Asda has posted a jump in profits in its first year under the Issa brothers’ ownership as one-off costs related to the coronavirus crisis abated. 

Asda fascia Northampton

The supermarket giant registered a 42% spike in operating profit to £693.1m in 2021, compared to 2020 levels. 

It said the bottom line improvement was “predominantly due to a reduction in Covid-related costs”, including giving 15,000 clinically vulnerable staff full pay for 12 weeks, hiring 22,000 temporary workers and offering home deliveries free of charge to shielding shoppers. 

Total sales across the 12-month period inched up 0.5% year-on-year to £20.4bn, while like-for-likes excluding fuel climbed 0.6%.

Asda attributed the gains to “strong performance” in home and outdoor categories and a return to growth within its George fashion business, following “pandemic-related disruption” in 2020. 

Like-for-likes within Asda’s core grocery category fell 0.5% by comparison compared to 2020 levels. On a two-year basis, food like-for-likes rose 4.6%.    

Asda said online sales dipped 5% during 2021 as lockdown restrictions eased. But it said demand for online grocer orders remained “significantly above pre-pandemic levels”, with sales up 75% compared to 2019.  

The retailer delivered 1 million ecommerce orders in the week before Christmas 2021 and regained its position as UK’s second-largest online grocer by market share. 

Despite that success, like-for-likes across the broader Asda business dropped 2.9% year-on-year during the golden quarter but were up 2.6% on a two-year basis. 

During the year, Asda opened 31 Asda On The Move c-stores on petrol forecourt sites owned by the Issa brothers’ EG Group. It has also introduced new foodservice brands such as Leon, Cinnabon and Sbarro into some of its larger supermarkets. It aims to expand the proposition into 100 supermarkets by the end of 2022.   

Asda co-owner Mohsin Issa said: “When we bought Asda we were clear that we wanted to grow this great business and our ambition is for Asda to regain its position as the UK’s second-largest grocery retailer. We are pleased with the progress made in the six months since we officially took over the business and are confident we can achieve this long-term ambition by providing customers with exceptional value wherever and however they choose to shop with us.”

As previously reported by Retail Week, Asda also today confirmed the launch of its new ‘Just Essentials by Asda’ brand to replace its Smart Price ranges. 

The range will comprise 300 products across fresh meat, fish, poultry, bakery, frozen, cupboard staples and household products including washing-up liquid and toilet paper.

Asda said the new range aims to “help millions of families fight rising living costs”.