Asda reports third-quarter revenues of £5.4bn

Leeds-based supermarket giant Asda has updated investors on its Q3 trading performance covering the three months to the end of September 2023, reporting revenues of £5.4 billion and a 2.8% increase in like-for-like sales compared to the same period of the previous year.

Asda’s like-for-like food sales increased 3.2% during Q3 compared to a year earlier, underpinned by the strong performance of its Just Essentials value range, with sales up by 21% year-on-year, in its second year since launch.

Asda ran two separate price drop campaigns during the quarter, lowering the prices on over 600 popular products by an average of 10%.

The supermarket said it gave £73 million back to customers through its Asda Rewards loyalty app in Q3, increasing the total amount that customers have earned in their Cashpots since Rewards launched last year to almost £300 million.

Asda also confirmed to investors that it had repaid a £200 million loan facility used to acquire the Co-op’s convenience stores and forecourts business last year.

“The repayment was made possible by Asda’s strong cash generation in the year to date, which reduces the retailer’s total debt leverage to 3.8x,” said Asda.

Asda chief financial officer Michael Gleeson said: “Asda has a sustainable capital structure, strong cash generation and clear strategy to deleverage over time, as the early repayment of the loan facility used to acquire the Co-op business demonstrates.”

Asda added: “In clothing and general merchandise, Asda grew ahead of the market in Q3, however, like other retailers, sales were impacted by the unseasonal weather across this period.

“This affected seasonal ranges and was the main driver in the 3.4% decline in like-for-like sales year-on-year.

“However, Asda posted strong performance in key George categories like Back to School, which had its best-ever performance on school clothing, with sales 9% up year-on year, and George Home, with 5% year-on-year growth in the quarter.

“A notable highlight was the launch of the Stacey Solomon home collection in September, which accounted for 70% of total online sales and the busiest day ever on the George Home website.

“Following the recent acquisition of EG Group’s UK convenience business, and the 119 stores acquired from the Co-op last year, the programme to convert the acquired stores to Asda Express is well underway.

“The 100th Express store is set to open this week and Asda expects to complete the conversion programme in the first half of next year, bringing the supermarket’s lower fuel and grocery prices to many more communities across the UK.

“With Christmas less than six weeks away, Asda today announced that it has expanded its partnership with FareShare and will donate the equivalent of 1m meals during the festive season.

“Asda has worked with the charity since 2013 and to support FareShare’s efforts further, the supermarket has worked with its wholly owned subsidiary IPL to identify surplus food from its supply chain.”

Blackburn-based billionaire brothers Mohsin and Zuber Issa and private equity firm TDR Capital completed the £6.8 billion acquisition of a majority ownership stake in Asda from Walmart Inc. in 2021.

Walmart retains an equity investment in Asda, with an ongoing commercial relationship and a seat on the board.