Asda, Britain's third biggest supermarket group, reported a 24% jump in annual earnings to over 1 billion pounds ($1.24 billion), saying it was making strategic progress despite losing market share to rivals.
Asda, owned by brothers Zuber and Mohsin Issa and private equity firm TDR Capital, said 2023 adjusted EBITDA after rent, its preferred profit measure, was 1.08 billion pounds ($1.33 billion) on total sales, excluding fuel, that rose 7.1% to 21.9 billion pounds.
While like-for-like sales rose 5.4%, growth slowed in the fourth quarter to 2.2% and monthly industry data has consistently shown Asda underperforming its bigger rivals - market leader Tesco (TSCO.L) and No. 2 Sainsbury's (SBRY.L).
Data from market researcher Kantar last month showed Asda had a 13.8% share of Britain's grocery market, down 50 basis points on the year.
Still, Mohsin Issa said Asda had "rock-solid foundations," and had invested in price and quality of its products in 2023, while progress included taking full control of 116 convenience stores from the Co-op and buying 356 sites of EG Group’s UK business.
Asda's strategy is to boost its convenience store presence by rolling out Asda Express stores across these sites.
EG Group is also owned by the Issa brothers and TDR.
"Tesco and Sainsbury's were able to insulate themselves quite a bit over the last 15 years as they grew their convenience business," finance chief Michael Gleeson told reporters.
"We think we have an opportunity which we've made a significant start on."
Asda has, however, been burdened by high debt levels since the Issas and TDR bought the business from Walmart (WMT.N) in a 6.8 billion pound deal in 2020 which left the U.S. giant retaining a 10% stake.
Asda said its net debt at the end of 2023 was reduced to 3.8 billion pounds and it was "fully committed to further deleveraging".
Gleeson said finance costs in 2023 rose to 225 million pounds, from 185 million pounds in 2022.
Asda declined to comment on media reports that Zuber Issa was looking to offload his 22.5% stake.
($1 = 0.8089 pounds)
