Asda is “not where it should be” since its takeover by TDR Capital and the Issa brothers, admitted former Walmart international boss Judith McKenna.
McKenna led the £6.8bn majority sale of the supermarket in 2021. Having previously spent 17 years at Asda prior to moving to the US, she said its recent struggles “hurt my heart”.
Asda’s market share has slumped significantly over the past year as stores have suffered amid battles with debt, staff disputes and a resource-sapping project to decouple its core IT systems from the legacy Walmart infrastructure.
Reflecting on the performance during a talk at The FT Live Future of Retail conference on Tuesday, McKenna said one of the initial strengths that the Issa brothers brought over other potential Asda buyers was an “entrepreneurship” and an ability to “do something different in UK supermarket retailing”.
“Through circumstances; economy, distraction, whatever that has been. It’s clearly not where it needs to be,” McKenna said.
McKenna singled out the ongoing systems transformation as a key issue, saying she hoped the business completed it ”soon”.
Asda has admitted that the transition – dubbed Project Future – has been a significant drain on resources, having led to issues with staff pay, and pulled resources out of shops.
“It is way harder to get out of systems, than it is to get into them,” McKenna said.
“That is a good business and great colleagues. Ultimately, I wish them well, but does it hurt my heart a little? Yes, it does,” McKenna said.
Asda ownership had been good for Walmart
Walmart still retains a 10% stake in the business, which is now majority owned by Mohsin Issa and TDR after Zuber Issa sold his stake in June. The Issas have denied widespread reports that the split was due to tensions between the brothers.
McKenna remains one of the most high-profile UK grocery figures to crack the US market. Her appearance at the conference is one of her first public talks since she left Walmart in January. She now sits on the board at Unilever.
Given her long association with Asda, McKenna said the decision to sell by Walmart had been “incredibly personally difficult”. However, she said it had been the right thing to do.
While Walmart was generally seen to have lost money through its divestment of Asda, the grocer had brought significant value to Walmart in other ways, particularly through its innovation, she said.
“I don’t believe that Walmart would be doing the kind of things it is doing today on grocery online – it is the biggest grocery home shopping business in the US – had it not got the jump-start that the technology and capability from Asda gave it.
“Very often there is a financial decision, and there is a kind of human/capital decision. Make no mistake – maybe not so much people, but definitely on some of the other things that we did, they made a tremendous difference not just to Walmart US, but around the world.”
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