Asda has shaved £300m off its mounting debt pile despite its sales growth falling behind previous quarters.
The grocery chain paid off a £200m loan it took out to fund the acquisition of 132 convenience stores and petrol stations from The Co-op last year, as well as £100m of borrowings.
This has reduced the company’s net debt from £4.2bn to £3.9bn during the three months to September. However, this figure has shot back up to £4.6bn due to the acquisition of EG Group’s UK business.
Asda chief financial officer Michael Gleeson said: “Asda has a sustainable capital structure, strong cash generation and clear strategy to deleverage over time, as the early repayment of the loan facility used to acquire the Co-op business demonstrates.”
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The update came as Asda reported a 2.8% increase in third quarter like-for-like sales to £5.4bn, compared to the same period of the previous year.
The small sales increase comes despite rising inflation and was notably down on the near 10% growth recorded in the second quarter and the 7.8% it boasted in its first.
Food like-for-likes were up 3.2%, boosted by a 21% sales growth of its Just Essentials value range.
The supermarket said it ran two separate price drop campaigns during the quarter, taking the total amount it has invested into lowering prices this year to £130m.
Asda co-owner Mohsin Issa said: “Despite inflation easing slightly, we know that many families are still struggling, as disposable income for the average household is 10% down compared to two years ago.
“Throughout the quarter we have been focused on helping customers save money whenever they shop with us, and this remains our key focus.”
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