Inside This Issue - News
Clarke takes the CEO reins at Asda
June 14th, 2010
LEEDS, England – Andy Clarke has been named president and chief executive officer of Asda Group PLC, the United Kingdom’s No. 2 supermarket chain. He succeeds Andy Bond, who stepped down in April to take the new, part-time role of chairman of the company’s executive board.
"I’m delighted to appoint Andy Clarke to be my successor," said Bond in a statement. "He was clearly the right choice from the internal and external candidates we considered."
Clarke joined Asda in 1992 and filled a variety of roles until he departed in 2001 to take a senior position at Matalan, an apparel and home goods retailer. He also served at Iceland Frozen Foods before returning to Asda in 2005 as retail director. He was named chief operating officer in 2007.
Clarke was considered a favorite to succeed Bond after other internal candidates bowed out. Chief merchandising officer Darren Blackhurst left the company recently, and chief financial officer Judith McKenna reportedly removed herself from the competition.
Analysts view the choice as a safe move, one emphasizing continuity, on the part of Asda’s parent company, Walmart. "At Walmart and at Asda, we have a robust succession planning and talent development process, and Andy Clarke has long been identified as a leader," said Doug McMillon, president and CEO of Walmart International. "Andy knows the company, our colleagues, and he cares about our customers. He is the ideal person for the job, and this will be a seamless leadership change."
Clarke faces an immediate challenge, however. Although Asda turned in a strong performance in 2009, its sales momentum slowed toward the end of last year, and results for the first quarter of 2011, which ended March 31, revealed its first decline in same-store sales since 2006.
"By our own high standards, our first quarter sales were disappointing," said Bond. "The market has slowed down significantly since the turn of the year, and I expect conditions to remain tough for some time."
According to data from Kantar Worldpanel, moreover, Asda’s share of the U.K. grocery market slipped 10 basis points to 16.9% from 17% during the 12 weeks ended April 18.
Clark’s first responsibility will be to execute the strategy he has inherited, which was spelled out during an investor conference in mid-April. The core of that strategy involves a reemphasis on everyday low prices, underlined by the recent launch of the "Asda Price Guarantee."
Under the program, if consumers can buy a basket of eight or more comparable products cheaper elsewhere, Asda will pay them the difference plus a penny.
Some analysts, though, question whether Asda’s response is on target, arguing that U.K. shoppers are again favoring premium products, a contention perhaps supported by the strong recent performance of Waitrose, the upscale supermarket chain owned by the John Lewis Partnership. The company posted a 3.4% rise in same-store sales during the quarter ended April 30.
Asda plans to open about 100 smaller-format Asda supermarkets, which measure between 8,000 square feet and 25,000 square feet, and 150 Asda Living nonfood outlets over the next five years.
Clarke pointed out that one advantage of the Asda supermarket as a growth vehicle is that its smaller size makes it easier to obtain planning approvals, which are notoriously difficult to get in the U.K. Moreover, they are a low-cost model.
The Asda Living expansion is intended to make Asda the country’s No. 1 general merchandise retailer. In addition, the company has set a goal of increasing the online share of sales of its exclusive George apparel brand to 40% from the current level of 10%.