Asda chair Allan Leighton: ‘There is no pressure on me to turn this into a quick fix’

It’s fair to say that 2024 was another tough year for Asda — the latest in a run. For executive chairman Allan Leighton, who returned last November more than 20 years after departing as chief executive, many of the grocer’s struggles over the last few years have been “self-inflicted”.

Since coming back, Leighton has refreshed the senior management team with a number of ex-Asda appointments, reintroduced Asda Price and price Rollback and overseen some restructuring and cost-cutting measures.

“We knew coming in that we’ve got three main issues that we’re dealing with. One is price and our price gap. The second is availability and continuing to improve that. And then an issue around a whole sort of range architecture that got over-SKUd from where we need to be,” Leighton said this morning.

“We’re making progress on all of those,” he maintained. “We started off the back of Rollback to open a bit of a price gap. Availability is improving by the day, and in pretty good shape. And the work on the range is beginning to start.

“I’m relatively pleased with the progress we’ve made so far”.

Rollback front and centre

Despite the leaps Asda has made in the four or so months since Leighton’s return, he is under no illusions that there’s still a lot to do.

He has big plans in particular for Asda Rollback. Relaunched in January, the scheme currently covers around 25% of Asda products, but Leighton and his team’s goal is to “get probably 80% of the range being rolled back” by the end of 2025, and to shift its entire product range to a new low ‘Asda Price’ by the end of 2026.

He also says that Asda currently stocks around 30,000 SKUs, and thinks the ideal range would sit more around the 25,000 to 26,000 SKU range.

Along with investment in price and range, Asda has already invested some £43m in stores and staffing in the second half of 2024. Despite that, Leighton said he still has a “significant war chest” to continue investing in the business.

“What we’re flagging is that all of this will represent a significant investment that will materially reduce our profits this year as we start to rebuild and reset the business”.

“I look at this as an investment warning, rather than a profit warning—and a sign that we have built a significant war chest [for investment]. Obviously the art is in how we utilise that. It’s not about the price that it’ll cost Asda, but what impact that investment will have in terms of putting great prices in our customer’s pockets”.

There are still big headaches for the retailer which Leighton is keenly aware of. Not least the ongoing and painful separation of the grocer’s IT infrastructure from its former parent company Walmart.

Earlier this week it was reported that the business would be cutting 200 jobs as part of the ongoing £800m IT programme—called ‘Project Future’. It represented the second major round of redundancies at the grocer in five months.

Leighton doesn’t see it as cost-cutting though. “It’s the absolute opposite of cost-cutting,” he said. “We see it as part of our vertical integration, and because we see that for the opportunity that it is, we want to run it inside the business rather than outside the business.

“I look at this as an investment warning, rather than a profit warning—and a sign that we have built a significant war chest [for investment]”

“It’s part of the growth strategy, particularly in terms of fresh food, and has little to do with cost-saving”.

The group’s core grocery offer is still performing sluggishly. Asda reported one of its worst Christmas trading periods in recent memory, and its market share has only just begun to recover after a long period of being consistently in retreat. 

While its non-food offer, and in particular fashion brand George at Asda, enjoyed strong trading in 2024, grocery offers struggled and total and like-for-like sales were down as a result.

“Sales are disappointing,” Leighton admits. “Profits are ok”. He points out that the reintroduction of Rollback and Asda Price is already having a positive effect on grocery sales and consumer behaviour.

“The early signs are encouraging in terms of simplifying the business, motivating our colleagues, and Rollback lines are certainly playing a bigger part in customer baskets,” he said. “You can absolutely see that”.

Headhunting a chief executive

Asda is now also entering its fourth year without a dedicated chief executive, following the exit of Roger Burnley in August 2021.

While Leighton was keen to dispel rumours that Asda is struggling to find a candidate for the role, he emphasised that he was looking for the “right person” to lead the business for the long term.

“We will have no problem in finding a new chief executive,” he said. “In fact, the opposite is probably true at this moment in time. But I think it’s very important to see exactly where we are and then make sure that we get the right person.

“You need to think about them in periods of 10 years,” he added. “Because we’re building a long-term strategy, and we need a long-term boss to ride along on top of that”.

Leighton’s views on finding a new chief executive to run the business are in keeping with his wider approach to the turnaround.

“There’s no pressure on me or the business to turn this into a quick fix,” he said. “It’s not a quick fix. A quick fix would be completely the wrong thing to do. This is the start of a strategic investment as we build the right fix, and as we build the business for the longer term”.