Supermarket chain Asda says its profits topped £1bn due to growth in food and clothing sales.
The Leeds-based chain – the UK’s third biggest supermarket operator – said sales for 2023 excluding fuel were just below £22bn, with its underlying earnings, before additional costs like tax, rent and interest, increasing 24% to £1.1bn.
Asda said that supermarket sales, excluding fuel, grew 5.4% on a like-for-like basis, which excludes the impact of new stores opening during the year. The group, which runs fashion brand George, said clothing sales rose 3.4% to £1.5bn.
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Asda said that it had benefited from about six million customers using its loyalty app to shop with the retailer. Around half of all sales are linked to its reward programme, Asda Rewards, which it described as a “key revenue driver” for the business. The £1bn earnings figure included contributions from the former EG UK stores brought into the group last year as well as 116 Co-op stores it also bought.
Co-owner Mohsin Issa said: “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.”
Asda said that it had grown its store footprint from 623 to more than 1,000 since the company was bought by the Issa brothers and TDR Capital in 2021. The company’s net debt at the end of its 2023 financial year stood at £3.8bn.
The publication of its annual results comes amid reports that Mr Issa’s brother, Zuber Issa, is getting ready to sell his stake in the group to private equity group TDR Capital, according to reporting in Bloomberg.
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