n Perhaps there have been no internal rows or conflict with Wal-Mart's style of control. But the stream of executive departures at Asda is raising serious questions in the City and the industry about the chain's capacity to endure constant management convulsions. Helen Gregory and Clive Beddall report Paul Mason's defection from Asda looks like a smart career move. Out-of-town discount retailer Matalan is fast growing in the country and, as most people haven't heard of it, there's plenty more room for growth ­ something most grocery retailers can't claim. The ex-Asda president and md calls his new job "one of the most exciting and prestigious roles in UK retailing". But his departure lends weight to the "brain drain" tag being levelled at Asda. Mike Coupe was the last high roller to leave in July, following the departures of Justin King, Allan Leighton and Archie Norman. The culture clash between Leeds and Bentonville has been blamed for this executive haemorrhaging, but it is strenuously denied by the chant-loving multiple. Some industry watchers believe Asda is not a happy ship, having lost much of its autonomy to Wal-Mart. They claim it's now such a small part of the US-owned empire that it's harder to get quick decisions on day-to-day issues such as sourcing. Some buyers are reportedly frustrated to see the likes of Tesco negotiating speedy deals on bogofs. However, senior sources within Asda/Wal-Mart insist the spate of executive departures is nothing to do with internal conflicts between the US and UK sides. As one put it on Thursday: "Everyone wants to write the story that there has been a massive internal row because it makes good copy. But that is simply not true. Most of those who have moved on in recent months came as part of the team assembled when Allan Leighton was at the helm. They have all been there for seven or eight years, they are all in their thirties or early forties, and at the stage of their careers when they want to be the top dog running companies. "Their only progression can be through Asda, and there are limited opportunities there, or within the worldwide Wal-Mart organisation, which would mean a move to senior positions in far off places like Mexico or South America. Most of them would sooner opt for posts in the UK. Most of the Asda senior team have matured sufficiently to the stage where they receive calls from headhunters almost every week. "There have been suggestions that Mason had policy disagreements with Wal-Mart Europe CEO Dave Ferguson, but this is not seen as a factor in his move to Matalan." Rumours of Mason's defection had been on the cards for weeks, although he had laughed off suggestions he was set to leave at the end of June when presented with The Grocer 33 trophy by the magazine's team. The clothing chain must be over the moon to snare 41-year-old Mason, as it's been without a chief executive to replace Angus Monro who left the company in April. Mason has been heralded by his new employers as someone well-versed in big volume trading and able to stabilise the business and give it the needed experience. With more than 20 solid years' retailing experience, including spells at do-it-yourself chain B&Q and at Mars, he is obviously a catch. Hand picked by Allan Leighton at Asda as logistics and development director in 1994, Mason has since been responsible for retail, logistics, and human resources, as well as for the store development of the group. Following in the footsteps of his charismatic predecessor, Mason was a much quieter character who kept a fairly low profile. He (on the face of it) embraced the smiley culture and rarely made company pronouncements. He was, however, singled out to take plaudits in front of 17,000 shareholders and colleagues at Wal-Mart's convention in Arkansas in June. There, Wal-Mart president and CEO Lee Scott showered praise on him. In a direct reference to the previous departures of Asda chairman Archie Norman and CEO Allan Leighton, he admitted US observers had questioned the changes in the UK executive team. He said: "Some people said we would suffer in Britain because we were losing a great management team. However, they had trained a great replacement team, so we won't suffer." Whatever his management style, Mason looks to have done the job for his American owners, as recent figures indicated Asda had returned from the "relative doldrums" of six to nine months ago. Like-for-like sales growth for the six months to July 31 was in the high single digits with total sales growth in the low double digit range, while George clothing had generated like-for-like sales in the "low teens". The chain attributed its success to strong food sales and boasted of 500,000 new shoppers since the start of the year. But despite healthy-looking recent trading figures, Wal-Mart has demanded Asda double its profits by 2003. According to Verdict Research's Richard Hyman, it hasn't got much time. "It needs to achieve top line growth to deliver higher cash profit. This will require it to capture significant slices of market share over the forecast period and is why Asda has been, and will return to setting the price agenda." Meanwhile, Asda's arch rival Tesco is rubbing its hands with barely disguised glee at recent events. Tesco says the exodus of Asda executives and its own price cutting are hurting the Wal-Mart subsidiary. "They have not made a significant investment in pricing this year and we are creeping past them with well resourced price cuts that they are not able or willing to match," claimed a Tesco spokesman. Understanding the numbers is something the new chief operating officer, Tony DeNunzio, should know all about. The firm's European finance chief flew back during his holiday to announce his appointment, dispelling rumours that Bentonville might bring in a US-trained exec. DeNunzio is an Asda stalwart, having eight years' experience at the chain and is described by industry watchers as "a nice bloke". The speed at which the announcement was made should please most with an interest in the chain, as any prolonged uncertainty would have been seen as damaging. In Mason's absence ­ for just under a week ­ the senior team had run the ship, with Wal-Mart European boss Dave Ferguson taking day-to-day control at Leeds. The senior source added: "Recent financial results have shown that Asda is the jewel in the crown of the Wal-Mart organisation and no-one in Bentonville wanted to see the boat rocked by further departures. Parachuting someone in would have caused some dissatisfaction here." Some retail executives expressed surprise at Asda's willingness to allow its most senior UK executive to join a rival without a fight. One even thought they weren't bothered about losing him, although both companies are still negotiating his starting date. An Asda spokesman was bullish about the situation, insisting: "We thrive on change. The more we have, the better we do." He added: "We have the highest respect for Paul Mason. He has done a tremendous job for Asda over the last six years." This view was echoed in the City. But not all analysts were convinced that the big Asda/Wal-Mart machine was powerful enough to absorb the shock of all this board-level upheaval. Dave Stoddart, an analyst at Teather & Greenwood, questioned the importance of the top person when the company had such a process-driven approach. But he added: "You can't lose the amount of senior talent that Asda has without it having an effect on the business." He had been sure that the replacement would come from within Asda. "There haven't been too many people rushing to join the company recently. It's been all one way traffic." According to Stoddart, Wal-Mart needs to keep at least a quota of the original Asda team in place because these people understand the business and the competition. "Wal-Mart has fallen foul of this in the past ­ such as in Germany ­ when it didn't understand the supplier base or the competitive environment." Another analyst warned Wal-Mart about being heavy-handed: "I'm sure they've tried to impose more systems on a company that was free-wheeling, but they need to remember what made it successful in the first place." Now with a new man safely ensconced at the top, it's surely not all doom and gloom for the retail giant. Along with the Asda colleagues' seemingly slavish devotion to their employer, there's a second tier of managers who were less lucky after the share sell-off and who are still hungry and determined to see the multiple give Tesco a run for its money. {{NEWS }}

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