Asda announced a return to sales growth following more than two years of decline. The supermarket recorded a 0.2% increase in sales at established stores, excluding fuel, during the seven-week period through August 18, marking what executives described as a significant psychological turning point for the business. This represented a reversal from the preceding three-month period, which had seen a 2.3% sales decline.
Executive Chair Allan Leighton attributed the turnaround to improved price positioning, increased customer traffic, and momentum in the company’s online operations. He noted that stability in the retailer’s information technology systems following a costly transition from its former owner Walmart’s technology had been instrumental in the recovery. The company spent nearly £1 billion on IT system overhauls after the Issa brothers and private equity firm TDR Capital acquired Asda in a £6.8 billion buyout in 2020. Leighton returned to lead a turnaround effort in November 2024, marking his second tenure with the company after a 20-year absence.
Growth was primarily driven by food sales, which increased 0.7% during the period, while non-food categories including clothing declined. Leighton attributed the weakness in non-food items partly to delayed back-to-school spending due to late-summer bank holidays and broader market softness. The company is managing price pressures selectively, with some inflationary pressures evident in produce categories such as tomatoes and cucumbers following dry weather conditions.
Asda continues to face competitive pressures from discount retailers Aldi and Lidl, as well as larger competitors Tesco and Sainsbury’s. Aldi remains positioned less than one percentage point behind Asda in market share and continues expanding at a faster rate. To bolster its competitive position, Asda has entered into a partnership with online specialist Ocado to enhance its website and delivery capabilities beginning next year.
Leighton expressed confidence in the company’s prospects and stated that government clarity on budget policy and economic strategy would be essential for supporting consumer and business confidence moving forward. He noted uncertainty regarding consumer sentiment improvements and called on policymakers to avoid policies that would increase business costs, specifically citing retailers’ concerns regarding business rates for larger facilities.
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