Asda was forced to release draft results to investors after the auditor failed to sign company accounts.
Asda’s managers made the unusual choice to give a private presentation to lenders at the end of last month. Asda announced unaudited profit of £248m on revenues of £25.6bn in 2023.
The retailer has a £4.2bn debt load, which has resulted in finance costs of £441m.
Asda decided to delay its results after EY resigned as the company auditor in July last year, following a romance between one of their former partners and billionaire Mohsin Issa.
KPMG replaced the Big Four accountant, but Asda did not make the change public at the time.
According to a source at Asda, investors are updated quarterly.
Asda has not yet released its figures, which were originally expected to be published in March.
The billionaire Issa Brothers and TDR Capital (private equity firm) are both co-owners in Asda.
Since the Issas & TDR purchased the business in 2021 for £6.8bn, Asda is burdened with increasing finance costs caused by high levels debt.
Documents show that the supermarket’s finance costs are still a major problem. They have risen from £101m (£101m) to £157m (£157m) in the last quarter of 2023.
Asda has been losing customers to its rivals, and this has led to financial challenges.
Kantar reports that the supermarket has a share of 13.8pc, down from 14.8pc at the beginning of 2021. Tesco has a market share of 27.2pc, while Sainsbury’s is at 15.2pc.
According to NIQ’s analysis, Asda sales were only up 0.8pc compared to a year ago. The supermarket was also behind its major competitors.
Leading retail analyst: “When their sales are so far behind their competitors, you have ask yourself ‘how long will that continue?’
The declining sales of the company have led to concerns amongst senior business figures, leading to speculation about Mohsin Issa’s role as CEO.
Over the last 18 months, his leadership has been responsible for significant cost cutting. For example, he reduced working hours of tens and thousands of employees in an effort to reduce its wages bill.
The discontent has increased amongst workers. Questions about the ownership of the company have aggravated this.
The Telegraph reported in February that Zuber issa wanted to sell his 22.5pc share in the company, following reports of a rift with his brother Mohsin.
Both have denied any rift between them.
The company has also been rocked recently by an IT meltdown which led to thousands receiving incorrect pay slips.
Asda’s spokesperson said that the company made significant investments in its business in order to achieve long-term, sustainable growth while also continuing to pay off debt and deleverage.
Asda’s source said that the audit for this year will be on schedule and in line with finalised accounts, both in 2023 and in 2022. Last year, we did not audit our results when we released them to the media in March.
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