ASDA nets 193 Netto stores in £778m deal
ASDA yesterday cemented its position as the country’s second-biggest supermarket by buying the UK stores of discount chain Netto in a deal worth £778 million.
The grocer, which last week revealed its first fall in same-store quarterly sales in four years, said the 193 stores, mainly in the North and averaging 8,000 sq ft, would be Asda-branded by summer 2011.
The move, subject to a green light from competition watchdog the Office of Fair Trading, is the first big step by new chief executive Andy Clarke. He described the deal as a “significant step forward”.
An Asda spokesman said: “This is part of our five-year plan to make us the clear number two in the market.” The new stores, which will sell a “broad range” of products including non-food, will also challenge market leader Tesco’s convenience stores. “Customers will be able to do a full weekly shop at our new stores,” said the spokesman.
“They will be able to buy food, socks and knickers and even irons and toasters.” As a result, Asda would employ “twice as many staff” as a typical Netto store in the same location. But it could not say how many jobs would be created.
Analysts Collins Stewart said: “This takes Asda into neighbourhoods where its name is known and its out-of-town stores don’t reach.” Shore Capital’s Clive Black said: “This will inject some life and momentum into a business that clearly has underperformed recently.But it won’t cause shockwaves given Netto’s 1 per cent market share.”
The OFT would likely require Asda to sell a “number of sites” to rivals.