Even a hypothetical spending splurge from the Queen probably couldn't have saved the quarter for Asda.
Asda, Walmart's (WMT - Get Report) 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.
Since the U.K.'s June 23 Brexit vote, which spurred a nosedive in the value of the pound, consumer confidence has weakened in part on fears that grocery store chains such as Morrisons, Tesco, Asda and Sainsbury would jack up prices. About 40% of the food in U.K. supermarkets is imported, according to research firm Kantar Worldpanel. The plunge in the pound in effect raises the price on imported goods.
"We are constantly listening to our customers and know they are concerned about whether food prices will go up following the Brexit vote, especially on imports," said Morrisons customer and marketing director Andy Atkinson about the new price-cutting campaign.
In the end, perhaps a promotional visit by the Queen wouldn't be such a bad idea after all for Asda.