Is Asda’s ambitious turnaround starting to bear fruit?
Asda has had a tumultuous year and a half.
Since January 2024, the supermarket giant has undergone numerous leadership changes, IT issues, and sales woes.
Its troubles began back in 2021, when it was bought in a debt-fuelled takeover by the billionaire Issa brothers – who have since departed the board – and private equity firm TDR Capital just before interest rates spiked.
Customer satisfaction, sales and brokers’ opinions subsequently dropped, with AJ Bell analyst Dan Coastworth describing its performance as “hugely embarrassing” and “extremely frustrating”.
But with returning chair Allan Leighton now at the helm, has it finally begun to stabilise?
‘We tried to be like everybody else… but we’re Asda’
The Leeds-headquartered chain has reported a revenue-excluding fuel of £5bn for the three months to 31 March 2025, the first quarter of its financial year.
The total is a 5.9 per cent decrease year-on-year while its like-for-like sales (adjusted for Easter) in the four months to the end of April, declined by 3.1 per cent.
Its three-month sales performance from March to May was the grocer’s best for a year, according to Kantar.
Allan Leighton, the chair behind Asda’s turnaround, said the company had made “real progress” but that there was still a “long way to go”.
“We’re putting a material investment into this, into the business this year, and so we’re ready to go with [price cuts],” he added.
While he hasn’t disclosed Asda’s exact investment into price cuts, Leighton’s talk of a ‘war chest’ earlier this year sent listed grocer’s share prices tumbling and prompted Tesco to set aside millions for price cuts in its annual results.
“We will continue to invest in price,” Leighton said. “We’ve done it. Everybody said, Well, are they really doing this? And the answer is, yes.”
“We’re not like anybody else,” he added. “The problem was we tried to be like everybody else. We’re Asda. We’re unique. We’ll continue to do this. Pricing is part of it. Whatever happens, we’ll keep pushing prices down.”
Headwinds ahead?
Despite Leighton’s ambitious plans for the supermarket, it faces a number of serious headwinds ahead.
Food wholesale prices, for one, are on the rise.
Grocery inflation jumped to its highest level in more than a year in May, with increases particularly stark for fresh foods like steak.
Retailers also face bigger cost burdens in the form of a higher minimum wage and higher employers’ national insurance contributions, as well as a new packaging tax.
Asda has previously said it expects its wage bill to increase by £100m annually due to the higher national insurance payments.
There’s also the issue of its lengthy and expensive detachment from previous-owner Walmart’s IT systems.
But Leighton remained calm about the pressures: “We watch [wholesale prices] very, watch very carefully, and then we’ll, we’ll inflate at a lower rate than the rest of the market.”
“We’re going at a very sensible pace [with Walmart],” he added. “This morning, you know, this has been a marathon.
“We’ve run 24 miles of a marathon speed. We’re not going to do the last two miles sprint. So we’re just sensibly pacing ourselves, making sure it works.”