Asda Rollback: momentum up, profitability still a hurdle

Britain’s supermarket chain Asda’s performance for the year to December 31, 2024 was marked with a revenue decline of 0.8 percent to 21.7 billion pounds, while like-for-like sales were down 3.4 percent.

Facing increased competition from Tesco, Aldi, and Lidl, which resulted in market share losses, Asda has launched a "Rollback to Asda Price" strategy involving price cuts across its product range to stimulate growth.

Having rejoined Asda as executive chairman in November after a 20-year interval, Allan Leighton acknowledged the positive momentum from the January Rollback relaunch, including a strengthened price position and better customer perception of value.

Nevertheless, he cautioned that substantial investments in price, availability, and the shopping experience are anticipated to significantly impact the company's profitability this year.

Asda also invested 43 million pounds in extended store hours during the latter half of 2024 to enhance replenishment and store standards.

Despite these challenges, Asda grew adjusted EBITDA after rent by 5.8 percent to 1.14 billion pounds during the year, driven by improved gross margins, particularly in non-food reflecting the strength of George brand, as well as profit from the 356 Asda Express convenience stores and forecourt sites acquired from EG Group.

With a substantial network comprising 580 supermarkets, 500 convenience stores, and 769 petrol forecourts, Asda has faced leadership transitions. Co-owner Mohsin Issa's departure last year adds to the company's ongoing search for a permanent chief executive, a position vacant since 2021.