Tesco Share News (TSCO)

Q3 like-for-like sales down 2.8% vs down 0.2% in Q2

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Asda had in August flagged likely hit to Q3 sales

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Says worst of disruption is now behind group

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But won't return to Q2 2025 position until Q2 2026

By James Davey

LONDON, Nov 28 (Reuters) - British grocer Asda warned it does not expect to return to underlying sales growth until mid-2026 after third quarter sales were dented by disruption linked to the completion of an IT overhaul separating its systems from former owner Walmart.

Walmart sold Asda to Zuber and Mohsin Issa and private equity firm TDR Capital in 2021 and the supermarket group is now majority owned by TDR.

In August, Asda said it had finished a project to separate over 2,500 systems from Walmart, which retains a 10% stake in Asda, but warned it would likely have a negative impact on its third quarter performance.

Asda, Britain's number three supermarket group after Tesco and Sainsbury's, said on Friday like-for-like sales in the three months to September 30 fell 2.8%, having been down 0.2% in the previous quarter.

"This (IT) change severely disrupted our systems and materially impacted our progress, as we saw a step-back to inconsistent availability, operational issues at depot and in-store and a poor customer experience online and through the app," executive chairman Allan Leighton said.

He said the worst of the disruption is now behind the group, product availability is back to where it was in June, operational issues are reducing and performance in recent weeks is improving.

However, he cautioned "we do not expect to re-establish our Q2 2025 position until Q2 of 2026." Asda said it exited the second quarter of 2025 with positive like-for-like sales.

TDR brought Leighton back to the grocer last November, more than two decades after he served as CEO.

In March, he warned his plan to be 5% to 10% cheaper than traditional rivals would "materially reduce" annual profit.

His comments hit the shares of industry leader Tesco and number two Sainsbury's on fears of a price war. However, Tesco and Sainsbury's have continued to trade strongly and their stock prices have more than recovered.

Industry data published earlier this month showed Asda's sales fell 3.9% over the 12 weeks to November 2 year-on-year, with its market share down 1 percentage point to 11.6%. (Reporting by James Davey; editing by Sarah Young)