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Wal-Mart's UK CEO Swap Can't Cure a Sales Struggle

Wal-Mart's UK CEO Swap Can't Cure a Sales Struggle
(DreamsTime)

By    |   Monday, 30 October 2017 07:54 AM

Another year, another Asda CEO.

The U.K. arm of Wal-Mart Stores Inc. on Monday appointed Roger Burnley as chief executive officer, taking over from Sean Clarke.

Burnley's route to the top job has been a circuitous one. Recruited from J Sainsbury Plc, he was named ASDA chief operating officer two years ago, paving the way for him to succeed then-CEO Andy Clarke in the next two to three years.

But in June 2016 -- just days after confirming that Burnley was likely to follow him -- Andy Clarke was ousted and long-time Wal-Mart executive Sean Clarke (no relation) slid into the top role.

Asda certainly needed -- and still needs -- some radical surgery. In the preceding year, its sales had fallen behind those of its so-called big four supermarket rivals Tesco Plc, Sainsbury and Wm Morrison Supermarkets Plc. Asda was always known for its cheap prices. When the German discounters Aldi and Lidl began to undercut it, sparking a vicious price war in the broader grocery sector, it had little to fall back on.

Sean Clarke got back to retail basics, cutting prices and improving the quality of products. It had already made big cost reductions under Andy Clarke. And these actions had started to pay off. Asda recorded its first same store sales growth for three years in the second quarter.

But Burnley takes over at a delicate time.

U.K. consumer spending is already being squeezed by inflation outstripping wage growth, and a central bank interest rate increase could exacerbate this pressure. Meanwhile, Aldi and Lidl are showing no sign of curtailing their expansion. Tesco's buying power should be boosted by its purchase of Booker, while Morrison is also getting its act together.

The new CEO is a respected retailer with a common touch. He should chime with Asda's customers and employees.

But as Gadfly has argued, Wal-Mart should look at a sale of Asda, which could be worth about 8 billion pounds ($10.6 billion) to 10 billion pounds, based on its property and the valuation of U.K. supermarket rivals.

Asda could be worth £10 billion

With the twin headwinds of competition from Amazon.com Inc. and the arrival of Lidl in the U.S., it has enough to be getting on with in its domestic market.

For years Asda's U.K. television advertisements featured a cheeky image of how the chain could leave customers more money to spend elsewhere, namely, a succession of shoppers tapping the back pocket of their trousers. If Burnley can manage to nurture Asda's nascent recovery just enough to appear that the parent is not selling out at the bottom, then that gesture might apply to Wal-Mart's coffers too.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Andrea Felsted is a Bloomberg Gadfly columnist covering the consumer and retail industries. She previously worked at the Financial Times.

© Copyright 2019 Bloomberg L.P. All Rights Reserved.

   
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Another year, another Asda CEO.The U.K. arm of Wal-Mart Stores Inc. on Monday appointed Roger Burnley as chief executive officer, taking over from Sean Clarke.
walmart, uk, ceo, sales
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2017-54-30
Monday, 30 October 2017 07:54 AM
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