Billionaire Issa brothers clear out old guard in battle to overturn Asda

asda

When former Asda boss Roger Burnley told the supermarket’s 145,000 employees he left ahead of schedule after the company changed hands, the good wishes poured in.

The staff said they were “proud” to be part of the “green machine” and “Roger Burnley’s army” following his leadership during the pandemic.

Speeding up his departure was the arrival of new owners – the billionaire Blackburn-based Issa brothers, who bought the grocer for £6.7 billion from US giant Walmart.

Burnley, who left last month, has been at the helm since 2018, signaling plans to leave next year in March. The 55-year-old originally said he would remain at his post until a successor was found.

Several sources said that while there was no bad blood between him and Mohsin and Zuber Issa, a stark contrast in the working styles soon emerged and his role became untenable.

The brothers’ approach is widely described by those who know them as entrepreneurial and a culture that is fast-moving.

Retail veteran Lord Stuart Rose, chairman of the Issas gas station firm EG Group, describes the pair as a “very rare species” because they “came from nowhere” and built a sprawling business empire.

By the early 2000s, they had saved enough money to buy their first gas station in Bury, Greater Manchester.

Now they are one of the largest gas station and convenience store operators in the world – their empire includes 6,000 gas stations – and its own fast food chain Leon.

The billionaire Issa brothers are currently considering selling their forecourt empire EG Group - Jon SuperThe billionaire Issa brothers are currently considering selling their forecourt empire EG Group - Jon Super

The billionaire Issa brothers are currently considering selling their forecourt empire EG Group – Jon Super

An Asda insider says: “They’re used to working in entrepreneurial companies – they want to keep going, they want to move forward quickly and that’s a bit of a culture clash in terms of how the company works and that’s proved difficult for some [at Asda].”

Burnley was followed out the door last month by Anthony Hemmerdinger, chief operating officer, and Preyash Thakrar, interim chief customer officer and former chief of strategy. Hemmerdinger was considered Burnley’s most likely internal successor.

Finance head Rob McWilliam also resigned in April, although headhunters say he was only there to guide the grocer through the takeover.

Under its previous 22-year Walmart ownership, Leeds-based Asda has ticked all the boxes of a well-oiled business machine, and insiders say it’s time for a mix-up.

“The people who went there were a bit more vanilla,” says an industry observer. “Changes have to be made, Asda cannot continue as it is, it is just going to lose market share, so it has to be different. Too many people have an interest in Asda continuing as it is. That’s what the Issas are trying to understand, they believe in a trade-led recovery.”

Asda follows leaders Tesco and Sainsbury’s in market share, with German discounters Aldi and Lidl – both of which are chasing the grocer’s budget-conscious customers, breathing it down the neck.

Earlier this month, it reported a 0.7 percent decline in comparable sales, excluding fuel, in the second quarter from April to June. The supermarket said the drop reflected exceptional sales levels during the first lockdown a year ago, with an increase of 3.1 pc. in the same period in pre-pandemic 2019.

As Asda gears up for its first post-pandemic Christmas, the recent departures have raised eyebrows among retail experts, with Britain’s third-largest supermarket not having a chief executive to see it through its most lucrative time of year. . The exits also left larger leadership gaps, with just four executives on the board, according to the website.

The company says it is determined to hire more independent non-executive directors and has made a series of management appointments, including Meghan Farren, Chief Customer Officer; Liz Evans, who will lead George’s fashion department; and Carl Dawson, Chief Information Officer.

An internal and external search for Burnley’s successor is still underway, although Mohsin – described by his sister-in-law Asma in a rare interview with BBC Radio 4 as “very work-oriented” – has believed the de facto a leading role for the time being.

The 50-year-old was said to spend most of the working week in Leeds, but an insider said he was merely providing additional support to the existing management team.

The couple’s mother, Zubeda, who initially worked in the textile industry when she and her late husband moved to the UK from India, is said to be extremely proud that her sons bought the supermarket chain. Asma also revealed that “they actually hate being called the billionaire brothers, they try to avoid the media as much as possible”.

But when it comes to business, some say the new owners want to shake things up quickly. They say there is no room for debate and there is no ‘clearly mapped out strategy and plan’.

“There’s a desire to push through a few things that they were really excited about, which I don’t think are necessarily the right things to do,” said a source.

At a recent court hearing as part of a wide deal to acquire Caffè Nero, which has not materialized, Mohsin said he did not need to ask permission from the [EG] board before making deals. Shed some light on them mode of operation, he said: “I do not need ratification or approval at any time.”

What is known is that the brothers are rolling out nearly 230 Asda stores at gas stations, with the grocer supplying products under a wholesale agreement to EG Group, which will own and operate each site at its gas stations.

When they bought the company, the Issas said they would focus on the convenience sector while expanding Asda’s major retail and online business.

Fraser McKevitt, head of retail at data company Kantar, welcomed their move: “There is a huge opportunity in [convenience] to take advantage of the 3.7 billion groceries that cost less than £20 each year to take home.”

While some critics claim they lack the knowledge to efficiently run the massive sheds of products Asda is known for, supporters point to recent partnerships with fashion brand Missguided to sell its goods in 100 stores, as well as Rawr Beauty, New Look, Maximuscle , My Protein and Lee Wrangler. The initiatives are intended to attract more customers to large stores.

While their management style may differ from Asda’s norm over the past two decades, a source in the city says the Issas are the “taskmasters” of partnerships after closing deals with fast food chains KFC, Starbucks, Subway and Greggs.

Any change of ownership is usually met with skepticism, but with the Blackburn brothers at the helm of Asda, the time has come for modernization.

As a City source adds, “The future of retail is what Amazon does. If you’re going to take on Amazon, you have to think differently.”