Asda has dismissed more than 200 employees involved in its £800 million IT upgrade project, marking the second round of redundancies in five months under new chairman Allan Leighton.

The staff were contracted to work on "Project Future" - a major initiative to separate the supermarket's IT systems from former owner Walmart. Sources indicate that more employees will be leaving in the coming weeks and months as they complete their roles on the changeover.

The £800 million IT transformation, described as Europe's biggest systems implementation programme, has been plagued with setbacks and delays. Problems included a botched update that resulted in thousands of employees being paid incorrectly, and an incident in August when thousands of customers ordering from its George clothing range were left out of pocket ahead of the new school year.

Walmart recently granted Asda an extension to the completion deadline, allowing the supermarket to avoid a multimillion-pound penalty charge after missing the original target.

In comments to Retail Gazette, an Asda spokesman said that Project Future had largely concluded “and so it is natural that colleagues leave the project as the specific workstreams they are working on are completed or as their contracts finish."

In addition to the IT project cuts, Asda is folding the management of its IPL sourcing and logistics division into its central management function. The supermarket said this restructuring aims to support its 'Formula for Growth' strategy and would integrate IPL's leadership teams into relevant Asda functions, "bringing the business closer to our operations."

The job losses come amid challenging times for the retailer, which has seen its market share fall from 13.7 per cent to 12.6 per cent over the past year. Recent trading figures from Kantar revealed sales at Asda dropped by 5 per cent in the four weeks to 23 February compared with the same period last year, making it the only major grocer to suffer a decline in sales during that period.

In January, Leighton sacked 13 regional managers as part of an internal restructuring following Asda's worst Christmas trading performance since 2015. The supermarket also made 500 staff redundant without a consultation period last November, and recently scrapped 10,000 staff bonuses, raising concerns about employee morale.

---