On Tuesday at an event in Leeds Walmart CEO, Judith McKenna, told Asda staff of a serious consideration of an IPO listing for Asda after their merger deal with rival supermarket chain Sainbury’s was blocked by UK authorities.
“While we are not rushing into anything, I want you to know that we are seriously considering a path to an IPO – a public listing – to strengthen your long-term success,” Ms Kenna said.
The CEO told managers at the Leeds Event, where Asda is based, that an IPO listing could “take years” to achieve.
The news, as I mentioned already, comes after the £15 billion ($19.3 billion) Asda-Sainsbury’s merger was blocked by the UK’s Competition and Markets Authority. Their concern was mainly with higher prices for consumers across all of the supermarkets’ services. This left Walmart in a pickle and thinking about what they’re going to do with the supermarket chain they bought 20 years ago.
This is the first time since the proposed deal Walmart has talked about the future of its UK operations.
“Walmart does not have a one-size-fits-all approach to operating its international markets, but a consistent focus on strong local businesses powered by Walmart” Ms Kenna continued to tell the 1,200 managers at the meeting.
The current Asda chief executive Roger Burnley also spoke at the meeting and told his staff that this news would not change Asda’s current strategy which focuses on lower-prices as they market themselves as a value supermarket. This seems like a good idea seen as the strategy has served them well so far with Asda reporting seven consecutive quarters of like-for-like sales growth. Their value strategy along with more innovation in their own-brand products, better store standards and improvements in its e-commerce operations mean Asda are in a pretty nice place right now.
As apart of their money-saving approach it was announced that Asda will be making £80 million of price cuts by the end of the year as well as testing new technologies within the chain.
The “Scan and Go” initiative is an all-new way to shop that Asda has introduced to 25 stores last week. It involves customers using a handset provided by Asda to use bar-codes to scan items as they shop so they can bag them as they go along. No need for tills, which means less staff, which in turn means saving money.
If the merger deal did go forward Walmart would have kept a 42% stake in the enlarged Sainbury’s-Asda business.