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Walmart 'seriously considering' IPO for Asda

It is the first time the US retail giant has directly acknowledged the speculation about Asda's future.

Article originally published by The Financial Times. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

The head of Walmart’s international division has told staff at Asda that it is seriously considering a stock market listing, though she cautioned that preparing for such a process would take years.

Judith McKenna, who was at one time Asda’s chief financial officer, told a meeting of store and other managers: “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.” 

It is the first time the US retail giant has directly acknowledged the speculation about Asda’s future, following the decision of the UK’s competition regulator to block its takeover by J Sainsbury. 

Walmart was to have owned 42 per cent of the combined business, and the transaction was widely believed to have been a prelude to a complete withdrawal from the UK in favour of faster-growing emerging markets such as China and India. 

Ms McKenna’s comments also suggest that a sale to private equity, as some had suggested as the Sainsbury’s deal unravelled, is not Walmart’s favoured option.

“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 McKenna said, adding that the primary focus of staff at the UK retailer should remain on delivering its strategy to “make you the best Asda you can be”. 

“Walmart will ensure that you have resources to do that,” she said, reiterating comments made in the aftermath of the collapse of the Sainsbury’s deal. 

Asda, based in Leeds, is the third-largest of the UK’s four big supermarket chains and arguably the most value focused. It was listed on the stock market before Walmart acquired it 20 years ago. Asda endured a long period of market share losses as German discounters Aldi and Lidl expanded rapidly in its northern heartlands in the aftermath of the financial crisis. 

However, over the past two years it has cut prices and improved its own-label ranges, and has stemmed its market share losses. The company will deliver the results of its first-quarter trading on May 16, alongside its parent. 

At the same meeting, Roger Burnley, Asda chief executive, said there was no change in direction, but cautioned that market trends are accelerating faster than expected and that it would be harder to deliver the strategy at the same pace without the synergies that the combination with Sainsbury’s would have provided. 

“We need to prioritise and focus on what will make a difference to customers versus what won’t,” he said. There will be £80m of price cuts during the rest of 2019, he added, along with initiatives such as same-day delivery of groceries and equipping more stores with “scan-and-go” technology.


This article was written by Jonathan Eley from The Financial Times and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Article originally published by The Financial Times. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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