Asda renaissance could launch a political career

The feting of Asda's chief executive, Archie Norman, has become so regular it is almost tedious. But you have to give the former management consultant his due. In three years he has turned a shipwreck of a company into Britain's third-largest supermarket chain with a share price heading steadily north.

Yesterday's impressive results mark something of a watershed in his stint at the helm. His first three years have been the story of the recovery, a feat achieved by returning Asda to a price-conscious format and motivating staff with such schemes as giving top performers a Jaguar to motor round in for a month.

Mr Norman's challenge is to manage the second part of the tale as impressively as the first. The omens are good, despite the unnerving and seemingly desperate torrent of customer service ideas that keeps pouring from the company's marketing department. On the trading level he must ensure that the erosion of the margin is compensated for by volume growth. So far the trick is working. While Sainsbury and Tesco battle it out for the higher margin ground, Asda has established a lucrative niche for itself as a cheaper alternative. It is also proving resistant to inroads from discounters such as Kwik Save and the Continental groups such as Aldi, Netto and Lidl.

If Asda has problems, they lie in the rapid introduction of information technology systems, which is fraught with difficulty, and the possibility that Asda's success may induce Mr Norman to dip into acquisition mode, an area where the company's record is poor.

Accidents aside, Mr Norman stands to do well from the Asda renaissance. In addition to his annual salary of pounds 470,000, he is sitting on 4 million share options currently worth more than pounds 2.5m. Then there is a lucrative bonus scheme that pays out at its maximum level if the share price rises above 100p. The scheme does not mature until 1997 but with yesterday's bumper results pushing the price to 90p, Mr Norman could soon be wealthy enough to turn his back on business for the political career some say he is keen to pursue. Turnaround skills are just what the Tory party needs. Joking apart, the possibility that Archie might go is a real worry for Asda shareholders.