Asda posted a 0.2% rise in like-for-like sales excluding fuel over the seven weeks to 18 August — its first positive comp since Q1 2024. Executive chair Allan Leighton called it "a huge milestone" and "psychologically important for the business." The preceding three months had seen a 2.3% decline. Food led the recovery at +0.7%, while non-food fell amid what Leighton described as a tough wider market and delayed back-to-school spending caused by the late August bank holiday. The turnaround narrative rests on three pillars: stabilised IT systems, sharper pricing, and online momentum. Asda has spent close to £1bn migrating off Walmart's technology stack — a migration so troubled it left shelves unstocked and drove customers to competitors. A deal with Ocado to overhaul website and delivery systems from next year is the next bet. Leighton, who returned in November 2024 for his second stint rescuing the business, insists the fundamentals are sound. The structural context is less flattering. The Issa brothers and TDR Capital acquired Asda in a £6.8bn leveraged buyout in 2020. TDR now controls the business. Since then, Asda has carried a huge debt pile while watching sales and profits erode. The £1bn IT spend wasn't investment in new capability — it was the cost of severing a technology umbilical cord that Walmart had provided as part of the ownership. The buyout extracted the retailer from a stable parent and loaded it with obligations. Aldi sits less than one percentage point behind Asda in market share and is growing faster. Lidl continues to expand. Tesco and Sainsbury's press from above. A 0.2% comp — while symbolically important — does not change the competitive arithmetic. Aldi's structural cost advantage (smaller stores, limited range, no legacy IT migration) means it can sustain price pressure indefinitely. Leighton says Aldi overtaking Asda is "not inevitable," but the trajectory says otherwise unless growth accelerates substantially. Leighton used the interview to lobby government directly. He said Labour's "key economic policy so far has been to inhibit growth" and called for retailers to be excluded from additional business rates on larger buildings. He praised chancellor John Healey as "very sensible and objective" but warned that clarity on the October budget would be decisive for both consumer and business confidence. Produce inflation — tomatoes, cucumbers — is emerging from the hot dry summer, and high fuel prices linked to the war in Iran are adding pressure. The honest read: Asda's 0.2% is a vital psychological signal for a demoralised workforce and supply chain, but the value story here remains extractive. Close to £1bn in IT costs, a massive debt stack from the leveraged buyout, and a competitive position being eroded from below by discounters — the benefits of the PE deal accrued to the sellers (Walmart) and the financial engineers (TDR, Issa brothers), while the business bears the cost of reconstruction. Consumer sentiment remains cautious, with households waiting on the October budget before loosening spending. The question isn't whether Asda can grow. It's whether it can grow fast enough to service its debt, fund its Ocado partnership, absorb produce inflation, and hold off Aldi — all simultaneously. A 0.2% comp in a seven-week window doesn't answer that question. It just keeps it open.
