On Tuesday, Asda, the third-largest supermarket group in Britain, reported a 2.8% year-on-year increase in its underlying sales for the third quarter. This marks a significant deceleration compared to the 9.6% growth recorded in the preceding quarter and represents an underperformance relative to its larger competitors.
The supermarket, which is owned by Zuber and Mohsin Issa along with the private equity group TDR Capital, disclosed a revenue of £5.4 billion ($6.7 billion) for the three months ending in September.
Asda reported a 3.2% increase in like-for-like food sales, but experienced a decline of 3.4% in clothing and general merchandise sales. Similar to other retailers, Asda attributed this dip to the adverse effects of unseasonable weather during this period.
Last week, Sainsbury’s, the second-largest player, reported a 6.6% rise in underlying sales for the second quarter ending on September 16. Moreover, market leader Tesco disclosed an 8.4% increase in like-for-like sales for the second quarter in the UK during October.
Throughout this year, monthly industry data has consistently indicated that Asda is not performing as well as its competitors.
Asda also announced the repayment of a £200 million loan facility, which was initially utilized for the acquisition of the Co-op’s convenience stores and forecourts business last year.
“Asda has a sustainable capital structure, strong cash generation and clear strategy to deleverage over time, as the early repayment of the loan facility used to acquire the Co-op business demonstrates,” finance chief Michael Gleeson said.
Last month, Asda concluded the acquisition of the majority of the UK & Ireland business from petrol forecourt operator and retailer EG Group, amounting to an enterprise value of £2.07 billion.
As part of its strategy to enhance its presence in convenience stores, Asda aims to deploy Asda Express stores across EG’s 356 locations in the UK.
The Issa brothers and TDR are also the owners of EG.