Asda boss bashes Budget as sales continue to drop
Asda boss Allen Leighton has hit out at the Autumn Budget as anti-growth and anti-investment as sales as the supermarket giant stumbled due to an IT handover.
The executive chairman said Chancellor Rachel Reeves’ Budget “didn’t do anything for anybody” and that “there’s nothing the government is doing that is stimulating growth”.
Speaking to City PM on a results call for Asda’s third quarter, Leighton added: “You’ve got to incentivise business to invest. That’s the way it works… until we grow, we’ll have no productivity.”
Reeves’ second Budget this week made a number of tweaks to the UK’s tax scheme, including increases to levies on assets and pensions.
The Budget has had mixed reviews from financial commentators, with many arguing that it failed to fix foundational problems in Britain’s economy and that higher taxes will slow the economy down.
“We have two issues as a country, one is growth, and one is productivity,” Leighton said. “And you don’t get productivity unless you have growth… [it all comes back to] people investing in their businesses.
Asda sales continue to drop
In its third-quarter results on Friday, Leeds-headquartered Asda reported a 2.8 per cent drop in like-for-like sales, largely thanks to a disruptive handover of IT systems from Walmart to the UK giant over summer.
“[The handover had a] pretty severe disruption of our systems and a pretty meaningful impact on our sales,” Leighton said.
Dubbed Project Future, the handover involved the separation of more than 2,500 ‘legacy systems’ and moving “every aspect” of Asda’s operations to its own IT platforms, the grocer said.
Asda’s turnover, excluding fuel, totalled £5.1bn for the quarter.
Walmart completed the sale of its majority stake in Asda to the Issa brothers and TDR Capital in February 2021. It retains a 10 per cent stake.
Last year, TDR Capital became the majority shareholder in Asda after buying out one of the billionaire Issa brothers.
The handover affected “stock accuracy and stock flow from the depots to the stores”, Leighton said, causing “two fold inconsistent availability”.
Asda’s turnaround plans earlier this year sent peers’ stocks tumbling, but the supermarket told investors today that the IT handover put a pin in its growth plans, adding that it doesn’t expect to re-establish its second-quarter performance until Q2 2026.
A supermarket sell-off last week raised almost £600m for Asda, which prompted concern from analysts, but Leighton said it was “not a sign of weakness” and that he felt “good” about Asda’s financial position.
“We feel pretty good about our balance sheet [and] we’re very confident in our formula for growth,” he said.
Asda ‘making good progress’
In a statement, Leighton said: “We said it would take three to five years to turn Asda around.
“We made good progress in the first half of the year against our ‘Formula for Growth’ with the best availability in eight years, a notable price gap versus competitors, and a return to like-for-like growth.
“At Q2 results, we said that the cutover from Project Future, although completed, would likely have a negative impact on our performance.
“This change severely disrupted our systems and materially impacted our progress, as we saw a step-back to inconsistent availability, operational issues at depot and in-store and a poor customer experience online and through the app that impacted our grocery home shopping business in particular.
“Since then, we have made good progress stabilising our platforms and the worst of the disruption is now behind us.
“Availability is back to where it was in June, operational issues are reducing and performance in recent weeks is improving, but we do not expect to re-establish our Q2 2025 position until Q2 of 2026.
“Thank you to all our colleagues for their hard work and commitment and our customers for their patience.”