Asda Reports Slower Sales Growth in Q1 Amidst Rivalry with Tesco and Sainsbury’s

Monthly industry data has consistently shown Asda lagging behind its main rivals, Tesco and Sainsbury's.

Asda, Britain’s third-largest supermarket group, reported on Friday that its underlying sales rose by 1.4% in the first quarter.

This marks a slowdown from the 2.2% growth in the previous quarter and reflects an underperformance compared to its larger competitors.

Owned by brothers Zuber and Mohsin Issa and private equity group TDR Capital, Asda saw its total revenue, excluding fuel, increase by 6.6% to 5.3 billion pounds ($6.7 billion) in the three months ending March 31.

Monthly industry data has consistently shown Asda lagging behind its main rivals, Tesco and Sainsbury’s.

Data from market researcher Kantar indicated that Asda’s sales fell by 0.4% over the 12 weeks to April 14, and its market share decreased by 60 basis points year-on-year to 13.4%.

However, Mohsin Issa expressed optimism, stating that Asda “made good progress against its strategy in the quarter, laying the foundations for long-term success.”

He highlighted the completion of converting 470 convenience sites acquired from the Co-op and EG UK to Asda Express, bringing Asda’s total store count to over 1,200. Additionally, in January, Asda began matching the prices of discounters Aldi and Lidl on hundreds of comparable grocery products. “We’re confident we’re doing the right things for the long term,” said chief financial officer Michael Gleeson.

Asda has faced high debt levels since the Issas and TDR purchased the business from Walmart in a 6.8 billion pound deal in 2020, which left the U.S. retailer with a 10% stake.

Asda’s interest costs in 2023 amounted to 225 million pounds. Earlier this month, Asda refinanced over 3.2 billion pounds of debt.

The company has been without a CEO since Roger Burnley left abruptly in 2021. Gleeson mentioned that the search for a new CEO is ongoing, with headhunters appointed for the task.

He declined to comment on media reports suggesting that Zuber Issa was considering selling his 22.5% stake in the company.