Asda, the UK's third-largest grocer, has announced its first quarterly sales growth in over two years, with executive chair Allan Leighton declaring a 0.2% rise in like-for-like sales (excluding fuel) for the three months to end of June as 'a huge milestone' and 'psychologically important for the business.' This comes after a previous quarter saw sales fall 2.3%, and marks the first uptick since early 2024.

Leighton attributes the turnaround to stronger pricing, increased customer traffic, and improved online momentum - previously 'the biggest drag.' The company has been recovering from a 'traumatic and expensive' IT overhaul following its £6.8bn acquisition by the Issa brothers and TDR Capital in 2020. TDR now controls the business, which has been grappling with falling sales, profits, and a hefty debt pile, while shelling out close to £1bn on technology revamps.

Leighton, who returned in November 2024 after a 20-year absence, faces stiff competition from discounters Aldi and Lidl, as well as Tesco and Sainsbury's. Aldi is now less than one percentage point behind Asda in market share and growing faster, threatening to snatch the third-place spot. But Leighton insists it's not inevitable, pointing to a new deal with online specialist Ocado to improve Asda's website and delivery systems starting next year.

Food sales led the growth, up 0.7% at established stores, while clothing and non-food dipped due to a tough market and the late August bank holiday. Leighton also noted inflation hitting produce like tomatoes and cucumbers from the hot dry summer, but said Asda is managing stocks and petrol pricing well despite high fuel prices linked to the war in Iran. 'Produce is the pinch point,' he said.

On the political front, Leighton remains cautiously optimistic but notes shoppers are waiting to see how things pan out with the autumn budget. He praised John Healey as chancellor - 'very sensible and objective' - but stressed that 'clarity on the budget and economic plan' is key. He criticized the Labour government's economic policy for inhibiting growth and called for measures like excluding retailers from additional business rates on larger buildings. 'That has got to be by not pulling more cost into business,' he added, presumably while crossing his fingers for a bit of retail-friendly policy.