Asda has confirmed that more than 10,000 of its managers will not receive their annual bonuses this year, following a worrying slide in performance at the once-thriving supermarket chain.
The payout cancellation comes amid Asda’s worst Christmas sales in a decade and a slip in market share from 13.7 per cent to 12.6 per cent, heaping pressure on the leadership team to reverse the retailer’s fortunes.
The bonus scheme’s suspension, revealed shortly before Asda is due to publish last year’s financial results, is expected to dampen morale among staff. One former senior employee warned that the setback would prove devastating, saying: “Morale will be rock bottom. Even Allan [Leighton] won’t be able to pick them up from this. This will mean some of the top talent looking elsewhere.” A recruiter added that the bonus cuts risk causing “anarchy” within the organisation.
Allan Leighton, who returned as executive chairman late last year after more than two decades away, is credited with transforming Asda into a retail powerhouse in the 1990s. He has pledged to restore what he calls the “Asda DNA”. However, recent figures reflect the scale of the challenge ahead: industry data from Kantar reveals a 5.2 per cent fall in sales in the 12 weeks to 28 January.
Leighton has already taken steps to reduce overheads, including a restructuring of senior teams that led to the departure of 13 regional managers in February. It follows the decision late last year to make hundreds of head office staff redundant, prompting condemnation from the GMB union over the way job cuts were handled.
Critics argue that the removal of bonuses, while saving costs for a price-focused turnaround strategy, will do little to inspire confidence among employees at a time when only half of them say they believe in Asda’s corporate direction. The supermarket is still hunting for a permanent chief executive after Roger Burnley’s abrupt exit in August 2021. Lord Rose’s attempt to fill the top job stalled, leaving Leighton to relaunch the search in January.
Asda has been under intense scrutiny since its 2021 takeover by the Issa brothers and TDR Capital. Once the jewel in Britain’s supermarket crown, it has suffered repeated setbacks, prompting Lord Rose—who stepped down as chairman last November—to label its performance “embarrassing”. Leighton has cautioned that the turnaround could take as long as five years, a prediction that industry analysts say is realistic given the company’s current condition and impending cost pressures like the Extended Producer Responsibility recycling levy, National Insurance changes and the National Living Wage.
In addition to cutting bonuses and restructuring teams, Asda may embark on further acquisitions. Leighton has hinted he is open to deals that “create further shareholder value” by offering scale or new capabilities. However, any new investments will likely face fierce scrutiny, given the risks associated with integrating additional businesses and the supermarket’s immediate priority of stabilising performance.
An Asda spokeswoman declined to comment on the bonus cancellations. The move, though, underscores the challenging balance between cost management and maintaining staff motivation as the supermarket fights to regain ground in an increasingly competitive market.
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Asda faces staff backlash after scrapping 10,000 manager bonuses