Asda cuts debt as it posts sales increase to £5.4bn

Asda, which is controlled by the Issa brothers, generated a 2.8% increase in like-for-like sales in its third quarter when revenues came in at £5.4bn.

The grocer also repaid a £200m loan used to buy the Co-op’s convenience and forecourts business last year. Asda said the repayment reflected its “strong cash generation in the year to date” and its total debt leverage fell to 3.8x - net debt came down from £4.2bn at the end of the scond quarter to £3.9bn at the end of the third.

Asda cut prices on 600 popular lines by an average of 10% in the quarter, taking the total invested in lower prices this year to £130m as shoppers continued to confront the cost-of-living crisis.

Food like-for-like sales were ahead by 3.2%, driven by factors including strong demand for value range Just Essentials, sales of which were up 21% year on year.

Asda maintained that its clothing and general merchandise “grew ahead of the market” but unseasonal weather took a toll, contributing to a 3.4% fall in like for likes.

Asda co-owner Mohsin Issa said: “Despite inflation easing slightly, we know that many families are still struggling, as disposable income for the average household is 10% down compared to two years ago.

“Throughout the quarter we have been focused on helping customers save money whenever they shop with us and this remains our key focus. This means keeping prices low on the products they buy the most, putting money back in their pockets via the Asda Rewards app and passing on savings whenever there is an opportunity to do so.”

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

Asda, which recently bought the Issa brothers’ EG UK and Ireland convenience and forecourts business, said the 100th Asda Express store will open this week as it converts the acquired shops.