facing recently announced tax increases and cuts in government spending. These are likely to cause our UK customers to face a challenging 12 to 18 months.