Editing Asda (section)

====Near bankruptcy and merger prospects====
With stores mainly based in the [[North of England]], the newly focused food retail group expanded further south in 1989 by purchasing the large format stores of rival Gateway Superstores for £705&nbsp;million. This significantly increased Asda's total selling area, but the company had borrowed heavily in order to fund the purchase – city estimates suggested that Asda had overpaid by around £300&nbsp;million for 61 of the largest Gateway stores, two undeveloped store sites and a distribution centre. That was far above the net book value of the locations, some of which were poorly sited. (Asda has subsequently relocated or rebuilt more than 30 of the original Gateway stores since the late 1990s.) The move left the company overstretched as a result, and by 1991, it found itself in serious financial trouble with over £1&nbsp;billion of debt; compounding the situation further was a declining customer base, which was mainly caused by Asda's focus on moving upmarket resulting in prices rising to levels significantly higher than competitors.<ref>{{cite news | url=https://www.managementtoday.co.uk/uk-asdas-open-plan/article/410110 | title=UK: ASDA'S OPEN PLAN | first=Anita | last=van de Vliet | work=[[Management Today]] | url-access=subscription | access-date=19 February 2021 | archive-date=7 March 2021 | archive-url=https://web.archive.org/web/20210307063109/https://www.managementtoday.co.uk/uk-asdas-open-plan/article/410110 | url-status=live }}</ref>

Eventually, a combination of flagging profits, a tremendous debt and a loss of customers left Asda in such an egregious financial situation that they came very close to breaching their banking covenants; at one point, they almost entered [[Administration in United Kingdom law|administration]]. The company's first response was to change its management; chairman John Hardman was ousted in June 1991 and was replaced by Patrick Gillam, and [[Archie Norman (businessman)|Archie Norman]] was appointed chief executive in October. Asda then completed a rights issue in November 1991 that raised £357&nbsp;million and cut the company's debts to £668&nbsp;million. In May 1992, Asda reduced their prices back to their traditional level (5–7% below competitors) and announced that they would eliminate over 500 management positions. Underperforming stores were initially converted to a new discount format called "Dales"<ref>{{cite web |url=https://ui.assets-asda.com/dm/asdagroceries/6.14a,%20New%20Dales%20Format,%201992?wid=1432&fmt=webp-alpha&qlt=60&cacheBust=2024-06-01 |title=New Dales Format |access-date=1 June 2024 |archive-date=5 June 2024 |archive-url=https://web.archive.org/web/20240605171546/https://ui.assets-asda.com/dm/asdagroceries/6.14a,%20New%20Dales%20Format,%201992?wid=1432&fmt=webp-alpha&qlt=60&cacheBust=2024-06-01 |url-status=live }}</ref><ref>{{cite web |url=https://www.independent.co.uk/news/business/asda-rights-wins-city-s-approval-1481474.html#:~:text=Conversion%20of%20four%20underperforming%20Asda%20stores%20into%20the%20Dales%20discount%20format%20had%20boosted%20sales%20by%2050%20per%20cent%20and%20increased%20customers%20by%2025%20per%20cent |title=Asda rights wins City's approval |date=29 January 1993 |work=[[The Independent]] |access-date=1 June 2024 |archive-date=1 June 2024 |archive-url=https://web.archive.org/web/20240601153028/https://www.independent.co.uk/news/business/asda-rights-wins-city-s-approval-1481474.html#:~:text=Conversion%20of%20four%20underperforming%20Asda%20stores%20into%20the%20Dales%20discount%20format%20had%20boosted%20sales%20by%2050%20per%20cent%20and%20increased%20customers%20by%2025%20per%20cent |url-status=live }}</ref> but this had been ended by 1998. In 1993, Asda completed a second rights issue that raised a further £347&nbsp;million<ref>{{cite web |url=https://www.independent.co.uk/news/business/asda-rights-wins-city-s-approval-1481474.html |title=Asda rights wins City's approval |date=29 January 1993 |work=[[The Independent]] |access-date=1 June 2024 |archive-date=1 June 2024 |archive-url=https://web.archive.org/web/20240601153028/https://www.independent.co.uk/news/business/asda-rights-wins-city-s-approval-1481474.html |url-status=live }}</ref> and began selling off some of its assets; some stores were sold to competitors, and the [[Allied Carpets]] chain was sold to Carpetland.<ref>{{cite web |url=https://www.independent.co.uk/news/business/asda-passes-allied-to-carpetland-supermarket-group-pays-more-than-pounds-18m-to-be-rid-of-carpet-stores-maples-sale-close-1465249.html |title=Asda passes Allied to Carpetland: Supermarket group pays more than pounds 18m to be rid of carpet stores Maples sale close |date=4 December 1993 |work=[[The Independent]]}}</ref> By 1995, the company had returned to profitability and had virtually wiped out its debt – this is cited as one of the most successful turnarounds in British retail history.<ref>{{cite web |title=Asda Group Plc |url=https://www.encyclopedia.com/social-sciences-and-law/economics-business-and-labor/businesses-and-occupations/asda-group-plc |website=Encyclopedia.com |access-date=16 June 2020 |archive-date=16 June 2020 |archive-url=https://web.archive.org/web/20200616203322/https://www.encyclopedia.com/social-sciences-and-law/economics-business-and-labor/businesses-and-occupations/asda-group-plc |url-status=live }}</ref>

Norman succeeded Gillam as chairman upon the latter's retirement in 1996, appointing then-deputy [[Allan Leighton]] as chief executive, and began to remodel Asda's stores along the lines of [[Walmart]], the world's largest retailer.<ref>{{cite web|url=http://www.deloitte.com/dtt/press_release/0,1014,cid%253D196099,00.html|title=Global powers of retail report – wal mart remains world's largest global retailer|website=Deloitte & Touche|access-date=7 October 2008}}{{Dead link|date=January 2014}}</ref> Leighton travelled to [[Bentonville, Arkansas]], to assess and photograph the systems and marketing deployed by Walmart.<ref>{{cite web |url=https://www.managementtoday.co.uk/mt-interview-allan-leighton/article/492063 |archive-url=https://web.archive.org/web/20081205095240/http://www.managementtoday.co.uk/search/article/492390/mt-interview-allan-leighton/ |url-status=live |archive-date=5 December 2008 |title=The MT interview: Allan Leighton | first=Chris |last=Blackhurst | website=[[Management Today]] |date=25 August 2005 | url-access=subscription}}</ref> In 1998, following the Walmart model, Asda began opening larger 'Hypermarket' (later 'Supercentre') stores as well as introducing pharmacies and cafes to its stores. At the same time, merger discussions were taking place between Asda and other retailers such as [[Safeway (UK)|Safeway]] and [[Kingfisher plc]]; both collapsed without an agreement being reached, but in 1999, a second round of discussions with Kingfisher later reached an agreement for a £5.4&nbsp;billion merger that would have both created the United Kingdom's largest multi-category retailer and enabled Asda to begin operating stores throughout Europe.<ref>{{cite web |url=https://www.campaignlive.co.uk/article/asda-kingfisher-multi-billion-pound-merger/42283 |title=Asda and Kingfisher in multi-billion pound merger |date=16 April 1999 |work=[[Campaign (magazine)|Campaign Live]] |access-date=2 October 2020 |archive-date=7 April 2023 |archive-url=https://web.archive.org/web/20230407220823/https://www.campaignlive.co.uk/article/asda-kingfisher-multi-billion-pound-merger/42283 |url-status=live }}</ref>