Profits at the UK’s third-biggest supermarket chain grew 24% in 2023, topping more than £1bn in a year where households struggled with the cost of living.

Asda said its bottom line was boosted by growing supermarket sales, with 5.4% growth – excluding fuel and the effect of new Asda shops opening.

Pre-tax profit reached £1.1bn over 2023, up 24% compared to 2022.

The value of those total sales, also leaving out fuel, hit nearly £22bn during the year.

Why are profits up?

It’s thanks to roughly six million customers who now use the Asda loyalty app, the chain said.

Around half of all sales are linked to the Asda reward programme, which the firm said was a “key revenue driver”.

Asda’s clothing section, George, was already the UK’s biggest retailer for kids, but sales increased by 3.4% over the year, valued at £1.5bn.

Sales growth, however, was slower than it had been a year ago.

Price rises – driven by high inflation – helped Asda sales, its chief financial officer Michael Gleeson said.

Asda had “tried very hard to protect customers from the worst impacts” of inflation, Mr Gleeson said, and pledged to match the prices of hundreds of items sold at discount rivals Aldi and Lidl.

Despite those efforts and growing sales, Asda still lost ground to its competitors.

Its market share fell behind rivals Sainsbury’s and Tesco to 13.6%, according to industry analysts Kantar, as it faced tough competition from the likes of Aldi and Lidl.

What’s been happening at Asda?

Mr Gleeson said competitors Tesco and Sainsbury’s “managed to insulate themselves a little bit” against discount retailers by growing out their convenience shops.

It’s something Asda has been working on, he said, adding: “I think that was clearly a gap that we needed to address and that’s what we’ve been doing over the last 18 months, and we now have just short of 500 convenience stores”.

Asda has bought petrol forecourts from EG Group and Co-op over the past few years, allowing it to expand into convenience stores.

Brothers Mohsin and Zuber Issa joined forces with private equity group TDR Capital to buy Asda three years ago.

They own 45% of the company, while US grocery giant Walmart controls 10% and the remainder is owned by TDR.

Asda as a result faced interest payments of at least £30m from February as loans taken on by the billionaire brothers to fund their £6.8bn purchase of the supermarket became due.

They bought Asda from Walmart with a high amount of borrowed money – a takeover that drew scrutiny from MPs and unions.

It’s been reported by Bloomberg that Zuber Issa is preparing to sell his stake to TDR.