Asda has fallen behind its rivals because of poor sales during the Christmas trading period leading the UK's third largest supermarket chain to axe hundreds of jobs at its Leeds headquarters. The job cuts are expected to be across several departments and include redundancies of senior staff as well.
An Asda spokesperson said: "We have started to talk to our colleagues in head office functions about what this means for them. We have made some difficult but necessary decisions but we must discuss these with our colleagues before we talk publicly."
Losses would be in the "low hundreds" the company said, adding that it was talking to workers about "the certainty of permanent structural change".
While the company has not yet disclosed its Christmas numbers, the grocer could post its sixth quarter of falling revenue, according to analysts. Besides, it could report its worst performance among the "big four" supermarkets, after data from Kantar Worldpanel indicated that Asda's sales in the 12 weeks to 3 January declined by 3.5%
In early January, Asda had said it would invest a further £500m (€654.4m, $712.5m) into slashing its prices and had warned of more challenges ahead. The spokesman added: "It's well documented that in recent years, customers have radically changed the way they shop. We were the first of the "big four" to recognise this and launch a new strategy in 2013, yet the external pressures have accelerated at an increasingly rapid rate over the last 18 months. [Hence] we also have to further change the way we do business."
Asda's job cuts come 18 months after it made an announcement to reduce its work force by about 1,360 employees, including back office positions. This was so as to focus more on e-commerce and to put more staff on its shop floors. Andy Clarke, chief executive, at that time had said: "Every supermarket must adapt to the intense changes in UK retailing or they will get left behind."
The data from Kantar also indicated that while Sainsbury's benefitted by an increase in both sales and market share during the same period, both Tesco and Morrisons reported a drop in sales of about 2.7% and 2.6% respectively during the 12 weeks to 3 January.
Asda is not the first to cut jobs due to poor sales. In 2015, Tesco revealed that it could cut as many as 10,000 jobs as part of a turnaround plan of which 6,000 would be at its head offices. Morrisons too reported that it could cut about 680 jobs because of its plans to close 21 of its supermarkets.