Yahoo Finance Asda boasts earnings and cash flow growth as low prices and loyalty apps win over consumers
Earnings for UK supermarket giant Asda rose by a quarter last year on the back of repeat customers using store loyalty schemes.
According to figures released by the chain today, adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 24 per cent to £1.1bn in 2023, against £867m the year prior.
The growth was driven by a sales uptick of 7.1 per cent (total sales or 5.4 per cent like-for-like) to £21.9bn for the period as as well as the success of the company’s loyalty app scheme, lower opening price points and the Just Essentials range.
The company’s underlying cash flow rose 31 per cent to £776m, which allowed the company to repay a £200m Co-op loan early and reduce leverage from 3.0 times to 3.9 times.
Michael Gleeson, Asda’s chief financial officer, said: “After taking full ownership of Asda in June 2021, the priority of the shareholders was to invest in colleague pay and help customers during the most challenging period of the cost-of-living crisis.”
He added: “These investments resonated with customers and helped to drive significantly higher sales in 2023.”
The company said that around half of all sales are now linked to Asda Rewards, and around 6m customers use the app.
The shareholders have also invested to fill the previous strategic gaps in the business.
This included taking full control of 116 convenience stores and three development sites from the Co-op during the period and acquiring 356 predominantly freehold sites of EG Group’s UK business.
The company said these acquisitions will accelerate the supermarket’s growth in convenience and food-to-go sectors, as well as taking the store count for the company, the third-largest in the UK by revenue, to over 1,000 locations for the first time.
In online grocery, Asda said it maintained its number two grocery home shopping market position behind Tesco due to continued investment in price and innovation.
Meanwhile, for the first quarter of 2024, the group said it was the first supermarket to price match both Aldi and Lidl across a broad range of popular everyday products – reducing prices by an average of 17 per cent.
Mohsin Issa, Asda’s co-owner, said: “Asda is a supermarket powerhouse built on rock-solid foundations – as our strong annual results and the 18m customers who shop with us every week demonstrate.
“Our strategy is all about growth and Asda increased underlying profit to more than £1bn and like-for-like sales by over 5 per cent last year, while significantly growing free cashflow and reducing leverage.
“I would like to thank our colleagues for their hard work over the last year, serving millions of customers each week and our recent investment in pay – a record £150m – will see Asda become the highest-paying traditional supermarket in the UK and reflects how much we value the contribution of every colleague.”
