Change at the top for ASDA

Continued poor results show new leadership is needed

Sean Clarke’s short spell as ASDA UK President and CEO will come to an end at the start of 2018 as the embattled grocer looks to former Sainsbury’s executive Roger Burnley in an attempt to finally overturn a string of desperate results.

The move does not come as a major surprise, however, as Roger Burnley had been widely tipped as a successor in waiting for the top spot at ASDA UK when he joined in October 2016 as deputy chief executive. However, although ASDA is keen to portray this as a seamless handover, we would expect that had results of truly turned a corner, Clarke would be continuing to run this business through 2018.

Clarke took the helm in July 2016 with the value grocer in dire straits, having just announced l-f-l sales decline for the sixth consecutive quarter, and seemingly unable to rebuff the aggressive expansion of Aldi and Lidl since the financial crisis. Despite continuously coming up against negative comparatives over the last 15 months, ASDA maintained consecutive poor results, finishing FY2016 with l-f-ls of -5.7%, followed by -2.8% in Q1 of FY2017. While ASDA’s most recent Q2 results showed a rise of 0.7%, its first positive l-f-l result in 12 quarters, in comparison to its competitors this was hardly a cause for celebration. Morrisons (+2.6%), Tesco and Sainsbury’s (both +2.3%) all posted significantly better results in similar time periods, with average CPI inflation of 2.6% over the three months from April to June the main driver behind ASDA’s return to positive growth, rather than any real improvement in its proposition.

Roger Burnley faces an uphill battle when he takes over after Christmas, with the discounters expanding apace, premiumising their ranges and developing consumer trust in their own brand items. ASDA must firstly revamp its stores to meet the improved expectations of shoppers following increased investments from the other big four players, and the discounters. It must then find a place in the market to distinguish itself from those competitors.

– By Tom Berry, Food & Grocery Analyst, GlobalData. GlobalData.com | LinkedIn | Twitter