Wal-Mart's Asda Weighs More Job Cuts in Battle With Discounters

(Bloomberg) -- Wal-Mart Stores Inc.'s Asda supermarket chain in the U.K. has entered into a consultation with staff that could result in 842 senior shop-floor employees being dismissed or paid less as the struggling unit seeks to cut costs.

“In November, we began consulting with colleagues in our grocery home-shopping and ambient teams about potential changes to the way they work to improve availability for customers,” an Asda spokesman said by email.

The consultation was communicated to staff in an internal memo that said Asda needs to continuously review its operating model to close the price gap with discounters Aldi and Lidl, the U.K.'s Guardian newspaper reported Thursday. The memo said about half of Asda's 153 smallest supermarkets are unprofitable, the newspaper said. 

The rapid expansion of the discounters has undermined Asda's long-held position as the U.K.'s cheapest mainstream supermarket, and the changes under consideration may reignite investor fears that Asda will start a fresh price war. As well as the threat from the discounters, British grocery chains are grappling with increased staffing costs from a rise in the minimum wage. Market leader Tesco Plc and J Sainsbury Plc both have recently slashed thousands of jobs.

In its retail and distribution activities, Asda reduced its headcount by about 7,000 in 2016 to 100,641, according to accounts filed at U.K. Companies House. That followed a 5 percent reduction in 2015. Meanwhile, its sales were mired in a three-year slump.

Asda Deputy Chief Executive Officer Roger Burnley will be stepping into the CEO role on Jan. 1. Burnley is said to have hired former Amazon.com Inc. and Asda executive Rob McWilliam as a strategic adviser.

To contact the reporter on this story: Sam Chambers in London at schambers7@bloomberg.net.

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John J. Edwards III

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