The owner ofAsdaslumped to a near £600m loss last year as sales at the supermarket group fell and the cost of servicing its debt pile increased.
The retail group dropped £599m into the red in the year to 31 December, before tax payments, down from a £180m profit in 2023, according to accounts for Bellis Finco, the retailer’s holding company. Sales at established stores slid by 3.4%.
Total sales rose to £26.8bn from £25.6bn as the UK’s third largest grocer opened new outlets. However, the company has also suffered difficulties as it battles heavy debts and problems transferring its IT systems from its former owner,Walmart.
The group wassoldto two billionaire brothers from Blackburn and the private equity company TDR Capital for £6.8bn in 2020.
The executive chair, Allan Leighton, who first helped turn around the supermarket chain more than 20 years ago, was brought in last year but has cautioned itcould take three to five years to revive its fortunes.
Asda runs more than 580 supermarkets, almost 500 convenience stores and 769 petrol forecourts.
The loss at its parent company came after Asda said its finance costs had risen 38% to £611m as a result of higher interest rates. The group said it had £4.9bn in external debts with further liabilities, including £3.8bn in leases and a £500m shareholder loan.
The company also said it had paid out a further £310m on “project future”, the transfer of its IT systems, taking total costs of the project to £889m by December last year – £89m more than previously expected. The project is not expected to be completed until later this year.
The scale of the losses emerged after Asda said in March it planned to invest“a pretty significant war chest”in cutting prices and putting more staff on the shop floor as the supermarket chain battles a decline in sales and market share.
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Leighton said there would be a “material reduction in our profit” for the year ahead as the group aimed to invest in order to regain its crown as the UK’s lowest-price traditional supermarket.
The accounts filed at Companies House showed that underlying profits, before debt payments and writedowns, were £1.1bn, up from £1bn a year before.