The parent company of Asda said it is considering a stock market listing for the Leeds-based supermarket after its attempt to combine with rival Sainsbury’s was blocked by the competition authorities.
Judith McKenna, Walmart International CEO, told Asda managers at an event in Leeds: “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.”
Asda gathered over 1200 of its store, depot and Home Office managers together in Leeds to update on progress on its ongoing strategy and the future.
But Ms McKenna cautioned that any preparations for an IPO would “take years”
She added: “Now is the time to stay focussed. You can drive sales in your store and make a difference to your customers and colleagues. This is not a market where success comes easily or without a lot of effort, but you have the skills, the tools and most importantly the attitude to be successful.”
The Competition and Markets Authority (CMA) blocked Sainsbury’s £7.3bn pound takeover of Asda over concerns that the tie-up would raise prices for consumers.
The decision prompted analysts to speculate that Walmart would try to sell Asda to private equity or consider a stock market listing for the business, which it paid £6.7bn to acquire in 1999.
Ms McKenna’s comments are the first time Walmart has publicly addressed its future strategy for Asda since the Sainsbury’s deal collapsed.
Roger Burnley, CEO of Asda, told staff at the event in Leeds to put the failed takeover behind them.
He said: “Forget the language of Plan A and Plan B – there has always been one clear strategy for Asda. It requires momentum in the short term, growth in the medium term and sustainability in the long term. We need to prioritise and focus on what will make a difference to customers versus what won’t.”
Asda has reported seven consecutive quarters of like-for-like sales growth thanks to a strategy focused on lower prices, more innovation in own-brand products, better store standards and improvements in its e-commerce operations.
Monthly industry data produced by researcher Kantar indicates that Asda will likely report an eighth quarter of growth when it updates on trading tomorrow.
Mr Burnley told managers at the Leeds meeting there would be £80m of price cuts throughout the rest of 2019.
Asda’s strategy is working, he said, but noted it would be harder to deliver the strategy at the same pace without the synergies that the Sainsbury’s deal would have provided.