Asda returns to growth after more than two years

Asda has recorded its first trading growth in more than two years, with sales at its physical stores up 0.2 percent in the seven‑week period ending 18 August, according to executive chair Allan Leighton. The rise, Leighton said, is a “huge milestone” that he believes will help the supermarket’s morale and momentum.

Leighton, who returned to the company in November 2024 after a 20‑year absence, attributed the uptick to a stronger price position, increased customer traffic and improvements to the online service. He noted that the business’s online sales have been a “biggest drag” in the past, but that momentum is now building.

The growth comes after a three‑month decline of 2.3 percent, the most recent fall in Asda’s sales since the first quarter of 2024. The supermarket’s performance has been hampered by a costly transition from the technology platform of its former owner, Walmart, and by a backlog of IT issues that caused stock‑taking problems and disrupted shelves. Since the 2020 takeover by the Issa brothers and private‑equity firm TDR Capital, Asda has struggled with falling profits and a large debt load, while spending nearly £1 billion to overhaul its IT infrastructure.

Leighton said the company’s food sales were the main driver of the recent growth, rising 0.7 percent at established stores during the seven‑week period. Non‑food categories, such as clothing, fell, which he attributed to a tough wider market and a late‑August bank holiday that delayed back‑to‑school purchases. He added that inflation in food remained a concern, with produce prices rising for items such as tomatoes and cucumbers due to a hot, dry summer, but that Asda was managing inventory and pricing for petrol well despite high fuel prices linked to the war in Iran.

The supermarket’s market share is under pressure from discount rivals Aldi and Lidl, which are close behind Asda and continue to grow faster. Leighton said Asda is fighting back with a partnership with online specialist Ocado to upgrade its website and delivery systems, which will come into effect next year. He stressed that the business is “too good not to be turned around” and that he has never felt “not confident” about its prospects.

Leighton also commented on the broader economic environment. He said it was unclear whether consumer sentiment had improved since former Labour leader Andy Burnham became prime minister, and that households were waiting for the autumn and the October budget announcement to see how the economy would develop. He praised John Healey’s appointment as chancellor, describing him as “very sensible and objective,” and called for a budget that does not “inhibit growth.” Leighton urged the government to consider excluding retailers from additional business rates on larger buildings.

In summary, Asda’s first trading growth in more than two years is driven by lower prices, improved online service and a stronger food sales performance. The company has made significant progress in stabilising its IT systems, but faces ongoing competition from discount chains and a challenging economic backdrop. The executive chair remains optimistic about the business’s trajectory, provided that broader economic policy supports growth rather than restraint.