Leadership Uncertainty and Debt Cloud the Future of Asda and EG Group

The abrupt resignation of billionaire Mohsin Issa as CEO of Asda, followed by his pivot to focus solely on his petrol forecourt business, EG Group, has sent ripples through the UK retail and energy sectors. While Issa’s decision to prioritize EG—a fast-growing enterprise with over 1,200 sites—reflects strategic realignment, the void left at Asda, combined with its staggering £3.8 billion net debt, raises critical questions for investors. This analysis explores the implications of Issa’s exit, the stalled CEO search at Asda, and the broader financial risks and opportunities tied to both companies.

The Catalyst for Issa’s Exit: Family Rifts and Retail Decline

Mohsin’s departure from Asda in 2024 was driven by a confluence of personal and business factors. His high-profile relationship with Victoria Price, a partner at EY, reportedly strained his relationship with his brother Zuber, Asda’s co-owner. This familial rift culminated in Zuber selling his 22.5% stake in Asda in early 2024, a move that underscored the brothers’ diverging priorities.

Asda’s performance further fueled the split. Under the Issa brothers and private equity firm TDR Capital, the supermarket’s market share plummeted to 12.6% in 2024, down from 16.4% in 2020. Sales fell by 5.2% year-on-year, while debt swelled to over £8.5 billion (including lease liabilities). These struggles, coupled with staff morale crises due to cost-cutting measures, prompted chairman Lord Stuart Rose to label Asda’s performance “embarrassing.”

The CEO Vacuum: A Leadership Crisis Unfolds

Despite Mohsin stepping down, Asda remains in limbo. The search for a permanent CEO, led by interim chairman Allan Leighton, has been a “car crash,” according to industry insiders. Candidates have declined the role due to Asda’s debt burden, operational chaos, and lingering influence of the Issa brothers. Leighton’s January 2025 relaunch of the recruitment process emphasized collaboration over hierarchy, but no candidate has been appointed.

The £3.8 billion net debt, combined with a £4.7 billion EBITDA (earnings before interest, taxes, depreciation, and amortization) shortfall since 2020, paints a dire financial picture. Meanwhile, competitors like Aldi and Lidl continue to gain market share, eroding Asda’s pricing power.

EG Group’s Growth Amid Uncertainty

While Asda flounders, EG Group—now under Mohsin’s sole leadership—seeks to capitalize on rising fuel demand and forecourt convenience. The company’s 2023 acquisition of 100-plus BP sites and expansion into electric vehicle charging infrastructure highlights its ambitions. However, EG’s success hinges on oil price stability and regulatory approvals for further acquisitions.

EG’s 12% market share in 2024 lags behind giants like Shell (28%) and BP (25%), but its aggressive acquisition strategy positions it for growth.

Investment Risks and Opportunities

Asda:
- Risks: High debt limits its ability to compete on price or invest in stores. The lack of a CEO delays strategic decisions, such as IT system upgrades or supply chain fixes.
- Opportunities: A turnaround CEO could leverage Asda’s scale (23% of UK groceries by volume) and the George clothing brand.

EG Group:
- Risks: Fuel demand volatility and competition from majors like Shell could squeeze margins.
- Opportunities: Forecourt convenience stores and EV charging stations align with consumer trends.

Conclusion: A Delicate Balancing Act

The Issa brothers’ exit marks a pivotal moment for both Asda and EG Group. Asda’s fate hinges on securing a CEO capable of stabilizing operations and reducing debt—a challenge compounded by its £8.5 billion liabilities and 12.5% market share (versus Sainsbury’s 15.5%). Meanwhile, EG’s growth depends on execution in a fragmented sector.

Investors should exercise caution. Asda’s stock, if ever publicly traded again, would likely face significant valuation discounts due to its debt and leadership void. EG, while less leveraged, faces regulatory and macroeconomic headwinds. For now, the safest bet remains watching from the sidelines until clarity emerges on Asda’s leadership and EG’s expansion trajectory.

Asda’s absence from this data underscores its privatized status, but the sector’s overall decline—driven by discounters—hints at the uphill battle ahead. Investors should prioritize companies with robust balance sheets and clear strategies in both retail and energy sectors.