Asda has agreed to sell 24 of its stores and a depot in a bid to shore up its finances and restore its competitiveness against rivals.
The debt-laden grocery giant said it would secure £568million by offloading the sites. After selling the sites, the business will then lease them back and continue to operate them.
Asda said all locations affected would continue to run as normal, with no changes for their staff.
Two separate buyers have agreed to purchase the 24 stores and depot run by the embattled supermarket chain.
Ten of the stores and an Asda depot in Lutterworth, Leicestershire, will be sold to US investment firm Blue Owl Capital, while a further 10 will be flogged to Blue Owl’s joint venture with Supermarket Income REIT.
Asda said a further four stores would be sold to London-based DTZ investors.
The supermarket chain has not released a list of the stores being offloaded.
Tough at the top: Allan Leighton, chair of Asda, is undertaking a turnaround process at the supermarket chain
Both deals will see Asda rent back the properties on 25-year lease deals, with options to extend by a further ten years.
It is understood the deals are part of efforts to strengthen Asda’s financial position as it continues to plough ahead with its turnaround plans to improve its performance under boss Allan Leighton.
An Asda spokesman 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.’
The supermarket is due to report on its trading over the third quarter and latest financial position next week.
Asda had £3.8billion in net debt at the end of last year, according to its latest annual accounts.
In the 12 weeks to 1 November, Asda’s sales fell by 6.5 per cent, making Asda by far the worst performer among Britain’s grocers, according to researcher NIQ.
The slump was ‘remarkable’ said Clive Black, an analyst at broker Shore Capital, adding ‘Asda’s momentum is exceptionally weak’ going into the key Christmas trading period.
Asda’s parent group saw a near £600million loss last year as sales fell and the cost of servicing its debt pile increased.
Former Asda boss Allan Leighton is the chain’s executive chairman and attempting to return the business to its low-cost roots. He has already revived the That’s Asda Price tagline.
The business has been without a chief executive for four years.
Nadine Houghton, a national officer for the GMB union, said: ‘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?’
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