Asda, the highly leveraged UK supermarket chain, is planning to cut jobs and change working practices to save costs.
(Bloomberg) — Asda, the highly leveraged UK supermarket chain, is planning to cut jobs and change working practices to save costs.
Britain’s third-largest grocer wants to axe night shifts so that staff restock shelves during late evening or daylight hours instead. That would remove the premium paid to night-shift employees who work after midnight and also cut more than 200 manager roles.
Asda is also suggesting reducing opening hours for its in-store post offices and closing a small number of pharmacies in its shops which will affect more than 260 roles.
The grocer, which has begun a consultation with employees, is following competitors with its biggest rival Tesco Plc cutting 1,600 jobs last year as it revamped overnight shifts.
Read more: Tesco Cuts 1,600 Roles With Shift to Daytime Shelf-Stacking (1)
UK supermarkets’ profit margins are being squeezed as they have not been able to pass on all their surging costs to shoppers at a time when consumers’ real incomes are falling amid the worst inflation in four decades.
Brothers Mohsin and Zuber Issa acquired a majority stake in Asda with buyout firm TDR Capital in 2021 and there’s speculation that the owners will merge the retailer with the UK arm of EG Group, a petrol filling station and convenience business.
Analysts at CreditSights cut their recommendation to sell on Asda’s bonds on Thursday, citing the risk that a possible deal could mean EG Group’s debt maturities take priority over Asda. EG Group has about £7 billion ($8.7 billion) of debt coming due by 2025.
“We believe that there is a meaningful probability of a deal going through, especially due to the shared ownership structure,” the analysts wrote.
Reads more: Debt Concerns Leave Asda Investors Fretting Over Mooted Merger
Asda reported a rebound in sales in November after two straight quarters of declines as the grocer focuses on keeping prices low. In December the grocer said it would open 300 stores by the end of 2026 under the Asda Express banner as it seeks to accelerate its push into the convenience store market.
–With assistance from Laura Benitez.
(Adds some additional material on Asda debt concerns at end)
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