Asda’s Financial Struggles and Debt Repayment
Thursday 20 November 2025 3:53 pm | Updated: Thursday 20 November 2025 5:58 pm
Introduction to Asda’s Debt Issues
Asda has struggled with debt since its 2021 leveraged buyout. The company has been working to repay its debts and improve its financial situation. Recently, Asda has raised close to £600m from three deals for its supermarkets ahead of a looming debt repayment to previous owner Walmart.
Asda’s Sale-and-Leaseback Deals
The grocery giant struck sale-and-leaseback deals for its supermarkets totalling £568m, according to the FT. It raised £467m in two deals with New York-based asset manager Blue Owl and London-listed Supermarket Income REIT to sell and lease back 20 stores and a depot in Lutterworth, Leicestershire.
The deals saw 10 of the stores acquired through a joint venture with Blue Owl and Supermarket Income REIT, while another 10 were acquired by Blue Owl alone. A separate deal to offload four supermarkets in Birmingham, Greater London, Coventry and Leeds to investment managers DTZ raised £101m, sources told the FT.
Debt Repayment to Walmart
Asda intends to use the proceeds of the two deals to repay a debt to Walmart, which retained a 10 per cent stake in the company following the £6.8bn sale to TDR and the billionaire Issa brothers in 2021. The structure of the buyout left Asda owing Walmart so-called payment-in-kind interest, which is rolled up and added to the principal due. When the investment matures in 2028, Asda could owe Walmart £900m.
Asda was seeking to settle the debt next year, as the rate of interest rises approaching the payment date, according to the FT. The latest deals leave Asda owning or holding 60 per cent of its store estate on long leases, comparable to levels of freehold ownership at rivals Tesco and Sainsbury’s.
Leadership Changes and Market Share
Former boss Allan Leighton re-joined Asda earlier this year in a bid to boost the struggling grocer’s fortunes; the supermarket giant has undergone numerous leadership changes, IT issues, and sales woes in the last few years. Leighton’s talk of a ‘war chest’ to spend on price cuts earlier this year sent listed grocer’s share prices tumbling and prompted Tesco to set aside millions for price cuts in its annual results.
However, its market share has continued to decline this year, falling behind rivals Tesco and Sainsbury’s and leaving its place in the UK’s supermarket chain open to threats from Aldi and Lidl. City AM has contacted Asda, Blue Owl and DTZ for comment.
Conclusion
In conclusion, Asda’s financial struggles and debt repayment have been ongoing issues for the company. The recent sale-and-leaseback deals and debt repayment to Walmart are steps towards improving its financial situation. However, the company still faces challenges in the market, including declining market share and competition from rivals.
FAQs
Q: What is Asda’s current debt situation?
A: Asda has raised close to £600m from three deals for its supermarkets ahead of a looming debt repayment to previous owner Walmart. The company owes Walmart £900m, which is due to be repaid in 2028.
Q: What are the sale-and-leaseback deals?
A: The sale-and-leaseback deals are agreements where Asda sells its stores to investors and then leases them back. The company has raised £568m from these deals, which will be used to repay its debt to Walmart.
Q: Who are the investors involved in the sale-and-leaseback deals?
A: The investors involved in the sale-and-leaseback deals are Blue Owl, Supermarket Income REIT, and DTZ. Blue Owl and Supermarket Income REIT have acquired 20 stores and a depot in Lutterworth, Leicestershire, while DTZ has acquired four supermarkets in Birmingham, Greater London, Coventry and Leeds.
Q: What are the implications of Asda’s declining market share?
A: Asda’s declining market share leaves its place in the UK’s supermarket chain open to threats from rivals such as Aldi and Lidl. The company faces challenges in competing with these rivals, which may impact its future financial performance.
