Leeds-based supermarket giant Asda said its 2023 adjusted EBITDA after rent, its preferred profit measure, rose 24% to £1.08 billion as its total sales, excluding fuel, climbed 7.1% to £21.9 billion.

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.

Asda — the UK’s third biggest supermarket group after Tesco and Sainsbury’s — declined to comment on media reports that Zuber Issa is looking to sell his 22.5% stake to TDR Capital.

Asda said its net debt at the end of FY23 was £3.8 billion “net of more than £1bn cash on the balance sheet” and that more than 90% of this debt is secured on fixed rates of interest.

Bloomberg reported that Asda Group Ltd. is planning a bond issuance to help refinance the debt pile that supported its acquisition by Mohsin and Zuber Issa.

The Bloomberg report said Asda is looking to raise £1.75 billion  through the bond sale. A spokesman for Asda declined to comment.

Separately, Asda is marketing a €1.05 billion term loan, according to an announcement seen by Bloomberg.

Asda chief financial officer Michael Gleeson said: “After taking full ownership of Asda in June 2021, the priority of the shareholders was to invest in colleague pay and help customers during the most challenging period of the cost-of-living crisis.

“This included the successful launch of our budget-friendly Just Essentials range and resetting the supermarket’s opening price points, as well as later launching the Asda Rewards loyalty app. These investments resonated with customers and helped to drive significantly higher sales in 2023.

“Around half of all sales are now linked to Asda Rewards and around six million customers use the app – making it a vital tool for them to manage their household budgets as well as being a key revenue driver for the business.

“The shareholders have also invested to fill the previous strategic gaps in the business, including acquiring the Co-op and EG UK convenience stores – which have already boosted annual earnings and helped grow Asda to more than 1,000 sites for the first time.

“Asda is a highly cash generative business, with strong liquidity, including more than £1bn in cash on the balance sheet at year end.

“The significant increase in both underlying free cashflow and adjusted EBITDA after rent last year enabled us to reduce leverage by almost a full turn to 3.0x.”

Gleeson said finance costs in 2023 rose to £225 million from £185 million in 2022.

Mohsin Issa said: “Asda is a supermarket powerhouse built on rock-solid foundations – as our strong annual results and the 18m customers who shop with us every week demonstrate.

“Our strategy is all about growth and Asda increased underlying profit to more than £1bn and like-for-like sales by over 5% last year, while significantly growing free cashflow and reducing leverage.

“We are committed to doing the right thing for customers, colleagues and local communities – and are putting in place the strategic building blocks to set up Asda for long-term success.

“As well as investing in price to maintain our position as the cheapest traditional supermarket, we continued to invest in further enhancing the quality of our products, building on the earlier successful launch of the budget-friendly Just Essentials brand with a significant own-label transformation programme.

“This saw us launch thousands of new and improved food lines to drive quality perception among consumers, including a refresh of our entire ready meals range.

“This investment includes non-food and saw George maintain its market leadership position in back-to-school wear and deliver total clothing sales growth of 3.4% last year – helped by our ongoing focus on price, quality and style.

“We continue to strengthen the business by expanding in the growing convenience and food-to-go sectors,  leveraging our loyalty app and driving innovation in online grocery where we are the UK’s second largest supermarket.

“I would like to thank our colleagues for their hard work over the last year, serving millions of customers each week. Our recent investment in pay – a record £150m – will see Asda become the highest paying traditional supermarket in the UK and reflects how much we value the contribution of every colleague.”