Even a hypothetical spending splurge from the Queen probably couldn't have saved the quarter for Asda.
Asda, Walmart's (WMT) 621-store chain in the U.K., once again won the unwelcome honor of worst-performing international division, with same-store sales plunging 7.5% due to a nosedive in customer traffic. In the first quarter, Asda's same-store sales fell 5.7%.
"In the U.K., the competitive environment and food deflation continued to challenge the market, significantly impacting traffic and comparable-store sales," conceded Walmart CEO Doug McMillon. He added, "While our turnaround will take time, I'm confident in the new leadership team there and want to assure you we're addressing this with urgency."
Fixing Asda is now in the hands of Sean Clarke, who had held top roles for Walmart in Japan and Canada, and officially joined as the chain's CEO in mid-July. Clarke is leading an effort to lower product prices, improve the quality of merchandise being sold and streamline the number of offerings.
But without question, Clarke has a long road ahead in trying reverse Asda's alarming sales declines.
Walmart assigned blame to Asda's continued struggles in the quarter on "significant structural shifts" in the U.K. market, primarily the rise of hard discount chains such as Aldi and Lidl. In reality, Walmart's grocery store competitors in the U.K. such as Tesco, Wm Morrison Supermarkets and Sainsbury have simply gotten better at offering deal-seeking Brits good discounts on apparel and food.
For example, Wm Morrison Supermarkets said recently that it will cut prices on 1,045 items by an average of 18% in an effort to ease concerns among British shoppers that an exit from the European Union would lift grocery bills.
