Asda to raise £568m in store sell-off as sales continue to fall
Asda is selling off 24 stores and a distribution centre – and leasing them back – to raise £568m in what has been called a “sign of weakness” as sales at the heavily indebted retailer continue to fall,The Leeds-based supermarket group, which is expected to release its quarterly results next week, has continued to lose market share to rivals as sales have gone backwards, despite an effort to win over shoppers with price cuts and improved stores,Sales fell 3,9% in the three months to 2 November, according to data from Worldpanel by Numerator (formerly Kantar), which indicated a one percentage point drop in market share from a year before,Asda’s parent group slumped to a near-£600m loss last year as sales fell and the cost of servicing its debt pile increased.
Nadine Houghton, a national officer for the GMB union, which represents thousands of the retailer’s workers, said there were concerns about Asda’s future in the light of the latest lease-back deal: “Asda’s owners, TDR Capital, is selling off yet more assets to settle the debt liabilities heaped on the business by its own borrowing.“Debt is up, lease liabilities are up, interest payments are up – but market share and staff morale are rock bottom.Asda was once one of the UK’s biggest retailers – where will it all end?”Clive Black, a retail analyst at Shore Capital, said: “From the outside it looks like a sign of weakness that tangible fixed assets are being sold at this time.”He said the deal might help Asda to pay off debt or allow more capital to invest in the business but would also mean higher rents, meaning less cash for day-to-day operations.“If trading was hunky dory, that can be accommodated in the big scheme of things, but that is not the case.
We had expected a more stable trading position from Asda by now,” Black said.“Recent market share data has been very poor for grocery.It all feels rather tight.”Patrick O’Brien, an analyst at GlobalData, said Asda’s promise in March under its new chair, Allan Leighton, to stir up the market with a barrage of price cuts, did not appear to have hit home.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotion“There was a feeling that Asda were really going to bring out the big guns and we haven’t really seen that materialise,” he said.
“We have not seen that aggressiveness on price as yet.”Asda, which has 579 supermarkets, 517 Express convenience stores and 29 Asda Living general merchandise and fashion outlets in total, said it would continue to operate from the latest batch of stores to be sold off.They have gone to two buyers: DTZ Investors and Blue Owl Capital.The deal is part of plan to cut hefty debts at Asda since a highly leveraged £6.8bn takeover in 2020 by the billionaire Issa brothers and the private equity firm TDR Capital.
TDR now controls the group after buying out one of the brothers, Zuber Issa, while Mohsin Issa retains a 22% stake.Amarveer Singh, a credit analyst at CreditSights, said the deal would negatively affect Asda’s credit rating as it would increase leasehold exposure while the proceeds of the sale and leaseback would not be used for investment or cutting the group’s main debts.Bonds fell as it emerged that the money is to be used to pay off a debt to Walmart, the US retailer that previously owned Asda and retains a 10% stake, as first reported by the Financial Times.Asda previously sold most of its warehouses for £1.7bn in 2021, and 25 supermarkets for £650m two years later, in similar deals in which it agreed to lease back the properties.
It also signed a more unusual ground rent deal for £300m in 2023.An Asda spokesperson said: “Asda’s property strategy is centred on maintaining a strong freehold base while also taking a considered and selective approach to unlocking value from our estate where appropriate.These transactions reflect that approach, enabling us to realise value from the sites while retaining full operational control.”
Uber hit with legal demands to halt use of AI-driven pay systems
Uber has been hit with legal demands to stop using its artificial intelligence driven pay systems, which have been blamed for significantly reducing the incomes of the ride hailing app’s drivers.A letter before action – sent to the US company by the non-profit foundation, Worker Info Exchange (WIE), on Wednesday – is understood to allege that the ride hailing app has breached European data protection law by varying driver pay rates through its controversial algorithm.James Farrar, the director of WIE, said: “Uber has leveraged artificial intelligence and machine learning to implement deeply intrusive and exploitative pay-setting systems that have damaged the livelihoods of thousands of drivers.“Through this collective action, we intend to get a fairer deal for drivers and ensure Uber is held financially accountable for the harm caused by this unlawful use of AI.“This case is … about securing transparent, fair and safe working conditions for all platform workers
Facebook and Instagram to start kicking Australian teenagers off platforms as social media ban looms
Australian Facebook and Instagram users under 16 will be notified starting Thursday that their accounts will be deactivated by 10 December, as Meta begins to comply with the Albanese government’s social media ban.Users affected by the ban will receive 14 days’ notice of their pending account deactivation through a combination of in-app messages, email and SMS before their access is cut off.The ban will affect users on Facebook and Instagram, as well as Threads, as an Instagram account is required to use that platform. Messenger is excluded from the ban – but Meta has had to develop a way for users to keep access to Messenger without a Facebook account as a result of the ban.Meta will begin stopping access to existing accounts and blocking under-16s from registering new accounts from 4 December, with access removed for all affected accounts by 10 December, the company said
TikTok to give users power to reduce amount of AI content on their feeds
TikTok is giving users the power to reduce the amount of artificial intelligence-made content on their feeds, as it revealed the platform hosts more than 1bn AI videos.The change, which is being tested over the next few weeks before a global rollout, comes as new video-generating tools such as OpenAI’s Sora and Google’s Veo 3 have spurred a surge in AI content online.The Guardian revealed in August that nearly one in 10 of the fastest-growing YouTube channels globally only show AI-generated videos. Many qualify as “AI slop”, the term for low-quality, mass-produced content that is often nonsensical or surreal.Jade Nester, TikTok’s European director of public policy for safety and privacy, said: “We know from our community that many people enjoy content made with AI tools, from digital art to science explainers, and we want to give people the power to see more or less of that, based on their own preferences
Meta wins major US antitrust case and won’t have to break off WhatsApp or Instagram
Meta defeated a major challenge to its business on Tuesday when a US judge ruled that the company does not hold a monopoly in social networking.The case, brought by the US Federal Trade Commission, could have forced the tech giant to spin off Instagram and WhatsApp, with the former FTC chair accusing the company of operating a “buy or bury” scheme against nascent competitors. The tech giant bought WhatsApp for $19bn in 2014. Losing either the image-based social network, which generates an estimated half of Meta’s revenue, or the world’s most popular messaging app could have done existential damage to Meta’s empire.The US district judge James Boasberg issued his ruling on Tuesday after the historic antitrust trial wrapped up in late May
What is Cloudflare – and why did its outage take down so many websites?
The internet infrastructure provider Cloudflare suffered an outage on Tuesday, making many websites inaccessible for about three hours.Cloudflare is a global cloud services and cybersecurity firm. It provides datacentres, website and email security, protection from data loss and defences against cyber threats, among other things. It describes itself as providing an “immune system for the internet”, with technology that sits between its clients and the wider world that blocks billions of cyber threats daily. It also uses its global infrastructure to speed up internet traffic
Cloudflare says ‘incident now resolved’ after outage causes error messages across the internet – as it happened
The firm has just issued an update saying it believes the incident over.A fix has been implemented and we believe the incident is now resolved. We are continuing to monitor for errors to ensure all services are back to normal.I’ve just quickly tested several key sites which are loading again.Key sites around the world went down, some for a few hours, after a widely relied-upon Internet infrastructure company suffered an unknown issueThe outages took place in the early hours of US morning and during UK business hoursIt affected users of everything from Spotify, ChatGPT, X, Zoom, Microsoft Teams and Canva to retail websites of Visa, Vodafone and Vinted and UK grocery chains Asda and M&S
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