Supermarket giant Asda is back in profit

Leeds-headquartered Asda has released its full year results for the period ending 31 December 2023, in which it delivered a 24% increase in adjusted EBITDA after rent to £1.078bn.

Asda says this was driven by like-for-like (LFL) sales growth and the impact of strategic acquisitions.

The supermarket grew LFL sales (excluding fuel) by 5.4%, with total sales, excluding fuel, rising by 7.1% to £21.9bn last year.

The £1.078bn Adjusted EBITDA after rent includes contributions of £27m from the former EG UK stores, based on two months trading, and £54m from former Co-op stores.

Asda adds this demonstrates the strategic value of acquiring these businesses in the growing convenience and food-to-go sectors.

Publications of its latest results come amidst reports that private equity firm TDR Capital is closing in on a deal to take majority control of the business. This would see it buy out co-owner Zuber Issa’s 22.5% stake, leaving it with more than two thirds control.

Zuber and his brother Mohsin teamed up with TDR to buy Asda for £6.8bn three years ago from Walmart. The brothers have recently have denied talk of a rift between them.

Mohsin Issa, co-owner, this morning said: “Our strategy is all about growth and Asda increased underlying profit to more than £1bn and like-for-like sales by over 5% last year, while significantly growing free cashflow and reducing leverage.

“We are committed to doing the right thing for customers, colleagues and local communities – and are putting in place the strategic building blocks to set up Asda for long-term success.

“This investment includes non-food and saw George maintain its market leadership position in back-to-school wear and deliver total clothing sales growth of 3.4% last year – helped by our ongoing focus on price, quality and style.

“We continue to strengthen the business by expanding in the growing convenience and food-to-go sectors,  leveraging our loyalty app and driving innovation in online grocery where we are the UK’s second largest supermarket.”

Michael Gleeson, chief financial officer, added: “After taking full ownership of Asda in June 2021, the priority of the shareholders was to invest in colleague pay and help customers during the most challenging period of the cost-of-living crisis.

“This included the successful launch of our budget-friendly Just Essentials range and resetting the supermarket’s opening price points, as well as later launching the Asda Rewards loyalty app.

“These investments resonated with customers and helped to drive significantly higher sales in 2023.

“Around half of all sales are now linked to Asda Rewards and around six million customers use the app – making it a vital tool for them to manage their household budgets as well as being a key revenue driver for the business.”