Asda yesterday announced pounds 452m of exceptional losses, writing off almost pounds 200m on its portfolio of 205 superstores and setting aside more than pounds 150m to pay for one-off costs of its three-year restructuring plan.
It sparked fears of more job losses among its 70,000 staff, as it included an pounds 89.5m provision, the bulk of which is to cover unspecified closure costs. It has axed 1,000 jobs in the past three months.
City analysts described the move as 'a massive deck-clearing exercise' as Archie Norman, the new chief executive, blamed the previous management for Asda's troubles and revealed a catalogue of exceptional costs.
He said the past management had 'neglected its heritage' and failed to invest adequately in many of the stores. He would restore profitable growth by returning to the traditional Asda virtues of offering value for money.
Asda also announced the appointment of Francis Maude, the former financial secretary to the Treasury, and David O'Brien, chief executive of National & Provincial Building Society, as non- executive directors.
The pre-tax loss for the 53 weeks to 2 May follows a profit in the previous period of pounds 168.3m. The final dividend of 0.85p was as indicated at the time of the rights issue in September. The total dividend cost is pounds 46.8m.
Group net borrowings fell from pounds 948m to pounds 678m at the year-end and will be below pounds 600m once Asda receives the proceeds of the sale of its 25 per cent stake in the MFI furniture group.
In the core Asda supermarkets chain, like-for-like sales were fractionally up, and had improved slightly more in the first few weeks of the new year. Allied Maples, the furniture subsidiary, plunged to an operating loss of pounds 9.8m from a pounds 1.6m profit last time.
Dales, the experimental discount format, is performing 'very much up to plan'. Ten neglected Asda stores will be refurbished according to a format pioneered at Waterlooville, Hants, where fresh food is situated at the front of the store and less space is devoted to clothing and household items.
However, the main reforms await the opening of a pilot store in the Potteries this September under the 'Asda Renewal Project'.
On top of the pounds 78.9m of exceptional costs announced at the interim stage, Asda unveiled another pounds 372.7m. These comprised:
A net pounds 189.9m diminution in the value of its retail properties. Another pounds 200m was wiped from the book value of 65 former Gateway stores.
Other provisions of pounds 89.9m to cover the cost of closing unprofitable stores over three years.
Restructuring costs of pounds 63.2m in the Asda chain - mainly the expenses of re-allocating space and moving fixtures and fittings in 140 stores.
Restructuring costs of pounds 29.7m in Allied Maples.
Ninety-four per cent of Asda shareholders took up their rights to buy more shares at 35p at the time of the rights issue last October. Yesterday the shares fell 1/2 p to 29 1/2 p.
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