Asda to cut management roles following Christmas setback

Asda Faces Job Cuts Amid Declining Market Share

Asda is preparing to cut over 150 positions after experiencing a significant drop in sales during the Christmas season, which led to its lowest share of the UK grocery market to date.

The supermarket chain is planning to eliminate more than 80 managerial roles along with numerous warehouse jobs as part of a broader cost-cutting initiative.

This move highlights the mounting challenges facing Asda, which continues to lose ground to competitors like Tesco and has yet to turn its performance around.

Consultations regarding redundancies are underway to determine the final number of staff departures, a process expected to further impact morale within the company.

The layoffs are set to affect several major distribution centers, with a focus on reducing the workforce responsible for handling deliveries in larger warehouses.

Asda has confirmed that logistics employees in Yorkshire are at risk as the company considers outsourcing certain parcel operations to delivery firm Evri.

This round of job cuts is the latest in a series of workforce reductions over the past year and a half, led by Chairman Allan Leighton.

Last July, a significant number of in-store managers were let go in an effort to streamline middle management, and hundreds of IT staff were dismissed following issues with a failed technology upgrade.

Leighton has been focused on reducing expenses as he attempts to restore Asda’s market position, which slipped to 11.4% in the 12 weeks leading up to December 28.

During this period, Asda’s sales declined by 4.2%, making it the only major supermarket to see a drop in sales over Christmas.

In contrast, competitors Tesco and Sainsbury’s attracted more shoppers during the holidays, widening the gap between themselves and Asda, which remains the UK’s third-largest supermarket.

Despite having previously led a successful turnaround at Asda in the 1990s, Leighton has yet to achieve similar results since returning to the company.

The supermarket’s struggles began after private equity firm TDR Capital and Mohsin and Zuber Issa acquired the business in 2021, when Asda’s market share was 14.8%.

Financial difficulties have been compounded by investors selling off Asda’s bonds following disappointing holiday sales.

A €1.3 billion (£1.1 billion) loan issued by Asda’s parent company, Bellis Finco, in 2024 has dropped to a record low of 88 cents on the euro, down from nearly 100 cents at the start of the previous year.

The situation worsened after ratings agency Fitch downgraded Asda further into junk status last year, raising the likelihood of increased borrowing costs for the retailer.

Company Response and Future Plans

Industry analysts believe that Asda will need to invest more to lower prices and win back customers, a strategy that could further squeeze profit margins.

Asda has stated that two separate consultations are in progress to enhance efficiency, with no plans to close any distribution centers as a result.

“We are proposing a new regional structure for our transport teams to simplify our distribution network and store deliveries. This would involve establishing eight regional hubs, each managed by a regional transport office,” a spokesperson explained.

They added, “This change would streamline operations, reduce duplicated work, improve flexibility, standardize processes, and decrease our reliance on external agencies and hauliers.”

Another consultation is focused on improving the speed of online order processing.

The spokesperson noted that Asda currently handles 28 million parcels annually through a system not originally designed for such high demand.

“As a result, fewer than half of our stores can currently provide next-day parcel collection, a service now expected by customers from all major retailers.

“By collaborating with Evri, all 1,200 Asda locations will be able to offer next-day collection and returns, giving shoppers a faster and more convenient experience.”