Asda: ‘It’s going to take time to rebuild’ says new boss
UK supermarket giant Asda has dominated headlines for the last year for a host of different reasons: turmoil at the top, declining market share and issues with a significant IT upgrade.
The grocer’s market share fell 5.8 per cent between December 2023 and 2024, while the market share of all other major UK supermarkets grew.
“Everyone is focused on making Asda the number one choice again for busy hard-working families who demand value.
“Looking ahead we still have plenty of work to get our business firing on all cylinders again… we will undertake a substantive and well backed programme of investment in price, availability and the shopping experience to deliver this,” Leighton said.
‘This is not a quick fix’
In an earnings call this morning, Leighton said: “There is absolutely no pressure on me or the business to make [the turnaround] a quick thing. This is not about a quick fix. This is about a right fix for the long term, and then it’s going to take time to rebuild the business.”
“These things can take three to five years to do. That doesn’t mean you don’t get there for three years, you make progress along the way.”
“But [we want] to rebuild this business in a way which is enduring, so you end up with a decade of growth,” he added.
From August 2021 to September 2024, Mohsin served as Asda’s chief executive but stepped down to concentrate on his petrol forecourts business, EG Group.
While Asda is still without a CEO, former CEO Allen Leighton stepped in last November as executive chairman.
Last week, Leighton told The Times that the Issa brothers had “ripped the heart out of the colleagues”.
He added that the brothers had “ripped all the hours out of the stores” in a bid to cut costs. “We put all the hours back.”
It’s not the only problem the supermarket has faced: declining market share, sales, and multiple executive team shake-ups have proved repeated headaches for Asda.
According to The Telegraph, a lengthy and expensive split from its previous owner, Walmart, has also cost the grocer £800m.
Lower prices and a better experience
Leighton wants to turn Asda into a growing, dynamic business again—”one of the great places in the UK to work.”
“That’s what drove the success of it last time,” he said. Leighton oversaw a successful turnaround of Asda in the late 1990s, which eventually included its sale to Walmart.
This time, the focus is on fixing the basics and “restoring DNA”.
That means lower prices, a better customer experience and improvements in product availability.
The company is in the process of undertaking a “significant” investment in the above. While it did not disclose details of the sum, it said the investment would “materially reduce our profitability this year, which we expect to reverse as our market share recovers and improves over time.”
In January, Asda relaunched its Rollback programme, with an average price reduction of 25 per cent across 4,000 products, Rollback has now been expanded to roughly a quarter of Asda’s entire range, the company said.
“Our objective is to be… five to 10 per cent lower price than any other supermarket business. That’s where we’ve been in the past, and that’s where our model really works,” Leighton said.
As for Project Future, relating to its split with Walmart, Asda expects the move to be completed by the end of the year.
One issue for Asda, however, is wage costs. As with all other businesses, it will face higher national insurance contributions in April.
The grocer estimated the bill at £75m to £80m this year.
Leighton said that the cost “will put pressure on growth”, but that the tax will not stop the business from investing or reducing headcount.
“It will have a material impact on our profitability, because we’re determined to invest [in] the company… The major the pressure is not really on headcount. The pressure is on growth.”