Asda Confirms Significant Sales and Earnings Decline Amid Turnaround Efforts
Supermarket chain Asda has acknowledged it still has "plenty to do" in its ongoing turnaround strategy, following the revelation of a substantial slump in both sales and earnings over the past year. The Leeds-based firm, which ranks as the UK's third-largest supermarket, disclosed that sales excluding fuel dropped by 3.3% to £21 billion in 2025 compared to the previous year. Additionally, adjusted earnings tumbled by a staggering one-third to £764 million for the same period.
IT Upgrade Disruption and Market Challenges
The company is currently in the midst of extensive turnaround efforts under returning executive chairman Allan Leighton, after losing market share in the competitive UK grocery sector to rivals such as Tesco, Sainsbury's, and Lidl. However, these transformation initiatives were significantly hampered by a botched £1 billion IT upgrade last year, which caused severe operational disruption.
Asda reported that the IT transition led to reduced product availability and weaker sales, as the company worked to separate over 2,500 legacy IT systems and migrate them to its own platforms. This complex process has been ongoing since Asda was sold by Walmart—which still retains a 10% stake—to brothers Zuber and Mohsin Issa along with private equity firm TDR Capital in 2021.
Recent Performance and Leadership Outlook
In a fresh update, Mr. Leighton noted that sales declined by 2.4% in the final quarter of last year, as the business continued to feel the lingering effects of the IT issues. Despite these challenges, he expressed optimism, stating that Asda now has "positive momentum" and is returning to sales growth. "There is plenty to do but there is also plenty of upside," he remarked. "We have that momentum and a strong balance sheet to allow us to push forward."
Asda has seen some recovery, with product availability now reaching an eight-year high of 95%, contributing to stronger sales in recent months. Total like-for-like sales fell by 1.6% in January and 1% in February but have grown by 1.2% so far in March, indicating a gradual improvement.
Future Prospects and Strategic Focus
Mr. Leighton added, "As we enter the second year of our turnaround, we have an improved customer offer, stable core systems, a strengthened balance sheet and a strong leadership team to deliver our formula for growth." He emphasized that progress in key areas such as price, availability, and customer satisfaction is moving forward, reflected in the positive like-for-like sales growth in stores over the last two months.
The company remains focused on leveraging its momentum to regain market position and drive future growth, despite the ongoing pressures from larger competitors and past operational setbacks.
