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Wal-Mart moves its China CEO to lead UK chain Asda

June 13, 2016 11:43 AM
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(Bloomberg)—Wal-Mart Stores Inc. chose the leader of its China unit to replace Andy Clarke atop its U.K. Asda chain, a surprise move just days after Clarke indicated he would be succeeded by the company’s new chief operating officer.

Sean Clarke, who started his retail career at Asda in 2001, will take over on July 11, the Bentonville, Ark.-based company said Monday. His deputy CEO will be Roger Burnley, the man that Andy Clarke had said would take over. Burnley is due to join Asda from competitor J Sainsbury Plc in October. Asda is No. 9 in the Internet Retailer 2016 Europe 500; Sainsbury is No. 21.

Wal-Mart’s move shows that Andy Clarke is “out of the loop” at Asda, Nick Bubb, an independent retail analyst, said by email. “They’ve clearly decided they can’t wait for Burnley to get his feet under the desk to make a move to replace Andy.”

Andy Clarke’s departure represents another boardroom victim of the surge of discounters Aldi and Lidl (No. 84). Within the last two years, all four of Britain’s biggest grocers have changed CEOs amid a price war that’s squeezed profits across the once-stable industry. The expansion of the discounters has robbed Asda of its position as the U.K.’s cheapest mainstream grocer. Amazon.com Inc. (No. 1) also has stepped up its push into the United Kingdom with an agreement in February to sell hundreds of products supplied by Wm Morrison Supermarkets Plc.

“People have been calling for Andy Clarke’s head for a long time,” said Richard Clarke, an analyst at Sanford C. Bernstein. “As the performance of all of the other U.K. supermarkets has gotten better, Asda’s has gotten worse.”

Clarke’s departure comes eight months after he announced further price cuts and the refurbishment of 95 of its larger stores, which so far have failed to arrest the sales slump. David Cheesewright, the CEO of Wal-Mart’s international unit, said last week that Asda’s performance was very disappointing. He signaled that Wal-Mart would change tack by prioritizing the protection of U.K. market share over profit, comments that alarmed investors in the likes of Tesco Plc (No. 3) and Sainsbury.

The move could lead to a major price war and an industry shake-out, David McCarthy, an analyst at HSBC, said in a June 6 note.

Wal-Mart described Sean Clarke, who is not related to Andy, as one of its most experienced executives. After an initial spell at Asda, he has worked for the retailer in Japan, Canada, and most recently, China.

There, he faced similar issues to those he will have to contend with in the U.K. Grocers have built too many large stores in China, some of which have become less profitable due to the rise in convenience and online shopping, according to Charles Allen, an analyst at Bloomberg Intelligence.

Wal-Mart said the head of its Canadian unit Dirk Van den Berghe will now lead its China unit as part of a new brief in which he’ll be responsible for the entire Asia region. Scott Price, the current head of Asia, has had his responsibilities pared and will now work exclusively as the chief administrative officer of Wal-Mart International.

For Andy Clarke, his departure marks the end of a 20-year career at Asda, including six years as CEO. He will take up an advisory role to the retailer for the remainder of 2016.

 

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