Business
UK supermarket Asda ‘lost the plot’ but is fixable, says chairman
Global Banking & Finance Review®
Company
By James Davey
LONDON (Reuters) – Asda, Britain’s third largest supermarket, “lost the plot” but can be fixed, its chairman said on Friday as it reported another slide in sales and warned measures in last week’s budget would cost the company 100 million pounds ($130 million).
The group, majority owned by private equity firm TDR Capital, said its like-for-like sales fell by 4.8% in the third quarter to end-September, a slight improvement on the previous quarter’s 5.3% dip but still a major underperformance versus industry leader Tesco and No. 2 Sainsbury’s.
“We’ve slightly lost the plot in terms of giving them (customers) what they want on a daily basis,” chairman Stuart Rose told Reuters.
“Our stores, they’re not as nice as I’d like them to be in terms of the experience and the visuals. They’re not as good as they should be in terms of the service we give our customers on availability and we’ve probably lost a bit of sharpness on price,” the veteran retailer said.
“They are operational things, which any shopkeeper can fix,” added Rose, who assumed the executive responsibilities of co-owner Mohsin Issa in September.
He said a 30 million pound investment in more worker hours had made a difference.
“That’s been noticed by our customers,” he said, noting a further 13 million pounds will be invested this quarter.
Analysts say Asda has been hampered by the cost of servicing the debt it took on when Mohsin and Zuber Issa and TDR Capital bought 90% of the group from Walmart in a 6.8 billion pound deal in 2021. Net debt was 3.8 billion pounds at end-Sept.
Since the deal, Asda’s share of the grocery market has fallen from 14.1% to 12.6%, according to market researcher Kantar.
Rose said management had been absorbed by a doubling in store numbers to 1,200 with an expansion into the convenience market and by a technology migration from Walmart.
He said National Insurance changes would cost Asda 100 million pounds next year and like other retailers warned “it will probably be inflationary to some degree.
($1 = 0.7714 pounds)
(Reporting by James Davey, Editing by Paul Sandle)
Like-for-like sales refer to the revenue generated by stores that have been open for a year or more, providing a more accurate measure of a company's performance over time.
Private equity involves investment funds that buy and restructure companies not listed on public exchanges, often aiming to improve profitability before selling them for a profit.
Operational efficiency refers to the ability of an organization to deliver products or services in the most cost-effective manner without compromising quality.
Market share is the percentage of an industry's sales that a particular company controls, reflecting its competitiveness and presence in the market.
Explore more articles in the Business category
