(Bloomberg) -- Sterling's recent devaluation is likely to provide some relief for Britain's struggling grocers in the form of higher food prices, according to researcher Kantar Worldpanel.
As about 40 percent of the food bought in British supermarkets is imported, a long-term reduction in the pound's value may herald an end to a two-year decline in U.K. grocery prices, Kantar said Tuesday. That would be a fillip to the country's four largest chains, which all saw their sales drop in the 12 weeks ended June 19, the researcher estimates.
Kantar's outlook provides a crumb of comfort for the likes of Tesco Plc, J Sainsbury Plc and Wal-Mart Stores Inc.'s Asda, whose sales and profit have been crimped by the advance of discounters Aldi and Lidl over the last four years. Wal-Mart moved Sean Clarke from China to the U.K. this month to take over as Asda's chief executive officer, after the chain reported its worst ever sales performance.
The economic uncertainty wrought by Britain's exit from the European Union is unlikely to cause a “substantial” fall in grocery sales, Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said by e-mail.
That view is shared by Tim Steiner, chief executive officer of online grocer Ocado Group Plc, which on Tuesday reported a 15 percent gain in first-half revenue.
“We certainly don't expect any negative short-term impacts from Brexit,” Steiner said on a call with reporters. “Currency weakness may bring some inflationary pressure in the food market, which wouldn't be such a bad thing given the deflation we've seen.”
To contact the reporter on this story: Sam Chambers in London at schambers7@bloomberg.net. To contact the editors responsible for this story: Matthew Boyle at mboyle20@bloomberg.net, Paul Jarvis, Thomas Mulier
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