Asda losses widen as price cuts and IT disruption weigh on earnings

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Asda losses and challenges

Highlights

Asda's pre-tax losses widen to £989mn in 2025 from £599mn in 2024, with underlying earnings after rent down 33 per cent to £761mn.
Project Future system overhaul results in a £284mn charge and operational disruption, including supply shortages and a £344mn property impairment.
Asda’s UK grocery market share drops to 11.5 per cent in 2025 from 14.3 per cent in 2021, while net debt falls by £500mn to £3.1bn.

2025 results and turnaround costs

As reported by Financial Times, Asda says its pre-tax losses widen to £989mn in the year to December 2025 from £599mn in 2024, according to a filing at Companies House on Friday.

Underlying earnings after rent fall 33 per cent to £761mn, while revenue including fuel declines 3.4 per cent to £25.9bn. Like-for-like sales drop 3.1 per cent as the Leeds-headquartered grocer cuts prices and runs promotions on thousands of household goods to win back shoppers.

The group also discloses a £284mn charge related to its "Project Future" systems overhaul and a non-cash impairment of £344mn after reassessing the value of its £8bn property portfolio. The technology transition away from systems previously run by Walmart is hit by delays and insufficient testing, leaving shelves short of some grocery items.

Executive chair Allan Leighton has previously described the problems as "totally self-inflicted". Asda says the reported loss does not reflect the underlying financial strength of the business, which ends the year with £1.3bn in cash.

Competitive pressure in the UK grocery market

Asda has been losing customers in recent years to Tesco, Sainsbury, Aldi and Lidl, and its share of the UK grocery market has fallen from 14.3 per cent in 2021 to 11.5 per cent, according to data from Worldpanel by Numerator. The retailer says it invests significantly to lower prices for customers in 2025 and strengthen its value proposition during sustained cost-of-living pressures.

Net debt falls by £500mn to £3.1bn after swelling following the company's £6.8bn buyout by TDR Capital and the Issa brothers in 2021. Asda says most borrowings are secured into the next decade, giving it flexibility to keep investing in its long-term growth strategy and turnaround plan.

Leighton has previously said a full turnaround could take up to five years, and that timetable is pushed back by six months in November because of persistent issues tied to the IT switch. The results also come as UK supermarkets Tesco and Morrisons report slower recent sales, with weaker consumer spending linked to concerns over the Iran war and poorer weather than a year earlier.

In our earlier article on Tesco’s TSCO share performance and outlook, we reviewed how the retailer’s £750m buyback programme supported capital returns even as sales growth came in weaker than expected. We also highlighted a bearish technical setup, with the stock trading below key moving averages and a near-term range that left the market waiting for a clear break above resistance to shift sentiment.

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