Allan Leighton will need time as well as money to turn Asda around

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When Amazon acquired Whole Foods Market in 2017, the news was enough to send shares in supermarkets, not only in the US but in the UK and Europe, into a tailspin. Tesco was one of the worst affected: shares fell almost 10%. And look how well that deal went for Amazon!

It’s a point worth remembering when trying to explain the market’s reaction to Asda’s poor results last week, or rather, the “significant war chest” new boss Allan Leighton has promised to compete against its UK rivals. Tesco’s share price has slumped by 14% since last Friday. Sainsbury’s and M&S have also been materially impacted.

Asda is the UK’s third biggest supermarket chain. And having secured more cash from owners TDR Capital – a US private equity giant with over €15bn of assets under its management – Leighton is going to pump up the volume on the newly returned Asda Rollbacks, invest six million more hours in the stores and cut 6,000 lines from its bloated range.

It’s a playbook Leighton has used before. As he said when he dusted down the DeLorean in November: “It’s back to the future – with modernity”. So the pocket tap is back, but now fronted by Joe Wicks. And he’s ‘putting the band back together’, persuading the likes of Jo Whitfield, Ade McKeon, David Lepley and Gavin Chappell to sign back up. But attracting new talent is also crucial. He’s even had nine applications for the vacant CEO position, who could do the job, he told us in an exclusive interview this week.

But Asda is a long way away from achieving the material impact on its rivals envisaged by the City’s writedowns. It’s taken years to lose the momentum and goodwill of its most loyal shoppers. Years of underinvestment in stores, systems, people, products, pricing. And if his turnaround plan succeeds, the time frame will be equally lengthy (Leighton estimates 10 years), not the 18 months the City supposedly builds into its valuations. In that time, those rivals will also change. And it’s not just Tesco, Sainsbury’s and M&S Asda is competing against. It’s also Aldi and Lidl. And both are twice as big as Tesco.