Asda selling off 24 supermarkets and distribution centre

The supermarket is still losing market share despite effort under Allan Leighton to win over customers with price cuts.

Asda is set to raise £568 MILLION in a store sell-off as sales continue to fall. The supermarket is still losing market share despite effort under Allan Leighton to win over customers with price cuts.

Asda is selling off 24 stores and a distribution centre – and leasing them back – to raise £568m. Sales fell 3.9% in the three months to 2 November, according to data from Worldpanel by Numerator (formerly Kantar), which indicated a one percentage point drop in market share from a year before.

Nadine Houghton, a national officer for the GMB union, which represents thousands of the retailer’s workers, said there were concerns about Asda’s future in the light of the latest lease-back deal.

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Nadine said: “Asda’s owners, TDR Capital, is selling off yet more assets to settle the debt liabilities heaped on the business by its own borrowing.

“Debt is up, lease liabilities are up, interest payments are up – but market share and staff morale are rock bottom. Asda was once one of the UK’s biggest retailers – where will it all end?”

Clive Black, a retail analyst at Shore Capital, said: “From the outside it looks like a sign of weakness that tangible fixed assets are being sold at this time.”

“If trading was hunky dory, that can be accommodated in the big scheme of things, but that is not the case. We had expected a more stable trading position from Asda by now,” Black said. “Recent market share data has been very poor for grocery. It all feels rather tight.”

Patrick O’Brien, an analyst at GlobalData, said Asda’s promise in March under its new chair, Allan Leighton, to stir up the market with a barrage of price cuts, did not appear to have hit home.

“There was a feeling that Asda were really going to bring out the big guns and we haven’t really seen that materialise,” he said. “We have not seen that aggressiveness on price as yet.”

An Asda spokesperson said: “Asda’s property strategy is centred on maintaining a strong freehold base while also taking a considered and selective approach to unlocking value from our estate where appropriate.

“These transactions reflect that approach, enabling us to realise value from the sites while retaining full operational control.”