Asda’s financial standing has taken another blow, as credit ratings agency S&P downgraded its credit rating from ‘B+’ to ‘B’ in the wake of “significant disruption” from the supermarket’s turnaround plan.
The second credit downgrade for Asda parent Bellis Finco in a matter of weeks – following Fitch’s downgrade in late November – came after Asda published punishing results for Q3, with like-for-like sales down 2.8% in the three months to 30 September, and total revenues down 3.7% excluding fuel.
Bellis Finco will now face higher borrowing costs thanks to the downgrade.
The disruption has largely been caused by severe disruption to operations from the company’s Project Future tech transformation plan to separate from former owner Walmart.
Read more: Has Asda’s turnaround run out of steam before it’s left the station?
Despite the downgrade, S&P was optimistic about Asda’s 2026 prospects, projecting a burgeoning recovery, including “marginal” growth and £1.3bn of adjusted EBITDA.
While its projected debt ratio was above previous S&P estimates, the agency predicted the group would “reestablish its competitive standing in a challenged trading environment in the UK as macroeconomic headwinds persist”.
The ratings agency predicted sales across all business lines would decline, with food sales falling by close to 2%-3% in 2025.
“While Project Future had been largely completed by August 2025, management reported further disruption into September and the fourth quarter, weakening product availability, the online shopping experience, and overall operations,” S&P said.
“Management has confirmed that the rate of incidents of Project Future malfunctioning has significantly slowed since mid-November 2025, but overall, the positive impact of the ’Formula for Growth’ strategy on earnings is delayed by about six months. This has also come at an additional cost, and we now forecast total operating costs related to Project Future to be close to £280m in 2025.”
An Asda spokesman said the company acknowledged S&P’s decision, though emphasised that the short term impact of Project Future was to blame.
”As outlined in our Q3 update, the transition to new systems created significant disruption, which affected performance,” he said.
“That phase is now behind us, and we are seeing clear improvements in key areas such as product availability. Importantly, S&P has maintained a stable outlook, reflecting its confidence in our recovery and in the strength of our value proposition.”
The agency warned further downgrades could come if Project Future faced any more disruption or delay, and the shortfall in earnings persisted longer than estimated.
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