Asda paid £1.1 billion dividend to US owners before Issa takeover

WALMART took a £1.1bn dividend out of Asda before selling the business to the Issa brothers despite profits falling.

In 2019 Asda, the UK’s third largest supermarket, saw its profits fall by 27pc to £584.2m while like-for-like sales, excluding fuel and VAT, fell by 0.8pc to £22.9bn.

Yesterday it revealed it paid a dividend of £1.15bn to its US owners in March this year.

Asda said the dividend reflected its performance over three years, was ‘surplus cash’ and followed a £1.2bn payment into the pension scheme, which has 12,300 members. The announcement also comes days after Asda followed Tesco’s lead in paying back the £340m rates relief tax break to the Government following strong sales in the pandemic.

The supermarket’s performance has been lacklustre in recent years as Walmart has looked for a way to exit the highly competitive UK grocery market so it can focus on defending its position in the US against Amazon.

In the 12 weeks to November 29, Asda’s sales rose by 7.7pc compared to the same period in 2019, according to Kantar, pushing its market share down from 14.6pc to 14.1pc.

Walmart completed the sale of a majority stake in the business to the Blackburn-based Issa brothers and their private equity backers, TDR Capital, with the US group’s international boss Judith McKenna ( pictured) instrumental in the sale.

The dividend was revealed as Asda prepared to file its annual accounts for 2019 with Companies House, which will be available next week. They will show profits were hit by a surge in property costs and an increase in share option charges.