Walmart's (WMT) third-quarter earnings report revealed a dire performance by its U.K. division, Asda.
Britain was Walmart's weakest international market by a country mile, recording a decrease in sales of 5.8% compared with the same time last year and a fall in traffic of 4.2%. The fall in sales has, however, slowed from last quarter, which saw a record of decline of 7.5%.
In stark contrast, Walmart's Mexico and Central America division saw sales growth of 7% compared with last year, and Brazil clocked in with a staggering 8.1%.
The company in its third-quarter earnings announcement said its key priorities in Britain were to improve customer experience and build sales momentum.
Walmart executives on a call today reiterated that they are trying to fix the U.K. business by sharpening price points and improving merchandise selection.
So what is going wrong at Asda? A fierce price war is underway in the U.K. food retailing sector as low-cost competitors Aldi and Lidl threaten the so-called "Big 4" supermarkets -- Tesco (TSCDY) , Sainbury's (JSAIY) , Asda and Morrisons. (MRWSY)
But inflationary pressure due to the fall in the pound could kill this strategy. Britain's headline inflation rate fell unexpectedly last month to 0.9%, after hitting 1% in September, though few expect the price reprieve to last.
Kantar Worldpanel predicts prices will increase in December, "unless retailers choose Christmas to unleash a new round of price cuts."