Asda is selling off 24 stores and a distribution centre – and leasing them back – to raise £568m in what has been called a “sign of weakness” as sales at the heavily indebted retailer continue to fall.
The Leeds-based supermarket group, which is expected to release its quarterly results next week, has continued to lose market share to rivals as sales have gone backwards, despite an effort to win over shoppers with price cuts and improved stores.
Sales fell 3.9% in the three months to 2 November, according to data from Worldpanel by Numerator (formerly Kantar), which indicated a one percentage point drop in market share from a year before.
Asda’s parent group slumped to a near-£600m loss last year as sales fell and the cost of servicing its debt pile increased.
Nadine Houghton, a national officer for the GMB union, which represents thousands of the retailer’s workers, said there were concerns about Asda’s future in the light of the latest lease-back deal: “Asda’s owners, TDR Capital, is selling off yet more assets to settle the debt liabilities heaped on the business by its own borrowing.
“Debt is up, lease liabilities are up, interest payments are up – but market share and staff morale are rock bottom. Asda was once one of the UK’s biggest retailers – where will it all end?”
Clive Black, a retail analyst at Shore Capital, said: “From the outside it looks like a sign of weakness that tangible fixed assets are being sold at this time.”
He said the deal might help Asda to pay off debt or allow more capital to invest in the business but would also mean higher rents, meaning less cash for day-to-day operations.
“If trading was hunky dory, that can be accommodated in the big scheme of things, but that is not the case. We had expected a more stable trading position from Asda by now,” Black said. “Recent market share data has been very poor for grocery. It all feels rather tight.”
Patrick O’Brien, an analyst at GlobalData, said Asda’s promise in March under its new chair, Allan Leighton, to stir up the market with a barrage of price cuts, did not appear to have hit home.
“There was a feeling that Asda were really going to bring out the big guns and we haven’t really seen that materialise,” he said. “We have not seen that aggressiveness on price as yet.”
Asda, which has 579 supermarkets, 517 Express convenience stores and 29 Asda Living general merchandise and fashion outlets in total, said it would continue to operate from the latest batch of stores to be sold off. They have gone to two buyers: DTZ Investors and Blue Owl Capital.
The deal is part of plan to cut hefty debts at Asda since a highly leveraged £6.8bn takeover in 2020 by the billionaire Issa brothers and the private equity firm TDR Capital. TDR now controls the group after buying out one of the brothers, Zuber Issa, while Mohsin Issa retains a 22% stake.
Amarveer Singh, a credit analyst at CreditSights, said the deal would be considered a negative development for Asda’s creditors as it would increase leasehold exposure while the proceeds of the sale and leaseback would not be used for investment or cutting the group’s main debts. Bonds fell as it emerged that the money is to be used to pay off a debt to Walmart, the US retailer that previously owned Asda and retains a 10% stake, as first reported by the Financial Times.
Asda previously sold most of its warehouses for £1.7bn in 2021, and 25 supermarkets for £650m two years later, in similar deals in which it agreed to lease back the properties. It also signed a more unusual ground rent deal for £300m in 2023.
An Asda spokesperson said: “Asda’s property strategy is centred on maintaining a strong freehold base while also taking a considered and selective approach to unlocking value from our estate where appropriate. These transactions reflect that approach, enabling us to realise value from the sites while retaining full operational control.”
• This article was amended on 21 November 2025. In an earlier version, an indirect quote misrepresented Amarveer Singh’s view of the deal, which is that it would be considered a negative development for Asda’s creditors, not that it would “negatively affect Asda’s credit rating”.
