Key facts
- Asda's losses have grown to almost £1 billion.
- The supermarket chain's sales fell by 4.2% in the 12 weeks leading up to December 28, 2025.
- This sales decline occurred while competitors reported increases.
- Allan Leighton returned as Asda's chair in November 2024 to oversee a turnaround.
- A significant IT upgrade project, 'Project Future', cost nearly £1 billion and impacted operations.
- Asda is focusing on its strengths in clothing and general merchandise alongside its supermarket business.
Asda is grappling with significant financial challenges, reporting losses nearing £1 billion and a notable decline in sales amidst fierce competition, particularly from discounters like Aldi. Industry data reveals Asda's sales dropped by 4.2% in the 12 weeks ending December 28, 2025, a period when its main rivals experienced sales growth.
William Woods, a food retail analyst at Bernstein Research, described Asda's situation as "a mess," indicating that despite efforts to cut prices and initiate a turnaround, shoppers are continuing to move away from the brand. The supermarket, once known for being Britain's cheapest grocer, has struggled to adapt to the evolving retail landscape.
Following its acquisition by the Issa brothers and TDR Capital for £6.8 billion in early 2021, Asda has been burdened by substantial debt. This debt-funded takeover, occurring at the end of a grocery boom, has become increasingly costly due to rising interest rates triggered by inflation and the war in Ukraine. The company has also experienced high management turnover and a decline in store standards, with shoppers complaining about empty shelves and poor online availability.
Allan Leighton, who returned as Asda's chair in November 2024, is spearheading a turnaround effort. He acknowledges that a costly IT upgrade project, dubbed 'Project Future,' which aimed to transition Asda's systems from former owner Walmart's infrastructure, incurred close to £1 billion in expenses and set back plans by six months. However, Leighton asserts that the IT systems are now stable and availability has improved significantly. A new partnership with Ocado is expected to modernize Asda's online operations starting next year.
Leighton remains optimistic about Asda's future, emphasizing the company's strengths beyond traditional grocery sales. He highlights Asda's significant presence in clothing and general merchandise as a key differentiator against competitors, including Aldi and Lidl. The company is also focusing on its superstores, George brand, fuel stations, and convenience stores, with online operations seen as a crucial future growth area. Asda's latest marketing campaign encourages consumers to "take a fresh look," with efforts to reduce prices relative to competitors.