Asda. Just the logo on the bag.
Asda has outsourced its whole online business to Ocado. Five years after a leveraged buyout, the company is paying interest on the loan used to buy it.
THE GIST ON ASDA: "Bagged"
What has Asda done with its online business?
Asda just outsourced its entire online business to Ocado, having once been the second biggest online supermarket in the country. Because Asda is paying interest on a loan that was used to buy itself.
Who owned Asda before?
Asda is one of Britain's big four supermarkets, a Yorkshire dairy company that grew into a national grocer. Walmart bought it in 1999 for nearly 7 billion pounds and ran it for 22 years, building one of the strongest online grocery operations in the country. Then, predictably, it was sold to private equity in 2021.
What is a leveraged buyout?
It was a 6.8 billion pound deal, financed by loading Asda up with 5 billion pounds of debt. The buyer borrows money to buy the company, and the company pays back that debt with its own profits. So the company's main job becomes servicing the debt on itself.
Five years on, profits have collapsed. Who would have seen that coming? Market share is at a decade low, Aldi has overtaken it and Lidl is not far behind. The online operation Walmart built has been starved of investment. So now Ocado runs the warehouses, the software and the robots. Asda just has its logo on the bag.
Is this just Asda?
This is what private equity does to brands we love. It buys them with the company's own money, then strips them of cash for years. It happened to Morrisons in 2021, and to Boots, Wagamama and the AA. Across the country, brand after brand wearing a leveraged buyout around its neck, outsourcing everything to maximise shareholder value until the only thing left is the logo. What else can they come for?
Does it matter who owns your supermarket?
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Quick answers
How was Asda's 2021 buyout financed?
It was a 6.8 billion pound deal financed by loading Asda up with 5 billion pounds of debt, which the company repays from its own profits.
Who runs Asda's online business now?
Ocado runs the warehouses, the software and the robots. Asda just has its logo on the bag.
How is Asda doing?
Profits have collapsed, market share is at a decade low and Aldi has overtaken it, with Lidl not far behind.
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