Asda, the UK's third-largest supermarket, recorded its ninth consecutive quarter of falling sales, with a 0.2% decline in the 12 weeks leading up to August 9. This performance stands in stark contrast to its major rivals, all of whom reported sales growth during the same period. For example, Tesco saw sales rise by 1.8%, Sainsbury's by 3.5%, Morrisons by 3.3%, Lidl by 8.5%, and Aldi by 1.1%. The overall UK grocery market experienced a 2.7% sales increase, fueled by summer spending on items like ice cream and sun cream.
Executive chairman Allan Leighton, who returned in late 2024 to revive Asda's fortunes, faces mounting pressure. The company reported a nearly $1 billion pre-tax loss last year, with sales falling 3.4% and debt interest climbing to $730 million. Despite aggressive price cuts implemented by Leighton, aimed at winning back customers, these efforts have yet to translate into consistent sales growth. An Asda spokesperson noted that the 0.2% sales decline represents an improvement of 0.9% from the previous period and is its best performance since March 2024, indicating a slowing rate of decline.
Asda's market share did see a slight increase, reaching 11.9% compared to 11.5% a year earlier. However, it remains significantly behind market leaders Tesco (27.8%) and Sainsbury's (15.1%). Aldi is closing the gap, holding a 10.9% market share, leaving Asda with only a narrow lead over the German discount chain. The fierce competition and a slowdown in grocery price inflation to 2.1% (the lowest since October 2024) mean shoppers are increasingly seeking promotions, which accounted for 31.3% of sales in the latest month.
Asda's struggles are compounded by a substantial debt pile, although net debt decreased from $4.1 billion to $3.5 billion over the last year. The supermarket is attempting to leverage its non-food divisions, which account for about 14% of its overall turnover, including its successful George clothing brand, fuel, pharmacy, and optical services, to differentiate itself from discounters and attract customers. However, the latest figures highlight the considerable challenge Leighton faces in returning Asda to sustained growth amidst a highly competitive market and deep-seated financial issues following its 2021 private equity takeover.
