The rapid depreciation of sterling against the dollar yesterday forced a profit downgrade by Wal-Mart, the owner of Asda supermarkets, and the world’s biggest retailer.

Despite reporting strong growth for both sales and profit and expressing confidence that it was well placed to benefit from a downturn, Wal-Mart said it had been hit by depreciation in the value of earnings from Britain and its other international businesses.

Tom Schoewe, the chief financial officer, said: “The rapid changes in currency exchange rates during the last few weeks are projected to negatively affect this year’s fourth-quarter results by approximately 6 cents per share.”

International turnover accounts for about 25 per cent of Wal-Mart’s sales, which improved by 7.5 per cent to $97.6 billion (£67 billion) for the nine months to October 30. The retail giant has suffered exchange-rate setbacks in its businesses in Mexico and Canada as well as Britain.

But it was the huge slide in the value of sterling, and therefore the value of Asda’s contribution, that prompted yesterday’s downward revision. The pound has slid more than 8 per cent since October 31, the end of Wal-Mart’s reporting period, and 15 per cent in the past month.

The currency swings undermined bullish talk from Lee Scott, president and chief executive. Referring to the economic environment, he declared yesterday: “This is our time.”

The currency movements have dampened Asda’s performance, which yesterday reported a 6.9 per cent increase in like-for-like sales, excluding petrol. Asda said it had benefited from a rise in the value of the average basket and an increase in the number of middle-class customers.

Mr Schoewe said that forecasts for the group’s fourth quarter are based on exchange rates remaining at current levels. Any weakening of the dollar in the next two months will translate into a higher value of international division’s sales.

Judith McKenna, Asda’s chief financial officer, said that wine, fresh meat and the “extra special” range were performing well despite the recession. Customers were also reverting to old-fashioned domestic management by stocking up once their salaries were paid, she added.

“You’re seeing slightly higher peaks at month ends, with bigger baskets of goods. People are buying things that will last through the week,” she said. “Lots of people buy a joint of meat, get a meal out of it on the Sunday and have the leftovers on the Monday.”

Recent years have seen a trend towards customers favouring greater convenience, at the expense of the weekly shop.

Asda also added further evidence that customers are dampening the effects of high food prices, after soaring food inflation in the past year, by buying selectively.

“Customers are being really canny, making commonsense decisions, seeking out value and cutting out waste”, Ms McKenna said.

J Sainsbury said this week that its customers were “dialling out” of inflation by switching from comparatively expensive protein such as pork and beef to chicken.

Asda – which is gaining ground on Tesco, the market leader, according to the latest industry figures from Nielsen and TNS, the research companies – said growth in food had been “particularly strong”, implying like-for-like growth in nonfood was below the 6.9 per cent headline figure. But it added that certain items were selling well. About 250,000 women’s coats were sold at £15, Ms McKenna said.

According to filings at Companies House, Asda’s pretax profit reached £570 million in 2007, the most recent year for which figures are available.

Sceptred aisles

£67bn Wal-Mart’s turnover in the nine months to October 30

160,000 Asda employees

£16.9bn Asda’s turnover last year

£560m Asda’s pretax profit last year

356 Number of Asda stores

Source: Companies House; about-asda.co.uk

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