Asda's ambitious £1 billion IT system overhaul has significantly hampered the supermarket's recovery efforts, pushing its timeline back by an estimated six months, the company has confirmed.
A Costly Technological Transition
The retail giant, acquired by the Issa brothers and TDR Capital from Walmart in 2021, has been engaged in the monumental task of separating over 2,500 legacy IT systems from its former owner. Chief Executive Allan Leighton, who returned to lead the business last year, stated that the severe disruption during the third-quarter transition led to a 2.8% drop in like-for-like sales.
Mr Leighton described the sales decline as a 'self-inflicted' problem, directly resulting from the migration to new platforms. The process was finally completed in Q3 of this year, but not without significant operational fallout.
Operational Disruption and Customer Impact
The core of the issue lay in the stock flow between depots and stores, which was severely disrupted. This led to what Asda termed 'inconsistent availability levels across stores and particularly online'.
This technological failure created a 'poor customer experience', with the company's app and website also suffering in August, damaging the performance of its home delivery service. The problems were so acute that they have set back the business's broader recovery plan by half a year.
Mr Leighton conceded, "It's put us back by around six months, but we now have the base to allow the business to grow." While availability has now returned to June 2025 levels and operational issues are receding, Asda does not expect to regain its Q2 2025 market position until the second quarter of 2026.
Broader Market Challenges
This internal struggle comes against a challenging backdrop. Asda has been losing ground to competitors like Tesco, Aldi, and Lidl in recent years. In response, the company has continued to invest in price reductions throughout this difficult quarter, a strategy central to Mr Leighton's plan to return to growth.
This price investment is happening amidst ongoing food inflation and general pressure on consumer confidence. Mr Leighton also warned that consumers are feeling 'confused and concerned' following the autumn Budget, though he noted it is 'too early' to predict the impact on crucial Christmas spending.
The ownership landscape has also shifted, with Zuber Issa selling his stake in the company last year. Walmart retains a minority share of 10% in the business.
