Wal-Mart unit Asda cuts 1,400 jobs
AFX | July 5, 2005
Britain's second biggest grocer Asda, a unit of US giant Wal-Mart Stores Inc, is to axe 1,400 jobs in an attempt to boost earnings after it lost customers to market leader Tesco PLC.
The company said it will plough the money saved from eliminating around 200 head office jobs, and a further 1,200 managerial roles within its stores, into lower prices.
'While our sales have slowed in recent months as the economy's tightened, Asda is no retail straggler,' chief executive Andy Bond said in a statement.
'But I'm simply not satisfied with this year's average performance - our natural home is outperformance -- and today's changes put in place the teams ...that will re-ignite our business over the next 12-18 months.'
News of the job cuts drew a stinging response from the GMB, the sole trade union recognised by Asda which represents around 25,000 of the company's 140,000-strong workforce.
'This is nothing short of appalling,' Harry Donaldson, the union's senior negotiator at the company, said in a statement.
He called on the country's competition watchdog to bring an end to the 'destructive' price wars between rival supermarkets.
Asda, which accounts for around half of Wal-Mart's international sales, has been struggling to hold on to customers in recent months in the face of brutal competition within the UK grocery sector.
Market researcher Taylor Nelson Sofres last week reported the company had a 15.4 pct slice of the 17.4 bln stg Britons spent at traditional grocers in the 12 weeks to June 19, down 1.7 points since the start of the year.
Despite consistently ranking the country's cheapest supermarket, Asda has been losing share to both Tesco and a revitalised J Sainsbury PLC as its rivals cut prices.
Asda has been plagued by a series of other problems in recent times, with a number of leading executives having quit the group.
It nonetheless pointed out that it has created over 40,000 jobs in the UK over the past six years.