Asda Takes Axe To Jobs Amid Grocery Price War

Asda is to cut hundreds of jobs as a brutal industry price war intensified by the growth of discount rivals hits the UK's third-largest supermarket chain.

Sky News has learnt that Asda, which is owned by Wal-Mart, the world's biggest retailer, is to inform staff this week about the latest round of redundancies, which will be largely focused on its head office in Leeds.

The cuts will come after most of Asda's rivals posted better-than-expected sales performances during the important Christmas trading period.

Asda has yet to release details of how it performed, and will not do so until Wal-Mart updates Wall Street next month.

However, industry analysts expect it to have fared particularly poorly, with data supplied by Kantar Worldpanel, the research firm, suggesting that sales declined by 3.5% in the 12 weeks to January 3, reducing its share of the grocery market by 0.6 percentage points to 16.2%

Responding to an enquiry from Sky News, Asda said in a statement:

"It’s well documented that in recent years, customers have radically changed the way they shop.

"We were the first of the 'big four' to recognise this and launch a new strategy in 2013 yet the external pressures have accelerated at an increasingly rapid rate over the last 18 months.

"As a result, the industry faces major challenges and the certainty of permanent structural change. In the context of this, we also have to further change the way we do business.

"Today, we have started to talk to our colleagues in head office functions about what this means for them.

"We have made some difficult but necessary decisions but we must discuss these with our colleagues before we talk publicly."

Sources said the final number of redundancies from Asda's head office remained unclear on Monday morning but added that it would be "in the hundreds".

Andy Clarke, the chain's chief executive, said earlier this month that it would invest "a further £500m in lowering prices and further improving quality" this year, even as he warned of "another year of intense pressure at a macro-economic level in addition to sales remaining under strain from price deflation, a continued competitive background throughout the sector and radically changing customer shopping habits".

The growth of Aldi and Lidl has eroded the historical advantage enjoyed by Asda in its everyday low pricing strategy.

There has been persistent speculation that Mr Clarke will step down as Asda's boss, with the appointment last year of Roger Burnley, a senior J Sainsbury (Other OTC: JSAIY - news) executive, to a senior role fuelling those expectations.

Asda employs 170,000 people across the UK, including 3,000 at its head office.