Asda, the debt-ridden grocery chain, reported a 6.6 per cent revenue growth in the first quarter of the year, thanks to price matching schemes with Aldi and Lidl.
Owned by the billionaire Issa brothers and TDR Capital, the UK’s third-largest supermarket reduced prices by an average of 17 per cent on over 280 items to match the prices of the German discounters. This strategy comes as Aldi and Lidl have gained significant market share amid the cost of living crisis, attracting cash-strapped consumers with their low prices.
Following the quarter, Asda announced additional price cuts on hundreds of products worth £70 million, reducing prices by an average of 11 per cent.
Asda reported a total revenue of £5.3 billion, with like-for-like sales increasing by 1.4 per cent. This announcement comes after the company refinanced more than £3 billion of debt.
Asda currently holds a net debt of £3.8 billion after acquiring the UK convenience store business of its parent company, EG Group. The supermarket also recently received a corporate rating upgrade from Moody’s to B1 from B2, and Fitch Ratings raised their outlook on Asda’s Long-Term IDR to positive from stable, affirming the IDR rating at B+.
In 2021, the Issa brothers, alongside TDR Capital, purchased Asda, which has over 1,000 stores across the UK, from Walmart.
In March, Mohsin Issa, one half of the billionaire duo, confirmed he would step back from the day-to-day running of the business and appoint a chief executive. The recruitment process for a new chief executive is currently underway.
Commenting on the results, Mohsin Issa said: “Asda made good progress against its strategy in the quarter, laying the foundations for long-term success – including completing the conversion of our newly acquired sites to Asda Express, as part of our strategic expansion into the growth markets of convenience and food-to-go. We did this while continuing to deliver great range, value, and convenience, including investing in lower prices and the quality of our food and non-food at a time when the household budgets of our customers remain under pressure.”
On Monday, Asda announced plans to develop a ten-acre Park Royal site in West London, building 1,500 homes, with a third being ‘affordable’. If given planning approval, the new site will be a ‘town centre’ linking Old Oak and Park Royal, regenerating the area with a 60,000-square-foot Asda store and 400 car park spaces.
