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Britain's Asda blames Brexit uncertainty for lower sales

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LONDON (Reuters) - Asda, the British supermarket arm of U.S. retail giant Walmart (WMT.N), reported lower sales in its latest quarter, saying uncertainty surrounding Britain’s exit from the European Union had negatively affected spending patterns.

The group, whose attempt to be taken over by rival Sainsbury’s (SBRY.L) for 7.3 billion pounds ($9.3 billion) was blocked by Britain’s regulator in April, said on Thursday comparable sales fell 0.5% in its fiscal third quarter. That compared with a second quarter rise of 0.5%.

Asda said its gross profit rate fell, reflecting price markdowns in clothing following a softer summer season versus last year. The fall in gross profit rate, plus increased operating expenses, meant operating income was also lower.

Prime Minister Boris Johnson has called a snap election for Dec. 12 to try to break a deadlock over a Brexit deal. Britain is currently due to leave the bloc by Jan. 31.

“This quarter has afforded consumers little respite from political or economic uncertainty and this has shown in their spending,” said Chief Executive Roger Burnley.

With the Sainsbury’s deal thwarted, Walmart, which purchased Asda for 6.7 billion pounds in 1999, said in May it was considering a path to a separate stock market listing for Asda.

Burnley told Reuters in July the timescale for a possible initial public offering (IPO) of Asda was two to three years.

Reporting by James Davey; Editing by Emelia Sithole-Matarise

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