Asda to sell off 20 supermarket stores to raise £400million
Asda is planning to sell around 20 stores in order to raise £400million. The supermarket reportedly plans to offload the stores and lease them back for around 20 years.
Asda has appointed property advisor Eastdil Secured to manage the sale, according to Green Street News. An Asda spokesman said: 'Sale-and-leasebacks have been a feature of the retail industry for many years.
'While maintaining a strong freehold base remains central to Asda's property strategy, we will consider suitable opportunities to unlock value from our property portfolio as part of our material programme of investment into the business.'
It comes after Allan Leighton returned to the supermarket last November after 25 years to help with a major turnaround plan.
In March this year, the new chief executive warned there would be no 'quick fix' to get the supermarket back on track after its total sales, excluding fuel, hit £21.7 billion last year – down 0.8% from the year before.
It ended the year with net debt of £3.8 billion, and about £800,000 cash on its balance sheet. Some of the measures he has introduced include Asda bringing back its Rollback pricing scheme, which saw the prices of more than 4,000 products in store and online slashed by an average of 25%.
Mr Leighton said its sales last year were 'disappointing' and its profit was 'OK-ish', adding: 'Obviously there are one or two things that we need to fix: our pricing, our availability, and our range architecture – that has all started … we're starting to make some progress.
'We're flagging a significant investment back into the business, and that is going to materially reduce our profit in the short term as we rebuild the business and we rebuild our market share.'
Asda previously said it expects business costs to surge by between £75million and £80million after changes to National Insurance and minimum wage.
Mr Leighton said: 'Like everybody else, we have to face into that. We're managing those cost headwinds, but at the same time investing significantly in the growth of the company.
'That's why we flagged it will have a material impact on our profitability, because we're determined to invest in the company for the mid and long term, not for the short term.'
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