Asda reports sales decline and warns of hit to profits
Asda’s profits saw positive growth last year, despite a drop in sales, as the supermarket pushed ahead with its turnaround plan.
For the year to 31 December 2024, Asda’s adjusted EBITDA after rent increased 5.8% to £1.14bn, driven by improved gross margins, particularly in non-food, which it said reflects the “strength and scale” of its George clothing business.
The growth came off the back of a full year of profit from the 365 Asda Express convenience stores and forecourt sites acquired from EG Group.
However, the supermarket’s total sales declined by 0.8% to £21.bn, while like-for-like sales (excluding fuel) were down by 3.4%.
Asda has also warned of softer profits in the year ahead, as it embarks on a “substantive and well backed programme of investment in price, availability and the shopping experience” to regain customer trust, according to executive chairman Allan Leighton.
Speaking to Grocery Gazette he explained that this will “materially reduce our profitability this year, which we expect to reverse as our market share recovers and improves over time.”
Subscribe to Grocery Gazette for free
Sign up here to get the latest grocery and food news each morning
Leighton said that already, the grocer’s “price advantage has strengthened and customers’ perceptions of the value we offer is starting to improve”, following the return of Rollback in January.
The price proposition offers an average reduction of 25% and has now been expanded to roughly a quarter of Asda’s entire range. The retailer will add thousands more products to Rollback at regular intervals during the year, as part of a strategic shift to move its entire product range to a new low ‘Asda Price’ by the end of 2026.
Asda also made two additional investments in store hours during the second half of 2024 totalling £43m, focused on replenishment and improving store standards. It said this made a positive difference for shoppers, with improvements in availability and an increase in customer satisfaction scores since the fourth quarter.
Asda chief financial officer Michael Gleeson said that looking ahead, the grocer has a “clear plan to reset our value offering and meet the demands of customers and future customers”.
“While it is encouraging that our market share performance is stabilising, we know what we need to do to regain our sector leading value position, and we are executing against this,” he said.
“Asda is a highly cash generative business and our strategy is backed by a robust balance sheet as we continue to make progress on our deleveraging commitments, having pushed all of our near-term debt maturities into the next decade.”
6 Comments. Leave new
My store is not clean at all lack of training given to new people.how do u expect a seventeen year old clean toilets.
Im sorry but asda is ridculously expensive for a lot of items. I was in one today which is just10 mins walk away from a waitrose store and i found myself wondering why i didnt just go to waitrose if i wanted to pay nearly £3 for a packet of biscuits. I really dont understand who is shopping there on a regular basis
I think Asda is a bit lost without a clear idea of who their target is,
Doesn’t suprise me in the slightest.
Old white men who know nothing about the world of today, stuck in the 80s.
The problems occurred after the takeover, the Issa brothers and TDR capital had run the business like it was a convenience store, supermarkets need to be able to provide much more than just a quick shop as the longer people are in stores the more likely they are to buy more and make repeat visits.
If stores look tired and outdated the customers are more likely to shop elsewhere.
Bringing back rollback and cutting down on SKU’s that don’t sell will help that. Experience in this sector takes a long time to learn and as such much of the senior leadership are much older than the leadership within stores.
Agreed. The take over by Issas and TDR was even everything started to go wrong. There was a distinct lack of knowledge in how to run stores on the day to day. Standards and availability slipped, working with less staff and expected to do more. So many unrealistic expectations stores declined. The store I worked in saw a mass exodus of staff, myself included. I have changed career path and never looked back. Its sad because it was a good place to work when I first started.