Asda is to buy Netto, the discount food chain, in a move that will add 193 stores to its estate.

The group, which is owned by the US retailer Wal-Mart and is Britain’s second-biggest supermarket chain, has agreed to buy the stores for £778 million from their Danish owner, Dansk Supermarked.

It expects to complete the sale this summer, unless the Office of Fair Trading objects, and to finish refurbishments under the Asda brand by the middle of next year.

Andy Clarke, Asda’s chief executive, said: “We very much look forward to welcoming Netto’s colleagues into our business and joining our team. Customers will benefit from low prices on a significantly broader range of quality products, complemented by the wide range of services we offer in all our smaller stores.

He added that a creation of new in-store jobs which could include sales assistant jobs and customer service jobs,  would be a welcome boost in communities across the UK.

Asda said in February that it was planning to accelerate growth in smaller stores and that it had created a separate division for 21 that were under 25,000sq ft. Netto stores are an average 8,000sq ft.

The acquisition marks the first big strategic move by Mr Clarke, who took over this month from Andy Bond.

Dansk Supermarked said that it planned to focus on expansion in Scandinavia and Northern Europe.

Asda’s sales fell for the first time in four years in the first quarter of this year. This was partly attributed to a fall in food price inflation, but bosses acknowledged that they had made a mistake in jumping on to the promotional bandwagon instead of trying to be the cheapest of the “Big Four” grocers.

In February the company said that it would try to accelerate growth in its non-food Asda Living chain and in its online services.

The Netto deal should put clear distance between Sainsbury’s, which has a 16.3 per cent market share, and Asda, which has 16.8 per cent share. Netto has market share of 0.7 per cent.

Source : The Times

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