Asda, owned by the Issa brothers and TDR Capital, a private equity firm, is falling further behind its supermarket competitors in the quest for sales growth, adding to the pressure on its billionaire owners to reduce costs.
Over the past 12 weeks, sales at Britain's third-largest grocer increased by 0.8 per cent year-on-year. This growth rate significantly lags behind its rivals, with Sainsbury's and Tesco recording growth rates of 7.9 per cent and 6.3 per cent, respectively, over the same period, as reported by research company NIQ.
Marks & Spencer and Ocado, its more upscale competitors, reported growth rates of 11.2 per cent and 13 per cent, respectively. During the 12-week period, Asda's market share declined from 12.3 per cent to 11.7 per cent. At the time of its acquisition from Walmart in 2021, the grocer held over 14 per cent of the market.
In 2021, Mohsin Issa spearheaded a heavily leveraged £6.8 billion takeover, supported by his brother Zuber and TDR Capital. This move burdened Asda with substantial loans just before interest rates surged.
The brothers sold their EG Group's UK and Ireland petrol station forecourts business to Asda last year. While this deal aided in improving EG Group's balance sheet, it burdened the supermarket chain with significant debts. Asda's chief financial officer, Michael Gleeson, informed MPs in December that the supermarket group's debts amounted to £4.2 billion.
