Bleak festive season for Asda as its market share drops to an all-time low

Asda Faces Challenging Holiday Season

Asda experienced a difficult Christmas period, with its market share dropping to a record low.

According to data from Worldpanel, the supermarket's market share slipped to 11.4% in the 12 weeks leading up to December 28, marking its lowest level during the festive season and the weakest performance ever recorded for this period.

Sales at Asda fell by 4.2% during this time, making it the only major UK grocer to see a decline in sales over Christmas. December also marked the 22nd straight month of falling sales for the retailer.

Meanwhile, competitors Tesco and Sainsbury’s attracted more shoppers, further increasing their lead over Asda, which remains the UK’s third-largest supermarket.

Expert Opinions on Asda's Performance

Clive Black, head of research at Shore Capital, commented, “By any standard, these results are disappointing, especially following several years of lackluster performance.”

The latest figures add pressure on Allan Leighton, Asda’s chief executive, who returned to the company in late 2024 to oversee its turnaround efforts.

Leighton, who previously helped revive Asda in the late 1990s, was brought back as chairman after years of decline. When TDR Capital and the Issa brothers acquired Asda from Walmart in 2021, the supermarket’s market share was 14.8%.

Last year, Leighton launched aggressive price cuts and invested in updating stores, claiming to see early signs of improvement over the summer.

Black noted, “Leighton pushed hard on price reductions last year, and in March, he made bold statements about Asda’s investment. These comments briefly impacted competitors’ share prices, but ultimately raised customer expectations that Asda couldn’t fulfill. Regaining those lost shoppers is now even more challenging.”

Operational Setbacks and Future Outlook

Asda’s efforts to turn things around have been hampered by IT system issues. In November, Leighton revealed that a £1 billion technology overhaul, intended to separate Asda’s systems from Walmart’s, caused significant disruptions, including empty shelves and problems with online orders. The company does not expect to fully recover from these issues until the second quarter of 2026.

Black warned, “The bigger concern is how Asda will perform during Christmas 2026. If there’s still no clear progress by then, both Leighton’s strategy and Asda’s future will face much closer examination.”

Financial Developments and Ownership

These challenges come as Worldpanel’s report follows the release of financial statements for TDR Capital, Asda’s private equity owner, which showed a £31 million payout to partners for the latest financial year.

Records filed with Companies House revealed that TDR Capital’s 17 partners shared £31.3 million in profits for the year ending April, despite Asda’s ongoing difficulties.

Some critics argue that Asda’s ownership structure has contributed to its struggles, pointing to the £6.8 billion debt-financed acquisition that left the supermarket with heavy interest obligations. TDR Capital declined to comment on these claims.

Asda’s Response

Asda maintains that the 4.2% sales drop actually reflects an improvement, noting that sales had fallen by 4.3% in November. A spokesperson stated, “Our main focus is to help families by offering quality, variety, and value. The latest Worldpanel data shows our overall sales are strengthening, and our volumes are improving as we keep price increases below the market average.”

They added, “We recognize that regaining market share will be a gradual process, but we remain confident in the appeal of our customer offering moving forward.”