Asda slashes debt as sales climb

Asda has experienced a jump in sales in the third quarter as the British supermarket announces a reduction in debt.

Asda purchased Co-op's petrol forecourt business for £600 million last year, using a £200 million loan facility to acquire it.

In its latest financial results, the retailer confirmed it had repaid this debt following strong cashflow over the past 12 months, reducing its total debt leverage to“3.8x”.

Sales at the supermarket for the three months to the end of September rose 2.8 per cent compared with the same period last year, with revenue rising to £5.4 billion.

Asda’s food sales increased by 3.2 per cent compared to the previous year, with the supermarket’s value range performing particularly well as demonstrated by a 21 per cent uptick in sales.

Elsewhere, Asda said seasonal merchandise was impacted by adverse weather which led to a 3.4 per cent decline in sales across these ranges. Homewares rose five per cent during the quarter, while back to school items saw a jump in sales of nine per cent.

“Despite inflation easing slightly, we know that many families are still struggling, as disposable income for the average household is 10 per cent down compared to two years ago,” said Mohsin Issa, co-owner of Asda. “Throughout the quarter we have been focussed on helping customers save money whenever they shop with us, and this remains our key focus.

“This means keeping prices low on the products they buy the most, putting money back in their pockets via the Asda Rewards app and passing on savings whenever there is an opportunity to do so.”

In August, Asda was reportedly in talks to sell a £500 million chunk of its portfolio in efforts to reduce debt.

Last month, Asda completed its purchase of EG Group’s fuel, foodservice, grocery and merchandise business in the UK and Ireland for £2.07 billion. The company, which was founded by Mohsin Issa and his brother Zuber, previously revealed that it had lost $258 million before the merger with Asda.

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