Asda puts 5,000 jobs at risk in major restructure but will create 4,500 new roles in its online operations - as UK billionaire Issa brothers are poised to take it over from US giant Walmart
- Consultation with around 5,000 staff over a major restructuring is launched
- The new plans could put around 3,000 back office store workers at risk
- Asda says it will create 4,500 jobs in online operations in statement to staffAsda has launched consultations with around 5,000 staff over a major restructuring which could put around 3,000 back office store workers at risk.
The supermarket giant - which currently has 146,000 staff - said the major restructuring has been driven by the 'structural shift' towards online grocery shopping during the pandemic.
The grocery firm said it also plans to create around 4,500 jobs in its online operations this year and will look to hire staff affected by the changes.
Roger Burnley, Asda chief executive officer and president, said: 'The pandemic has accelerated change across the retail sector especially the shift towards grocery home shopping and our priority is to serve customers in the way they want to shop with us.
Asda Watford Supercentre in Hertfordshire which is being used as a vaccination centre
A queue of shoppers outside an Asda store in Norwich, after the first lockdown was imposed
'The last 12 months have shown us that businesses have to be prepared to adapt quickly to change and I am incredibly proud of the way we demonstrated our agility and resilience through the pandemic. 'We know that these proposed changes will be unsettling for colleagues and our priority is to support them during this consultation process.
'Our plans to transform the business will result in more roles being created than those we propose to remove.
Mohsin Issa, 49, (left) and his brother Zuber, 48, whose parents came to Britain from India 'with nothing', built EG Group from one site bought for £150,000 in 2001 into a £9billion giant employing 44,000 staff
'Our absolute aim is to ensure as many colleagues as possible stay with us, as well as creating the opportunity to welcome new people to our business.'
Two months ago Asda said former owner Walmart paid itself a £1.15 billion dividend from the supermarket chain back in March, 2020.
It like many others have also faced challenged over ever-changing coronavirus restrictions and regulations.
Asda had to restrict numbers of customers going into stores as well as urge them to wear facemasks.
Asda’s latest figures showed it had been underperforming compared to some of its rivals.
A February release showed it did record a 5.1 per cent rise in sales during the fourth quarter and a 6.9 per cent increase in the shorter eight-week run-up to Christmas.
In contrast, Tesco said sales at stores open one year were up 8.1%.
And Sainsbury's enjoyed such strong Christmas sales that its annual profits will be £60million more than expected – with its share price hitting a two-year high.
It said its underlying pre-tax profits for the year are now expected to hit £330million.
That figure was significantly up on the £270million previously predicted, as the pandemic continued to boost food stores while Britons are told to stay at home.
The pandemic has seen online buying explode as customers are forced to stay in during the UK's lockdown.
The impending new owners of Asda will take on around £3.5 billion of debt financing
The online grocer reported underlying group earnings of £73.1million for the year to November 29, up from £43.3million the previous year, as revenues rose by 35 per cent to £2.2billion.
Earnings in its retail arm, a joint venture with Marks & Spencer, more than trebled to £148.5million, up from £40.6million the previous year.
It comes just over a week after billionaire petrol station tycoons the Issa brothers and their private equity backers were poised to complete their £6.8billion acquisition of the supermarket.
They have had no involvement in the launch of this consultation process or the decision taken to look at job numbers.
The EG Group, owned by Mohsin and Zuber Issa, previously reached an agreement to acquire the chain from Walmart.
The deal, which is being backed by investment funds managed by TDR Capital, will also include its chain of petrol forecourts.
They will take on around £3.5 billion of debt financing, sell its petrol station business and intend to sell distribution sites.
They secured FCA approval for the takeover last week. However, the deal still needs to secure approval by UK competition regulators.
The brothers, who are worth an estimated £3.56bn, sent ripples through the City when they were named as the frontrunners for the takeover last year.
The first Asda supermarket, opened in 1965 in Wakefield, West Yorkshire
Asda history: How Britain's third-largest supermarket began as a Yorkshire family butcher
An article about one of the first ever Asdas
1950s: The Asquith family (W.R. Asquith) open a butcher's shop in Knottingly, West Yorkshire, which was eventually expanded to seven shops.
1958: They travel to the USA to visit Piggly Wiggly, probably the world's first supermarket.
1963: The Asquiths open the UK's first self-service supermarket in Wakefield, West Yorkshire.
1965: Peter Asquith built his first new supermarket from scratch, next to a large car park, knowing that cars would change the way people shop. Associated Dairies were employed to run the in-store butchery operation and the name Asda was born by combining ASquith and DAiries.
1966: Asda becomes the first major food store to sell general merchandise.
1968: Associated Dairies buys out the Asquith Brothers.
1999: Asda is bought by Walmart.
2020 (February): Walmart says it is looking for a buyer.
2021 (February): Issa brothers and their private equity backers announce their £6.8 billion acquisition of Asda has now been completed. The children of immigrants who moved to Blackburn from Gujurat, India, in the 1970s, Mohsin and Zuber now have franchise agreements with brands including Starbucks, Subway and KFC.
The Blackburn-born siblings were recently locked in secret talks to buy Topshop before it became part of the Asos portfolio.
The Issa brothers' estate includes a £25m Kensington townhouse and a private jet that is kept in a hangar at Blackpool Airport alongside Donald Trump's personal helicopter.
They are also building five identical mansions just three miles from the £115,000 Blackburn two-up two-down where they were raised.
Mohsin is expected to live there with his wife, Shamim with whom he shares two grown-up children.
In a separate announcement earlier this month, the Competition and Markets Authority (CMA) said it has set April 20 as a deadline for its preliminary decision on the move.
In October, the suitors announced the deal to buy the majority stake in the UK's third biggest grocery, although previous owner Asda will still hold a minority stake.
The CMA launched an investigation in December and initially set a February 18 deadline for its Phase One probe, before pushing its timetable back in order to look at additional documentation.
Since the inquiry was launched, the Issa brothers and TDR have confirmed plans to sell Asda's petrol forecourt business to its own EG Group for £750million.
The CMA will also consider the forecourt deal as part of its inquiries.
The update also comes days after the new owners completed a £2.75billion junk bond sale to help fund the Asda acquisition.
Competition lawyers expect the deal to be given the go-ahead by the regulator.
It comes almost two years after Asda's attempted merger with rival Sainsbury's was halted by the CMA.
It is thought Walmart was wooed by the Issas' entrepreneurial flair and the potential to put Asda convenience stores in EG's petrol stations.
Walmart is looking to sell most of its stake in Asda to focus on defending its position in the US against Amazon and pursue opportunities in higher growth markets, such as India.
From a terraced home in Blackburn to self-made billionaires on the brink of buying Asda: The rags-to-riches story of petrol station pioneer brothers
By Rory Tingle for MailOnline
Mohsin Issa, 49, and his brother Zuber, 48, whose parents came to Britain from India 'with nothing', built EG Group from one site bought for £150,000 in 2001 into a £9billion giant employing 44,000 staff.
The brothers are now worth an estimated £3.56bn, including a £25m Kensington townhouse and a private jet that is kept in a hangar at Blackpool Airport alongside Donald Trump's personal helicopter.
They are also building five identical mansions just three miles from the £115,000 Blackburn two-up two-down where they were raised. Mohsin is expected to live there with his wife, Shamim with whom he shares two grown-up children.
The brothers holding trophies at an awards ceremony in London in 2018, which saw them named EY Entrepreneur of the Year
As the children of immigrants who moved to Blackburn from Gujurat, India, in the 1970s, Mohsin and Zuber Issa - who were born in the former mill town - quickly learned the importance of hard work.
Their first experience of business was selling petrol from their parents' filling station, where they would have their big idea that would revolutionise the industry and make their millions.
Petrol sales were in decline and fuel duty on the rise, cutting into already wafer-thin fuel margins and leading to hundreds of operators leaving the market.
At the time most garages - if they sold food at all - offered a measly selection of pre-packaged sandwiches, crisps, sweets and chocolate.
But the Issas realised fuel sales still had a purpose in creating a captive market at petrol stations, who could then be offered appetising food rather than the gruel offered elsewhere
The brothers struck franchise agreements with brands including Starbucks, Subway and KFC, before embarking on a buying spree to snap up sites that had previously become vacant.
They now own Europe's largest forecourt operator, Euro Garages, which in 2019 reported revenues of more than £17.9bn.
The firm is now the largest Subway franchisee in Europe and earlier this year bought a group of 146 KFC stores.
Describing the secret of their success, Zuber told the Financial Times: 'We wanted to create a destination where you could get fuel, food-to-go and shopping.
'This is the formula and it works.
'We were fortunate that the big players were leaving the market just as we were growing.'
TDR Capital - a London investment firm behind We Buy Any Car and David Lloyd gyms - bought a 50% stake in EG Group in 2015.
The Issas retain the remaining 50%.
The £115,000 terraced house where the brothers grew up in Blackburn. They were born in the town after their parents moved from Gujurat, India
A wider view of the road in Blackburn where the brothers grew up. Their company is still based in the town
They are now worth an estimated £3.56bn, including a £25m Kensington townhouse (pictured) and a private jet that is kept in a hangar at Blackpool Airport alongside Donald Trump's personal helicopter
Blackburn-born brothers who started out cleaning toilets have built £3.5bn petrol station business
They were brought up in a terraced house after their father came to Britain to work in the textiles industry.
Four decades on, Mohsin and Zuber Issa's journey from the back streets of Blackburn to the top of the property ladder appears complete.
The self-made billionaires, who own Euro Garages, Europe's biggest independent forecourt firm, have recently bought a £25million Knightsbridge mansion.
Their woollen mill worker father Vali and mother Zubeda were living at a two-up, two-down terraced house on Balaclava Street in Blackburn when Mohsin and Zuber were born in the early 1970s.
Euro Garages has a partnership with a several household name brands, including Spar, Greggs, Burger King, Subway and Starbucks.
It was founded by brothers, Zuber Issa and Mohsin Issa in 2001 with a single petrol filling station in Bury, Greater Manchester.
Just 15 years ago they were working in a petrol station in Halifax, doing the stock-taking and cleaning the toilets among other things.
They took a lease on a local garage with their combined savings of £5,000 and today they control a business with an estimated value of some £3.56billion.This prompted a debt-fuelled buying spree that saw the brothers buy thousands of new sites and expand into eight other countries around the world.
'They never in their wildest dreams would have imagined 5,500 gas stations in nine markets,' senior executive Ilyas Munshi told the American trade magazine CSP last year.
'If they had only 20 sites, they would have felt they had done their job.'
As proud Lancastrians, the brothers have insisted on keeping EG Group's headquarters in Blackburn, and recently unveiled a new £35m headquarters.
'People are always asking when we will move to London or Manchester,' Zuber told the FT.
'But the quality of life here is great. A lot of people do a few years in London then come to the North West.
'They want to raise a family and have less pressure. We have got a lot of fantastic people that way.'
Mohsin has a wife Shamim, and their son and a daughter both work for EG.
Both brothers rarely give interviews and have adopted a low-key public profile.
They are now building five identical 'super-sized' homes three miles from their childhood home.
Despite the fierce opposition, which saw the council face 30 letters of complaint, eight old houses have now been demolished and builders have laid foundations for the five 5,000 sq ft mansions.
Plans for the large houses, which are located on a quiet rural road outside Blackburn where houses sell for up to £1 million, were lodged in April 2018.
They sparked an uproar, with the properties described as 'not in fitting with the local area' as the homes stand over 4.5 metres taller with 1,500 square metres of floor space.
But planning permission was granted and pictures taken earlier this year showed builders had already moved in.
In 2017, the pair purchased a £25million mansion in Knightsbridge, which estate agents said could be worth £80million when planned renovations are carried out according to estate agents.
Their Grade II listed Georgian house is also at the centre of a long-running planning row.
The previous owner began digging a basement and left a vast 30ft-deep crater the size of two tennis courts, described by horrified neighbours to 'Hitler's bunker'.
When finished the luxury 22,000 sq ft home will have a huge underground car park, a swimming pool, spa, and cinema.
The brothers donate 2.5% of their earnings to charity through the Issa Foundation, which funds hospitals and provides free breakfasts for children in Lancashire.
Architect's plans for one of the five new homes that the brothers are building in countryside near Blackburn
Plans for the large houses, which are located on a quiet rural road outside Blackburn where houses sell for up to £1 million, were lodged in April 2018. They are currently a building site
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