Asda paid Walmart £1.1bn dividend before sale, accounts reveal

Asda paid an intercompany cash dividend of £1.15bn to former parent company Walmart in March this year, despite profits being dented by the onset of the pandemic, according to recently published company accounts. 

The payout came only months before the American retail giant sold the business to billionaire Issa Brothers for £6.8bn in October. 

The payment was revealed as the supermarket group released its statutory accounts for the financial year to 31 December 2019, which also showed that operating profit fell to £584.2m, down from £803.2m the previous year. 

The group said profit was “adversely affected” by a number of one-off costs, including an increase in share option charges, mainly due to the Asda colleague Sharesave plan and property costs.

Looking ahead, Asda noted that the business will invest over £1bn in the next three years under its new ownership in a bid to “further strengthen the customer proposition and supply chain”.

However the Issa brothers’ recent takeover has caught the attention of the CMA, with the authority announcing plans this month to launch a ‘phase one inquiry’ into the deal. 

During the investigation the CMA will look at whether the deal may be expected to result in a “substantial lessening” of competition within any market or markets in the United Kingdom for goods or services.

It has been reported that the current statutory deadline for the CMA to announce its decision is 18 February 2021.

Rob McWilliam, CFO at Asda, said:“This annual report is a record of the progress we made in investing for customers and advancing delivery of our strategy in 2019.

“During the year, we invested incrementally in our customer offer, delivering lower prices to millions of customers and improving the quality of thousands of own-brand products through use of healthier ingredients and more sustainable packaging. We also refreshed 37 stores with our latest proposition.”

He added: “Another key milestone was the agreement with Rothesay Life for a buy-in of the Asda Group Pension Scheme. This transaction saw Asda make a one-off payment of £1,174.8m into the scheme and secured the benefits of the 12,300 scheme members. 

“Once the buy-out completes, it will remove all future scheme liabilities from the Walmart and Asda balance sheets – delivering a positive outcome for scheme members, Asda and Walmart.”