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Asda, Walmart Respond to Acquisition Speculation

After announcing a 1.3 percent decline in like-for-like sales in Q4 of 2019 due to challenging market conditions, Walmart and Asda have responded to speculation regarding a third-party investment in the retail group.

Walmart and Asda are looking to grow the business and engage a growing interest from a small group of third-party investors.

Asda and Walmart have responded to speculations of a potential acquisition in a recent joint statement.

“Walmart firmly believes that an IPO is an attractive long-term objective for Asda," reads the statement. "Asda is a great business with a clear strategy for the future and Walmart is committed to ensuring it has the resources and support it needs to deliver that strategy. Walmart has a clear international strategy around ‘strong local businesses, powered by Walmart – which involves a number of different ownership arrangements depending on the needs of its different markets. Following inbound interest Walmart and Asda can confirm that we are currently considering whether there is an opportunity for a third party to invest in Asda, alongside Walmart, in order to support and accelerate the delivery of Asda’s strategy and position Asda for long term success.”

After announcing that certain areas of sales were facing challenges, specifically clothing, Asda is nonetheless sticking to its commitment to consumer-first price points, convenience and growing the product offerings customers care about.

“No decisions have been made,” the statement continues. “If or when we decide to pursue this opportunity further our first priority will be to share more detailed information with our colleagues.”

During the Q4 decline, Asda still proudly announced a slew of consumer awards and a 10.3 percent year-on-year, double digit growth in home shopping thanks to its same-day-delivery and click-and-collect offerings.

We know that our customers mind sets during the quarter were cautious and whilst customers were enthusiastic for Christmas, they were more mindful in their spending – with many choosing to pare back gift lists and focus presents on kids rather than adults and extended family,” says Roger Burnley, chief executive officer, president, Asda. “Our monthly Income Tracker showed that whilst disposable income remained stable at around £217 a week during fourth quarter, previously seen trends of growth are starting to slow, and consumers remain highly budget conscious.”

The growing consumer resonance of store-in-a-store offerings are encouraging, and Asda will continue to trial partnerships in selected stores with the view of growing the strategy in 2020; working with brands to allow a wider retail experience and serve increasing demand for convenience.

“We continue to develop our store proposition, maximising our space and testing new concepts for our customers. During the quarter we refreshed seven stores – including a £5m refurbishment of our Edinburgh Jewel store, which sees us working with new partners to further enhance our customer offer. Throughout the quarter we implemented trials with new partners including Sushi Daily and Claire’s Accessories in a number of stores, and this is an approach that we will continue to thoughtfully grow in 2020 as we deliver our partnerships strategy.”

While talks are on the table, there are no investment-level changes for Asda and Walmart just yet as it continues to scope out viable avenues for its growth and customer engagement, even amid nationwide consumer caution and an ever-changing marketplace.

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