Asda has reported a decline in annual sales and profits as it continues to navigate a challenging turnaround, while warning that geopolitical tensions could drive further inflation and fuel supply pressures.
The UK’s third-largest grocer said sales excluding fuel fell 3.3 per cent to £21 billion in the year to 31 December 2025, while like-for-like sales improved slightly but remained in decline at minus 3.1 per cent. Adjusted EBITDA dropped sharply by 33.1 per cent to £764m, reflecting continued investment in price and operational recovery.
Despite the weaker financial performance, Asda pointed to early signs of stabilisation under its “Formula for Growth” strategy. The retailer said it had re-established a price gap of between 4 and 7 per cent against traditional supermarket competitors, improved product availability to a near eight-year high of 95 per cent, and returned to positive in-store like-for-like growth in March.
Executive chairman Allan Leighton said the business was “edging forwards” into the second year of its turnaround, supported by improved systems, a strengthened balance sheet and a rebuilt leadership team. Net debt fell by £500 million to £3.1bn, with the group ending the year with £1.3bn in cash.
However, Leighton cautioned that external pressures are mounting. He warned that the ongoing conflict in the Middle East is likely to push up food prices, as suppliers face rising fertiliser, energy and fuel costs. While Asda has so far only seen a “trickle” of supplier price increase requests, he said inflationary pressures are inevitable and uneven across commodities.
He also urged government intervention, calling for measures to support farmers and reduce fuel duty, arguing that rising pump prices are generating significant tax revenues that could be redirected to ease cost pressures in the supply chain.
Fuel has emerged as a particular concern for the retailer, which is one of the UK’s largest forecourt operators.
Leighton acknowledged that heightened demand and tight supply have led to occasional temporary shortages at some petrol stations. “Our fuel volumes are up quite significantly and clearly demand has been outstripping supply. Supply is tight and we are all trying hard on that,” he said.
Asda stressed that sites remain operational and continue to receive regular deliveries.
The supermarket's turnaround is expected to take between three and five years, with Leighton emphasising that recovery will be gradual rather than immediate.
“We have good momentum in the business,” he said. “These things don’t turn around overnight.”