Asda has recorded its first underlying sales growth in over two years, according to executive chair Allan Leighton, as the UK’s third-largest supermarket attracts shoppers with lower prices and stabilizing online operations. Established store sales, excluding fuel, rose 0.2% in the seven weeks leading to August 18, reversing a 2.3% decline from the previous three-month period.
The Path to Recovery and IT Stability
The recent uptick marks a notable shift for the grocer, which had not seen sales growth since the first three months of 2024. According to Leighton, the business is “still in the foothills of recovery” and faces significant remaining work. Reuters reports that the retailer’s second-quarter revenue, including fuel, reached £6.5 billion, representing a 0.4% increase that accelerated to 2.1% in the opening weeks of the third quarter.
Performance has benefited from improved stability in IT systems following a complex and costly transition away from the technology of former owner Walmart. Billionaire brothers Mohsin and Zuber Issa, alongside private equity firm TDR Capital, acquired a 90% stake in Asda in a £6.8 billion deal in 2021. TDR now maintains majority control, while Walmart retains a 10% holding, and Asda closed its second quarter carrying a net debt of £3.2 billion.
Market Share Pressures and Online Overhaul
Asda continues to face intense competition across the UK grocery sector. Industry data shows Asda holding an 11.5% market share, down 40 basis points year-on-year, placing it narrowly ahead of discount rival Aldi, which has expanded at a faster pace. To defend its market position, Asda struck a partnership agreement with technology firm Ocado in May to revamp its online infrastructure. A pilot program is scheduled to launch toward the end of the year ahead of a broader rollout planned for 2027.
Food sales led the recent positive momentum, rising 0.7% at established stores during the seven-week reporting window. Conversely, clothing and non-food sales declined due to a difficult broader retail market and a late August bank holiday that delayed back-to-school purchasing.
Pro Tip: When evaluating supermarket retail trends, industry analysts closely monitor non-grocery revenue streams—such as fuel, pharmacy, and George clothing—which account for over half of Asda’s total revenue.
Economic Climate and Budget Clarity
He emphasized that economic policy should avoid inhibiting growth and urged the government to consider exempting retailers from additional business rates on larger commercial properties.
Frequently Asked Questions
Why did Asda’s sales fall prior to this growth period?
Sales declined due to heavy competition from discount chains Aldi and Lidl, alongside technology disruptions stemming from the transition away from Walmart’s IT systems, which impacted stock availability.
Who owns Asda currently?
Private equity firm TDR Capital is the majority owner, following a 2021 acquisition alongside the Issa brothers, while Walmart retains a 10% minority stake.
How is Asda improving its online delivery services?
Asda partnered with technology specialist Ocado to overhaul its website and delivery systems, with a pilot launch set for late this year ahead of a broader rollout.
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