“Smiling’s my favourite,” beams Will Ferrell’s elf Buddy in Asda’s feel-good Christmas ad.

Whilst the Hollywood star’s fee must have blown a hole in even Asda’s considerable budget, the supermarket’s performance has given its owners – the billionaire Issa brothers – something to smile about too.

On Friday, the supermarket announced its best quarterly results since the start of 2021. Whilst its new ownership makes the figures even hazier than in its Walmart past, it does look as if Asda’s time in the supermarket doldrums might finally be over. There is a growing sense things are coming together just in time for this most challenging of golden quarters.

And while it would be wrong to describe the current dire financial backdrop as good news for any business, it has in some ways played into the hands of Asda’s bosses. Walk into an Asda store today and there is a tangible feeling of a retailer that knows what it needs to do to reclaim that number two ranking – even if it has a long way to go yet.

Crucially, Asda has successfully focused on the key factors that have proven winners in the cost of living crisis: value and loyalty.

April’s move to ‘Drop and Lock’ the price of 250 food and drink products was bang in tune with the times. The same applies to May’s relaunch of its value range under the Just Essentials banner. While it may have attracted spurious headlines about stigmatising the poor, 70% of the range’s sales come from new customers – showing it is far from a source of shame.

Kiboshed for years under Walmart, Asda’s belated rollout out of a loyalty card, which went nationwide across all stores in August, has already landed 2.7 million active users.

Together, the moves on value and loyalty are helping to turn the ship around, as proven by Kantar figures showing Asda has picked up 400,000 new shoppers in Q3. Asda claims these new converts are coming from across the range of its supermarket – and discounter – rivals. However, Morrisons is particularly feeling the heat from a rejuvenated rival, and it was no surprise to see it launching more price cuts today in the run-up to Christmas, of which more may be needed.

The Issas’ turnaround remains very much a work in progress. Especially considering analysts have pointed out the figures make no comment of EBITDA performance, which probably doesn’t feature on a happy elf’s wishlist, but is the sort of hard evidence bondholders in the City will want to see on the back of their financing of the takeover.

Meanwhile, the financial quarter has come and gone with still no sign of a replacement for Roger Burnley as CEO. That Asda is showing signs of being back on track is testament to the interim team the owners have assembled.

“They may not yet be Champions League, but the management the Issas have got together includes a lot of solid Championship performers who have managed to get momentum back in the business,” says Shore Capital analyst Clive Black.

Retail Mind founder and former Asda buyer Ged Futter points to the likes of Kris Comerford, who arrived as chief commercial officer in July from Tesco, and Kristian Horabin, made VP of Ambient later that month having been buying director with Aldi, as strengthening the team even in the absence of a CEO.

“From what I hear they have also managed to make sure Mohsin Issa doesn’t move too fast while trying to turn things around,” he says. “The Issas come from a background where they are used to getting things done now, whereas getting Asda back on track is like turning around a super tanker.

“Yet it is starting to happen. I think of all the mults, Asda is the one retailer where you can really see an upwards trajectory in its performance.”

It seems an awfully long time since Asda was attracting such positivity. Maybe Buddy has worked his magic after all.

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