UK supermarket Asda returned to profit in 2023

Fri, 28th Jun 2024 12:00

Made pretax profit of 180 mln pounds in 2023

Industry data shows Asda losing market share

By James Davey

LONDON, June 28 (Reuters) - Asda, the British supermarket group which is 10% owned by U.S. giant Walmart, said on Friday it returned to a pretax profit in its 2023 financial year, even though it lost market share to rivals over the period.

Mohsin and Zuber Issa and private equity firm TDR Capital bought 90% of Asda from Walmart in a 6.8 billion pound ($8.6 billion) deal that completed in 2021.

Earlier this month TDR agreed a deal to gain majority ownership by acquiring Zuber Issa's share.

Asda, Britain's third largest supermarket group, said it filed its annual accounts at Companies House on Friday for the year to end-December 2023, which showed a pretax profit of 180 million pounds, compared with a loss before tax of 432 million pounds in 2022.

It said the outcome reflected an increase in operating profit and a partial reversal of previous impairment provisions.

Asda had already reported in April that underlying earnings for 2023, or adjusted EBITDA after rent, had increased 24% to 1.078 billion pounds, on total sales, excluding fuel, that rose 7.1% to 21.9 billion pounds.

That is despite its weaker performance against rivals.

Market researcher NIQ said on Thursday Asda's sales fell 4.9% in the 12 weeks to June 15 year-on-year, with its market share down a whole percentage point on the year to 12.2% - as it struggles to keep up with industry leader Tesco and No. 2 Sainsbury's.

Analysts say Asda's ability to compete has been burdened by high debt levels. Interest costs rose to 225 million pounds in 2023 and Asda's net debt as of end-March 2024 was 3.8 billion pounds.

Asda says its focus is on growing the business for the long-term by diversifying its offering. It highlights major investment in its online business, on expanding its convenience store estate and on upgrading its bigger stores. ($1 = 0.7909 pounds) (Reporting by James Davey. Editing by Jane Merriman)