Asda vowed to cut its £3.8billion debt pile even as it was hit by a slowdown in sales.
The supermarket giant said it was ‘fully committed’ to slashing its huge debts as it tries to battle discount rivals.
The group’s debt pile increased to £3.8billion in 2023 from £3.7billion in 2022 after it took over parent company EG Group’s UK convenience store business.
Asda has been struggling since the Issa brothers joined forces with private equity giant TDR Capital to buy it in a £6.8billion debt-fuelled deal three years ago.
Soaring interest rates have driven up the cost of borrowing while shoppers have flocked to discounters Aldi and Lidl for cheaper shopping.
Asda said it was ‘fully committed’ to slashing its huge debts as it tries to battle discount rivals
But bosses were bullish about its future in its annual update, which had been expected around a month earlier.
They said a new Just Essentials budget range helped push annual sales up 7.1 per cent to £21.9billion.
But momentum dwindled over the year as the grocer struggled to retain shoppers amid stubborn inflation.
Sales were up 7.8 per cent in its first quarter but by just 2.2 per cent in the last quarter, which covered the critical Christmas period.
Mohsin Issa, who is overseeing daily operations instead of a chief executive, said: ‘Asda is a supermarket powerhouse built on rock-solid foundations.’
And finance chief Michael Gleeson said more low-cost ranges would ‘give customers hopefully fewer reasons to switch to Lidl and Aldi’.
He said his team were ‘absolutely confident we’re doing the right things in terms of investment and price proposition generally for the long run’.
‘Market share tends to ebb and flow in the short term,’ he added. Earlier this month, data from NIQ showed Asda’s growth is stalling, with sales up just 0.8 per cent in the past 12 weeks.
The report suggested Asda has been overtaken by Aldi as the country’s third most popular supermarket.
Clive Black, retail analyst at Shore Capital, said Asda is losing ‘a lot of customers’ as it battles to turn its fortunes around.
‘It has a relatively weak private or own label assortment in quality terms, especially compared to Aldi and Lidl, never mind Tesco and Sainsbury’s,’ said Black. ‘For Asda to compare its lines to Marks & Spencer has been bonkers.’
Higher sales pushed annual profits up 24 per cent to £1billion but the company only shared one measurement for its earnings.
The news comes as Zuber Issa readies to sell his stake to private equity group TDR Capital. He is thought to be close to offloading his 22.5 per cent holding.