Asda: Leadership Drama and Market Share Loss Weigh on British Supermarket Giant

The British retail company Asda is once again in the public spotlight as further changes at the top management level were announced. Co-owner Mohsin Issa, who had led the search for a new CEO for the United Kingdom’s third-largest supermarket for nearly two years, is stepping back from operational management. Until a permanent CEO is appointed, Lord Stuart Rose, Asda’s chairman, and Rob Hattrell, a senior executive at major shareholder TDR Capital, will take over daily operations. Issa had emphasized his suitability for the position during a parliamentary hearing last December, while Asda was transitioning away from the IT systems of former owner Walmart. The takeover by the Issa brothers and TDR Capital occurred in 2020 for £6.8 billion. The challenges for Asda are significant. Debt is high and sales are declining. According to Kantar, Asda’s market share fell from 14.8 percent in February 2021 to 12.6 percent in August. During the same period, German discounters Aldi and Lidl, as well as Tesco, gained market share. Asda's net debt amounted to £3.9 billion at the end of June; refinancing of more than £3.2 billion took place in May. Richard Lim, CEO of Retail Economics, sees Asda falling behind: "Asda seems to be trailing the competition in terms of offering and consumer needs, and this is reflected in the market share." Mohsin Issa, who remains on Asda’s board, is now focusing on the gas station operator EG Group, which he and his brother Zuber founded. Zuber has sold his shares in Asda to TDR Capital and will also withdraw from the operational business of EG Group. The separation of the brothers' business activities was fueled by intense public and political pressure. In addition to these structural changes, Asda has also filled key positions, including Matt Heslop from Lidl, CFO Michael Gleeson from Morrisons, and food chief Kris Comerford from Tesco. According to a headhunter, potential CEO candidates face obstacles due to the lack of autonomy under Mohsin Issa's influence. Asda itself did not comment on the challenges of the CEO search. Under Mohsin’s leadership, Asda has attempted to expand into the convenience store sector through acquisitions, increasing the number of stores from 623 to 1,200. Investments were also made in store cleanliness and additional cashiers, while a loyalty program with six million active customers was launched. Lord Rose admitted to the Daily Telegraph last month that Asda’s downturn under his watch was embarrassing and a change in leadership was necessary. Previously, Judith McKenna from Walmart had emphasized that Asda is "obviously not where it should be" and pointed to "distractions." The IT overhaul process must be completed by the end of the year to avoid fees from Walmart. McKenna hopes for a quick completion and highlighted Asda’s good business practices and capable staff.