The owner of Asda slumped to a near £600m loss last year as sales at the supermarket group fell and the cost of servicing its debt pile increased.
The UK’s third-biggest supermarket dropped £599m into the red in the year to 31 December 2024, before tax payments, down from a £180m profit in 2023, according to accounts for Bellis Finco, the retailer’s holding company. Sales at established stores slid by 3.4%.
Total sales rose to £26.8bn from £25.6bn as the retailer opened new outlets, after snapping up some former Co-op stores and EG petrol forecourts. However, the company has suffered difficulties as it battles heavy debts and problems transferring its IT systems from its former owner, Walmart.
The fall in underlying sales, at the group which runs more than 580 supermarkets, nearly 500 convenience stores and 769 petrol forecourts, meant the company had to slash £378m off the value of its stores, contributing to the profit drop.
Leeds-based Asda was sold to two billionaire brothers from Blackburn – Mohsin and Zuber Issa – and the private equity company TDR Capital for £6.8bn in 2020.
After trading troubles at the retailer and an apparent rift between the brothers following the breakdown of Mohsin’s marriage, which was said to have “sent shock waves” through the family, he stepped back from running the business last year but retains a minority stake. Zuber Issa sold his stake to TDR.
Asda’s executive chair, Allan Leighton, who first helped turn around the supermarket chain more than 20 years ago, was brought in last year but has cautioned it could take three to five years to revive its fortunes.
The loss at its parent company came after Asda said its finance costs had risen 38% to £611m as a result of higher interest rates. The group said it had £4.9bn in external debts with further liabilities, including £3.8bn in leases and a £500m shareholder loan. The next major debt repayment of £300m is due in February next year.
The company also said it had paid out a further £310m on “project future”, the transfer of its IT systems from those run by Walmart, taking total costs of the project to £889m by December last year – £89m more than previously expected. The project is not expected to be completed until later this year.
The accounts also confirm that Asda is on the hook for a £900m cash payment for Walmart’s remaining 10% stake in the business, which the UK retailer is contracted to buy back by February 2028. Walmart also received a payment of £12.5m from Asda last year related to the buyout.
The scale of the losses emerged after Asda said in March it planned to invest “a pretty significant war chest” in cutting prices and putting more staff on the shop floor as the supermarket chain battles a decline in sales and market share.
Leighton said there would be a “material reduction in our profit” for the year ahead as the group aimed to invest in order to regain its crown as the UK’s lowest-price traditional supermarket.
The accounts filed at Companies House indicate that Asda also expects to take on more debt to fund the price cuts. The figures show that underlying profits, before debt payments and writedowns, were £1.1bn, up from £1bn a year before.
