Asda needs to be ‘ruthless’ about simplifying its operations

The returning boss of Asda told staff that turning around the embattled supermarket chain would not be easy, in his first message to the workforce since making a surprise comeback at the grocer.
Allan Leighton, 71, was confirmed as executive chairman of the debt-laden group on Saturday, replacing fellow retail veteran Stuart Rose, as the search continues for a chief executive.
“We’ve got to get back to our Asda Price position. That’s what sets us apart from our competition,” Leighton wrote in his email to staff.
He added: “I wouldn’t have come back if I didn’t think it was possible. We’ve been here before and I’m confident we can do it again.”
Leighton was part of the executive team that steered Asda from the verge of bankruptcy and towards a £6.7 billion sale to Walmart in 1999. He said the grocer had to “stop disappointing our customers on availability”, adding: “Put simply, if we don’t have it on the shelf, our customers can’t buy it.”
The company would need to be “ruthless” about simplifying its operations and “not adding in unnecessary complexity”. Leighton said: “While these things are simple, I know they aren’t easy.”
The Leeds-based retailer has endured a turbulent few years since being taken over by TDR Capital, the private equity firm, and the billionaire Issa Brothers in a £6.8 billion leveraged buyout in 2021.
Of the £6.8 billion paid, the majority was funded by raising £4 billion in high-yield bonds and leveraged loans, at a time when interest rates were at historic lows. However, the rapid rise in borrowing costs since the transaction was agreed has left Asda unable to compete as aggressively on price as rivals.
Figures from Kantar show that Asda’s share of the UK grocery market slipped to 12.5 per cent over the 12 weeks to November 3, down from 13.5 per cent a year earlier.
Rose, 75, has been leading the company since Mohsin Issa stepped-down from overseeing the grocer’s operations in September, while a lengthy search for a permanent chief executive continues.
Asda is 67.5 per cent-owned by TDR Capital, with Mohsin Issa holding 22.5 per cent and Walmart retaining 10 per cent. His brother, Zuber, sold his 22.5 per cent stake to TDR this year to focus on other businesses. Asda declined to comment on the email.