Asda promised to reduce its £3.8bn debt even as it was hit by a slowdown in sales.
The supermarket giant said it was “fully committed” to cutting its huge debts as it tries to fight off discount rivals.
The group’s debt rose to £3.8 billion in 2023 from £3.7 billion in 2022 after it took over parent company EG Group’s convenience store business in the Kingdom United.
Asda has been struggling since the Issa brothers joined forces with private equity giant TDR Capital to buy it in a £6.8bn debt-fueled deal three years ago.
Rising interest rates have driven up the cost of borrowing, while shoppers have flocked to discounters Aldi and Lidl to shop cheaper.
Asda said it was “fully committed” to cutting its huge debts as it tries to fight off its discount rivals.
But bosses were optimistic about their future in their annual update, which was expected about a month earlier.
They said a new budget range from Just Essentials helped boost annual sales up 7.1 per cent to £21.9bn.
But momentum slowed throughout the year as the grocer struggled to retain shoppers amid persistent inflation.
Sales rose 7.8 percent in the first quarter, but only 2.2 percent in the final quarter, which covered the critical Christmas period.
Mohsin Issa, who oversees day-to-day operations rather than being a chief executive, said: “Asda is a supermarket powerhouse built on solid foundations.”
And finance chief Michael Gleeson said more low-cost ranges would “hopefully give customers fewer reasons to switch to Lidl and Aldi”.
He said his team was “absolutely confident that we are doing the right thing in terms of investment and overall pricing proposition for the long term.”
“Market share tends to go down and down in the short term,” he added. Earlier this month, NIQ data showed Asda’s growth is stalling, with sales rising just 0.8 per cent in the past 12 weeks.
The report suggests Asda has been overtaken by Aldi as the country’s third most popular supermarket.
Clive Black, retail analyst at Shore Capital, said Asda is losing “a lot of customers” as it struggles to turn around its fortunes.
“It has a relatively weak own or private label range in terms of quality, especially compared to Aldi and Lidl, let alone Tesco and Sainsbury’s,” Black said. “For Asda to compare his lines to Marks & Spencer was crazy.”
Rising sales saw annual profits rise 24 per cent to £1bn, but the company only shared a measure of its profits.
The news comes as Zuber Issa prepares to sell its stake to private equity group TDR Capital. He is believed to be close to offloading his 22.5 percent stake.