Business News: Asda’s Profits Increase by 24% to £1.1bn in 2023

Asda, the UK’s third-largest supermarket chain, saw a significant increase in profits in 2023, reaching over £1 billion. Despite facing challenges with the cost of living, Asda attributed its profit growth to its loyalty programme, which now boasts around six million users. The loyalty app has become a key revenue driver for the chain, with roughly half of all sales linked to the Asda reward programme.

While Asda’s clothing section, George, experienced a 3.4% increase in sales, overall sales growth was slower compared to the previous year. The chain’s chief financial officer, Michael Gleeson, acknowledged that price rises due to high inflation helped boost sales. Asda also made efforts to match the prices of hundreds of items sold at discount rivals Aldi and Lidl to remain competitive.

Despite its profit growth, Asda lost ground to competitors like Sainsbury’s and Tesco, with its market share falling to 13.6%. Industry analysts attribute this decline to tough competition from discount retailers like Aldi and Lidl. To address this challenge, Asda has been expanding its convenience store network, acquiring petrol forecourts from EG Group and Co-op in recent years.

The future ownership of Asda is also under scrutiny, with reports that Zuber Issa, one of the billionaire brothers who bought the chain three years ago, is preparing to sell his stake to private equity group TDR. The takeover of Asda by the Issa brothers and TDR drew attention from MPs and unions due to the high amount of borrowed money involved in the acquisition.