Asda delivers more than £1bn of underlying profit and "significant strategic progress" in 2023

It came as supermarket sales, excluding fuel, grew 5.4 per cent on a like-for-like basis, which excludes the impact of new stores opening during the year.

The group, which runs fashion brand George, said clothing sales edged up by 3.4 per cent to total £1.5bn.

In a statement, Asda said: “As a consumer champion, Asda reduced prices on more than 800 popular everyday products in 2023, passing on the benefits of commodity price deflation where it occurred and maintaining its position as the lowest-priced traditional supermarket. Total sales, excluding fuel, increased by 7.1 per cent to £21.9bn last year.

“Asda also continued to invest in enhancing the quality of its food, building on the earlier successful launch of its budget-friendly Just Essentials brand, with a significant own-label transformation programme.

"This saw Asda launch thousands of new or improved food lines to drive quality perceptions among customers last year, including a refresh of its entire ready meals range.

“The £1.078bn Adjusted EBITDA after rent includes contributions of £27m from the former EG UK stores, based on two months trading, and £54m from former Co-op stores – demonstrating the strategic value of acquiring these businesses in the growing convenience and food-to-go sectors.”

Mohsin Issa, Asda’s Co-owner, said: “Asda is a supermarket powerhouse built on rock-solid foundations – as our strong annual results and the 18m customers who shop with us every week demonstrate.

"Our strategy is all about growth and Asda increased underlying profit to more than £1bn and like-for-like sales by over 5 per cent last year, while significantly growing free cashflow and reducing leverage.

"We are committed to doing the right thing for customers, colleagues and local communities – and are putting in place the strategic building blocks to set up Asda for long-term success.

“As well as investing in price to maintain our position as the cheapest traditional supermarket, we continued to invest in further enhancing the quality of our products, building on the earlier successful launch of the budget-friendly Just Essentials brand with a significant own-label transformation programme.

He added: "This saw us launch thousands of new and improved food lines to drive quality perception among consumers, including a refresh of our entire ready meals range.

“This investment includes non-food and saw George maintain its market leadership position in back-to-school wear and deliver total clothing sales growth of 3.4 per cent last year – helped by our ongoing focus on price, quality and style.

“We continue to strengthen the business by expanding in the growing convenience and food-to-go sectors, leveraging our loyalty app and driving innovation in online grocery where we are the UK’s second largest supermarket.

“I would like to thank our colleagues for their hard work over the last year, serving millions of customers each week. Our recent investment in pay – a record £150m – will see Asda become the highest paying traditional supermarket in the UK and reflects how much we value the contribution of every colleague.”