Asda losing out in battle for shoppers as owners cut costs

ASDA is losing out in the battle for shoppers, new figures reveal, piling fresh pressure on its billionaire owners struggling to cut costs.

The store chain is lagging all its major rivals on sales growth, this month’s Kantar figures showed, with sales up just 1.9pc on the year.

Across the grocery sector as a whole, sales were 5.1pc higher in the 12 weeks to Feb 19 against the same period last year, with Tesco recording 6.2pc growth and Sainsbury’s 7.6pc. Only Co-op performed worse than Asda.

Asda’s share of the market has slipped to 13.8pc from 14.3pc this time last year. It had held a 14.8pc share of the market when brothers Mohsin and Zuber Issa and TDR Capital completed their takeover of Asda in early 2021.

The figures will come as a blow to the Issa brothers as they face scrutiny from MPS over whether Asda has become less competitive under their ownership.

The supermarket has been battling to keep shoppers while finding areas to cut costs. The Telegraph revealed this month that Asda risked a wave of strike action from workers after it slashed millions of hours to reduce its wage bill. It comes at a time of mounting competition for workers, with M&S this week announcing a £89m investment in pay for staff from April.

Asda is also facing hundreds of millions of pounds in interest payments, caused by its £4.2bn debt pile.

Meanwhile, it has been racing to ward off pressure from the German discounters which are luring shoppers away, and last month announced plans to price-match Aldi and Lidl in stores.

Lidl is the strongest performing chain in the latest period, says Kantar, with sales up almost 11pc on where they were last year. The discounters now hold a 16.9pc share of the market.

Asda has been trying to win back customers with the promise of new stores closer to their homes. Earlier this month, bosses said Asda would be opening 110 new convenience stores in February to try to catch up with rivals.

They said the openings, many of which are in the South, would take its total number of smaller stores to 1,000.

The struggle for customers will fuel further scrutiny over its ownership, with one of the billionaire Issa brothers having held talks to sell his stake.

revealed earlier this year that Zuber Issa had approached buyout specialists and retailers to explore a sale of his 22.5pc shareholding.