Asda sales slump deepens as IT overhaul hits Christmas prospects

Asda is facing fresh turbulence after a £1 billion IT upgrade led to significant operational disruption and a marked decline in sales, with the company bracing for a difficult festive trading period. Executive chairman Allan Leighton attributed a 2.8 percent fall in sales during the three months to the end of September to issues arising from the complex separation of Asda’s computer systems from those of former owner Walmart. The project, known internally as Project Future, resulted in empty shelves, delivery setbacks, and website and app outages. These problems have delayed the supermarket’s turnaround efforts by at least six months.

Leighton acknowledged the problems were rooted in system integration and inadequate testing, rather than competitive pressures. He suggested a full recovery is not likely before the second quarter of 2026. The severe impact on operations has reinforced fears that Asda may once again record the weakest Christmas performance among major UK supermarkets, following a 5.8 percent drop during last year’s festive season.

Market analysts, including Shore Capital’s Clive Black, have warned that Asda is unlikely to meet internal expectations this Christmas and will remain at the bottom of the supermarket league for trading momentum. Since Leighton’s return a year ago, he has spearheaded efforts to revive the retailer, launching aggressive price cuts; however, Asda’s challenges have intensified. The company’s share of the grocery market has fallen to a record low of 11.6 percent as rivals like Aldi rapidly close the gap, with some analysts forecasting Aldi could surpass Asda within six months.

Compounding these issues, Asda’s 2021 takeover by TDR Capital and the Issa brothers left the company with a heavy debt burden. The recent quarter saw total revenues at £5.1 billion, a near 4 percent decrease compared with both the preceding quarter and the same period last year. Debt pressures have intensified following a £600 million sale and leaseback of multiple stores, a move that has raised recurring rent costs and attracted criticism from trade unions concerned about asset-stripping.

Despite operational challenges, the company indicated that product availability has stabilised above 95 percent. It is accelerating investments in price reductions and refurbishments, allocating £12 million toward upgrading stores in Yorkshire and surrounding regions. Still, concerns persist as ratings agency Fitch downgraded Asda’s debt further into junk territory, signalling rising borrowing costs ahead.

Leighton remains under pressure to deliver evidence of progress in his restructuring strategy amid rising interest rates and mounting financial obligations. He has also voiced criticism of government policy, arguing that persistent business costs and tax increases are stifling growth and investor confidence across the UK retail sector.