Asda Boss Slams “Disgraceful” Government Claims Amidst Retailer’s Turnaround Efforts
The chief executive of Asda has launched a scathing attack on the government, labelling the Chancellor’s accusations of petrol price gouging as a “disgrace.” This strong criticism comes as the supermarket giant navigates a significant turnaround plan, revealing a dip in sales and profits for the past year.
Allan Leighton, executive chairman of Asda, expressed his frustration with Chancellor Rachel Reeves’ claims that businesses are profiteering from global conflicts, such as the situation in Iran. Leighton argues that it is, in fact, the government’s own revenue that is being boosted by escalating fuel prices.
Asda, the UK’s third-largest supermarket chain, reported a 3.3 per cent decrease in sales, excluding fuel, to £21 billion for the last financial year. Profits also saw a substantial fall of one-third, dropping to £764 million. These figures underscore the challenges Asda has faced in its efforts to regain market share lost to competitors like Tesco, Sainsbury’s, and Lidl.
The Leeds-based retailer has been undergoing a comprehensive turnaround strategy spearheaded by Leighton, who returned to the helm to steer the company. However, these transformation efforts were significantly hampered by a costly and problematic £1 billion IT upgrade implemented last year. The company acknowledged experiencing “severe disruption” directly linked to this IT transition, which led to reduced product availability and consequently weaker sales performance.
Asda has been in the process of migrating over 2,500 legacy IT systems to its own platforms since its acquisition from Walmart in 2021 by Zuber and Mohsin Issa, with private equity firm TDR Capital also holding a stake.
In a recent update, Leighton indicated that sales continued to decline by 2.4 per cent in the final quarter of the past year, still feeling the repercussions of the IT system issues. However, he expressed optimism about the company’s current trajectory, stating that Asda now possesses “positive momentum” and is on the path to sales growth.
“There is plenty to do but there is also plenty of upside,” Leighton remarked. “We have that momentum and a strong balance sheet to allow us to push forward.”
The supermarket chain confirmed that product availability has now rebounded to an eight-year high of 95 per cent. This improvement has reportedly led to stronger sales figures in recent months. While total like-for-like sales experienced a 1.6 per cent dip in January and a 1 per cent fall in February, they have seen a positive uptick of 1.2 per cent so far in March.
Leighton elaborated on the progress: “As we enter the second year of our turnaround, we have an improved customer offer, stable core systems, a strengthened balance sheet and a strong leadership team to deliver our formula for growth. Our progress in key areas like price, availability, and customer satisfaction is edging forwards, reflected in positive like-for-like sales growth in our stores for the last two months.”
Government Accused of “Pointing Fingers” Amidst Fuel Price Surge
The criticism of the government’s stance on price gouging intensified as the cost of petrol breached the 150 pence per litre mark for the first time in nearly two years. Leighton joined a growing chorus of business leaders who are challenging the Chancellor’s narrative, arguing that the government is the primary beneficiary of soaring fuel prices through increased tax revenues.
Leighton asserted that the government was “pointing fingers at people” and possessed “zero credibility” when discussing profiteering.
“This whole thing is actually a disgrace, that they try to point the finger at petrol retailers for gouging,” he told the Daily Mail. “And, you know, it’s a typical camouflage, they point the finger at somebody else, hopefully then nobody will work out that [they] are the problem.”
He further contended that ministers were wasting valuable time by targeting businesses instead of focusing on initiatives to support employers in creating jobs for young people. Leighton likened the bureaucratic process to facing numerous hurdles in the Grand National, implying a significant lack of progress.
These comments follow similar sentiments expressed by other prominent business figures. The boss of Next recently stated that the government should not profit from the ongoing crisis in the Middle East. Meanwhile, the chief executive of Marks & Spencer attributed rising energy bills for businesses to Labour’s green levies.
Both Chancellor Rachel Reeves and Sir Keir Starmer have suggested that retailers are profiting from the conflict in Iran, placing them at odds with those operating forecourt businesses. Business groups counter this by arguing that the government is the entity cashing in, as it collects increased VAT revenue when prices at the pump are higher.
The Chancellor is currently facing mounting pressure to reconsider a planned 5 pence per litre increase in fuel duty, which would raise it from the current 52.95 pence to 57.95 pence over the next twelve months.
Leighton articulated his view on the government’s strategy: “The government strategy is called ‘point a finger at somebody else’. That is their strategy. They’ve got zero credibility on all this price gouging and everything else. It is time they stepped up and actually started to do things that were positive, rather than trying to camouflage, by pointing fingers at people.”
He concluded by stating that the government was benefiting financially “off the back of this” while other sectors of the economy and the public were struggling. “And they’ve got the gall to point the finger at everybody else,” he added, deeming the situation “unacceptable.”
Leighton suggested that the government should consider sharing some of the unexpected incremental duty collected from fuel sales with consumers and farmers, both of whom are currently facing significant financial pressures. He implied that understanding the root of the problem should not require extraordinary intellect, stating, “You don’t have to be Einstein to work out where the problem is.”
