Asda interim boss Stuart Rose has launched a no-nonsense defence of its sweeping staff cutbacks and vowed the struggling retailer is “back to being a shopkeeper” after the turmoil of Mohsin Issa’s time at the wheel.
Days after nearly 500 head office staff were made redundant, the stand-in CEO and former M&S boss admitted the supermarket had been distracted by the challenges since its takeover from former owner Walmart, but was now “doing the right thing”.
He spoke as Asda posted its quarter three trading update to 30 September, revealing its financial problems continued, with a 2.5% decline in total revenues excluding fuel to £5.3bn. Like-for-like sales declined 4.8%.
However, Rose – who along with TDR Capital partner Rob Hattrell has taken command of Asda’s turnaround plans following Issa stepping back from the helm in September – said all major food businesses sometimes faced major challenges. He pointed out it was 10 years ago this week that Tesco, now seen to be firing on all cylinders, faced its great financial crisis and trading scandal.
“We have been through a massive change over the last few years, probably the biggest change any retailer has been through,” Rose told The Grocer this morning.
“We’ve doubled our footprint, we’ve expanded convenience, we’ve gone into food to go, we’ve launched Asda rewards and we’ve made a significant progress on the information programmes and this workload has no doubt taken a bit of gloss off our performance in terms of market share and customer experience.
“We know that and that’s why Rob and I are now focusing on getting those things back into the front of mind so what we’re doing is prioritising availability, we are prioritising our front of store, we’re prioritising getting our price managing right.
“We think we’re doing the right thing in a very tough and competitive market.”
Asda’s drastic cutbacks at its headquarters in Leeds and Leicester shocked many staff and observers with their scale and timing, weeks ahead of Christmas. The retailer also issued a new order for staff working from home to return three days a week under a compulsory hybrid working system.
Rose described the decisions as “painful medicine” that Asda needed to take to get back in the race with its competitors.
“We made a few changes this week in terms of the way we operate at head office. We’ve slimmed the operation down and we want to make it more customer-focused.
“Fundamentally it’s a great business and we’ve had to make some changes but we now need to get back to day-to-day shopkeeping.
“I don’t like to admit it, but I’ve been in this business 50 years. You tell me a company that hasn’t been through a difficult time. I was only reflecting last night, it’s the 10th anniversary since Tesco had their big crisis.
“Every business goes through an up and a down. Marks & Spencer went through an up and a down when I went back there in 2003.
“So yes, it’s been painful but it’s been the right thing to do for the business.
“Clearly those people who are leaving the businesses probably won‘t be very polite about me, but that’s life.”
Rose admitted Asda had taken its eye off the ball under Issa but stressed it was now 100% focused on turning around the performance of its stores. He said it was investing another £13m into store hours, on top of the £30m it announced in July before Issa’s decision to step aside.
“I used to have an old boss who used to say if you don’t look out the window every day, one day when you finally do you will find the world has moved on,” Rose said.
“It’s a highly competitive industry. They are not sitting on their backsides at Sainsbury’s or Tesco and we have been very distracted on the really hard yards we’ve had to cover so yes, we take the hit for that but we now realise we have to get back to shopkeeping and we are capable of being good shopkeepers.”
Asked about the timing of the cuts to staff at head office, with just weeks to go before Christmas, he said: “It’s never easy but the argument is its better if you realise that you need to start administering some medicine to do that as soon as possible.
“I want to make sure that we enter January 2025 with a clean sheet.”
Hattrell also defended Asda’s turnaround strategy, saying it was investing massive sums to improve store service, which was starting to show.
“If you add the investment up it’s over £120m annualised and that’s substantial investment. I can see it visible when I’m in stores now, [with] more colleagues available helping customers, and we can see it in our underlying metrics and customer surveys. We are seeing small steps forward of improvement, so we know it’s working.
“We just need to keep relentlessly focusing on it.”
Rose said the search for a new CEO for Asda, which many believe should be its number one priority, was making progress.
“The process is active. I’m very confident we will find the square peg to put in the square hole that we need,” he said.
Asda chief financial officer Michael Gleeson said: “We are taking clear steps to improve store standards and deliver a more consistent experience for customers in whichever format they choose to shop with us.
“These plans are bearing fruit with customer perceptions improving, a continued market outperformance from our George fashion brand and a strong response from customers to the quality and value of the new Exceptional premium lines.
“While these steps have already started to make a difference, we recognise that more work is required to deliver sustained sales growth.”
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