Asda escapes fine despite missing deadline for £800m IT upgrade

Telegraph

22-02-2025

Asda has been handed a reprieve by its former American owner Walmart after the struggling British grocer missed a crucial target for an £800m IT upgrade.
The supermarket chain is understood to have swerved a penalty after Walmart agreed to push back the deadline for Asda to separate its computer systems from those of the US chain.
Asda has been attempting to extract itself from Walmart's IT systems, untangling thousands of programmes responsible for checkouts, administration and payroll, in a race to avoid a penalty charge for continued use of the technology.
The British supermarket was sold by Walmart in 2021 to private equity giant TDR Capital and brothers Mohsin and Zuber Issa.
It had been aiming to complete the changeover, named Project Future, by February. Earlier this year, industry sources warned that Asda risked millions of pounds worth of charges if it missed this target.
However, Walmart and Asda are now understood to have come to a revised agreement, including scrapping the February deadline.
It follows a series of setbacks for the project. Last March, a botched computing update led to thousands of workers receiving incorrect payslips. A second update went wrong later the same year, affecting thousands of orders for its George clothing range.
The push to complete the changeover without causing further issues for customers has been regarded as critical for Asda, which is racing to stem a slump in sales.
Figures from Kantar earlier this month showed that sales at the troubled grocer were down 5.2pc in the 12 weeks to Jan 28 compared with last year.
It was the only major retailer to record a decline for the period, after a poor Christmas performance piled fresh pressure on its new chief Allan Leighton to kickstart a turnaround push.
Project Future has been touted as 'mission critical' to Asda's revival plans. It was championed by Mohsin Issa, Asda's co-owner, who had been running day-to-day operations at the supermarket up until late last year.
The company had signalled it was aiming to make sure it completed the work on time. Lord Rose, then chairman of the supermarket, last year told the Telegraph that there was 'an incentive for us to come off their system, but it's not meaningful in the company's profit and loss'.
He said: 'At the end of the day, it is not £15m a week, but there is an incentive for us to finish this on time.'
Lord Rose stepped back as chairman in November to be replaced by Asda's former chief executive Mr Leighton.
The new chairman has claimed his focus will be on restoring 'Asda's DNA', setting out plans to cut prices and improve availability in stores.
A spokesman for Asda said: 'We continue to make good progress delivering Project Future and have successfully migrated large parts of our business to brand-new systems.
'We will continue to take a pragmatic approach when delivering the remainder of the programme and Walmart continue to be incredibly supportive in every way in helping with the implementation.'