Asda’s pre-tax losses nearly doubled to £989 million in 2025, as the supermarket giant absorbed a huge one-off charge from its troubled IT separation from former parent Walmart and ploughed cash into a high-stakes price war aimed at winning back shoppers.
The £989 million loss – up sharply from a £599 million shortfall the previous year – reflects a year of upheaval under executive chairman Allan Leighton, who returned in November 2024 to lead what he has described as a three-to-five-year turnaround. The single biggest factor was a £656 million one-off cost tied to the group’s separation from Walmart, which still owns a 10% stake and holds a seat on the board.
Of that £656 million, £284 million was directly related to the IT separation itself – a process management has called “troubled” and “self-inflicted”. The £1 billion “Project Future” technology overhaul was designed to give Asda independence from Walmart’s systems, but it suffered delays and disruption that hit product availability and dented sales. The fallout is estimated to have set back the supermarket’s recovery by six months. However, Asda says availability has now recovered to an eight-year high of over 95%.
A further £344 million of the one-off charge came from a non‑cash impairment after a revaluation of Asda’s property portfolio. The remaining portion of the £656 million figure covers other separation costs not broken out in the accounts.
Beyond these exceptional items, Asda’s aggressive pricing strategy also weighed heavily on profitability. Leighton has publicly pledged to make the chain between 5% and 10% cheaper than its traditional rivals, warning that such a move would “materially reduce” profits. The investment was channelled through the “Asda Price” and “Rollback” campaigns, which dragged down adjusted earnings. Underlying earnings before interest, tax, depreciation, amortisation and rent fell 33% to £761 million for the year.
The pricing push, intended to restore Asda’s value credentials as households battle the cost-of-living squeeze, contributed to a 3.1% decline in like‑for‑like sales (excluding fuel) year‑on‑year. Asda’s market share also slipped: it stood at 11.4% in December 2025, down from 11.6% in July, making it the largest share loser in the UK grocery market over that period. In May 2025, discounter Aldi overtook Asda to become Britain’s third‑largest grocer by food and drink sales – though Leighton has said share fluctuations are not his primary concern. Competitors Tesco and Sainsbury’s have gained ground, while Aldi and Lidl continue to expand.
Not all of Asda’s operations are struggling. The convenience‑store format Asda Express recorded like‑for‑like sales growth of 3.5% in the third quarter of 2025, while the George clothing brand saw first‑quarter like‑for‑like sales rise by the same margin.
Balance-sheet strength and turnaround costs
Despite the headline loss, Asda insists its underlying financial position remains robust. A spokesman for the supermarket said: “The reported loss does not reflect the underlying financial strength of the business – and continued powerful cash generation.”
The company ended 2025 with £1.3 billion in cash and total liquidity of £2.1 billion. Net debt fell by £500 million during the year to £3.1 billion, and the majority of borrowings are secured well into the next decade. According to Asda, this gives it the “flexibility to continue investing in our long-term growth strategy and deliver a disciplined and sustainable turnaround.”
The turnaround plan, which Leighton has said will take three to five years, also includes structural changes. TDR Capital, the private equity firm, holds a 67.5% majority stake after acquiring Zuber Issa’s holding in November 2024. Mohsin Issa owns 22.5%, and Walmart retains 10%. Leighton has prioritised restoring Asda’s “DNA” of competitive pricing, improving product availability, and recruiting a new chief executive.
Alongside the turnaround, Asda has invested £80 million in retail pay, lifting hourly rates to £12.60. It is also considering stricter disciplinary rules for sick leave, a move that has raised concerns among some employees. On the environmental front, the company is pursuing net‑zero carbon emissions by 2040 and has pledged to eliminate deforestation from its supply chain by 2025, with initiatives including expanding its Bio‑LNG fleet and increasing the recyclability of own‑brand packaging to 97.5%.
The £989 million loss, while stark, is in large part the result of one‑off accounting charges and deliberate investment. The question now is whether Leighton’s bet on slashing prices – and the fear of a sector‑wide price war with rivals such as Tesco and Sainsbury’s, which have also cut prices – will restore the momentum Asda has lost to discounters and entrenched competitors.
