Supermarket giant Asda is selling 24 stores and a major distribution depot for £568 million in a sale-and-leaseback deal as it battles to manage its hefty debt pile.

The Leeds-based retailer will immediately rent back all the properties under 25-year leases, with options to extend for another 10 years, meaning no changes for shoppers or staff at the affected sites.

Two buyers have acquired the assets. US investment firm Blue Owl Capital has purchased 20 stores and Asda’s depot in Lutterworth, Leicestershire.

London-based DTZ Investors has bought four stores in Small Heath, Birmingham; Colindale, London; Coventry Abbey Park; and Killingbeck, Leeds.

The deal comes as Asda continues to lose ground to rivals, with sales falling 3.9% in the three months to November 2nd. Market share dropped by one percentage point compared to the previous year, despite efforts by Chairman Allan Leighton to win back customers with price cuts.

The GMB union, which represents thousands of Asda workers, has sharply criticised the move as “asset stripping” by the private equity-owned chain.

Nadine Houghton, GMB’s national officer, said: “Debt is up, lease liabilities are up, interest payments are up – but market share and staff morale is rock bottom.

GMB members working on the shop floor and in distribution continue to report declining health and safety standards and increased stress levels brought about through asset stripping.”

Retail analysts have described the sale as a “sign of weakness”. Clive Black from Shore Capital said the deal might help pay off debt but would mean higher rents and less cash for day-to-day operations.

Black was quoted as saying: “If trading was hunky dory, that can be accommodated in the big scheme of things, but that is not the case. Recent market share data has been very poor for grocery. It all feels rather tight.”

Asda had £3.8 billion in net debt at the end of 2024, the same level as the previous year. The supermarket was acquired from Walmart in 2020 by billionaires Zuber and Mohsin Issa, backed by private equity firm TDR Capital, in a highly leveraged £6.8bn deal.

TDR now controls the group after buying out Zuber, while Mohsin retains a 22% stake. Walmart keeps a 10% holding.

This is not the first time Asda has used such deals to raise cash. The retailer previously sold most of its warehouses for £1.7bn in 2021 and 25 supermarkets for £650m two years later, also with leaseback arrangements.

Reports suggest the money raised from the latest deal will be used to pay off a debt to Walmart rather than for investment in stores or cutting the group’s main debts.

An Asda spokesperson defended the strategy, saying: “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.”

Asda operates 579 supermarkets, 517 Express convenience stores and 29 Asda Living outlets across the UK. The company is expected to release its quarterly trading results next week.