Mccoll's Retail Share Discussion Threads

[etavener] 02/12/2015 15:49

I'm starting to wonder why I'm holding these. When is this likely to turn? Bought this for the 7% yield and the possible growth. However, it doesn't seem like the market likes it.

[bugle4] 01/12/2015 12:17

McColl's enjoys brighter end to year as it pushes towards a convenient future
McColl's Retail is busy converting its old-fashioned newsagents into food and wine convenience stores
By Eleanor Steafel

9:19AM GMT 01 Dec 2015

CommentsComment

McColl's Retail, one of the largest convenience store chains in the country, has reported a strong final quarter after what has been a turbulent year for the group.

Total sales grew 2.7pc in the 13 weeks to November 19, although like-for-like sales - which strip out new stores opened this year - were down 1.8pc. However, this was a 0.5pc improvement on the prior quarter.

McColl's has been on a drive to convert its newsagents into food and wine outlets and is also modernising its convenience store estate, with the goal of having 1,000 convenience stores.

The retailer has 1,352 shops - 893 of which are convenience stores - operating under the Martin's name and the RS McColl brand in Scotland.

McColl's shares suffered a 10pc slump earlier in the year on the back of its first annual results as a public company. Its shares are now trading at 134p, down from 191p when it floated in February 2014.

Total sales for the year grew 3.1pc, with like-for-likes down 1.9pc. There was a steeper 4pc like-for-like fall in its newsagents versus a 0.6pc fall in its convenience stores.

McColl's acquired 60 new convenience stores this year and converted 45 newsagents to food and wine shops.

Chief executive James Lancaster, who has run the company for 20 years, said: "I am delighted to report significant progress on our strategic initiatives for the financial year, continuing our expansion into convenience and capturing further market share.

"Whilst the sector continues to be challenging, total company like-for-like sales improved in the quarter, and have held up well in our developed convenience stores over the course of the year.

"We therefore expect results to be in line with the board's expectations for the year."

The group, which sold off 100 newsagents earlier in the year, said the divestment was expected to be "earnings neutral" in 2016, with the funds generated to be used to invest further in convenience.

Mr Lancaster said earlier in the year he felt the company had come a long way from its "newsagent roots".

"We’re a world away from just being the place to go in the neighbourhood for your papers and milk.

"Increasingly we believe we are becoming the neighbourhood’s favourite store for just about every daily essential – from an evening meal to a morning coffee, from picking up your online purchases to posting a letter or paying a bill.”

Earlier this month Mr Lancaster announced his intention to step down from the CEO role and become non-executive chairman.

[loganair] 26/10/2015 22:28

McColl’s Retail – a super market investment? By Richard Gill

Overall supermarket sales grew by only 0.8% for the period. However, one part of the sector which is showing good momentum is the convenience store market, an area which FTSE Small Cap business McColl’s Retail is taking advantage of.

The Business:

Founded by current CEO John Lancaster in 1973 as a vending machine operator, McColl’s is now the second largest multiple convenience store business in the UK and the largest independent operator of Post Offices. With a focus on local neighbourhood locations (as opposed to high streets) at the end of August this year the company had a total store base of 1,346, with 866 of these being convenience stores.

For reporting purposes the company divides its stores into several categories:

Premium Convenience – operating under the McColl’s brand name these are larger convenience stores which offer a wider range of groceries, including chilled and fresh products.

Standard Convenience – traditional convenience outlets which are typically larger than the (below) Food and Wine stores and stock a larger range of convenience products.

Food and Wine – newsagents that have been converted to convenience stores by introducing a grocery and alcohol range, longer trading hours and other improvements.

Newsagents – In total the firm operates some 474 newsagents shops, which are under the brand of RS McColl in Scotland and Martin's in the rest of the UK. The newsagent portfolio contains smaller stores which sell the traditional confectionery, tobacco and news related products, along with services such as Post Office counters and Paypoint.

The company’s growth strategy is focussed around upgrading its stores to the higher value, better performing convenience formats. McColl’s is looking to have 1,000 convenience stores by the end of 2016 by converting newsagents into food & wine stores, upgrading standard stores to premium stores and via acquisitions, while also expanding the product range and maintaining a profitable newsagent operation.

Recent trading & financials:

Over the financial years ended November 2011 to 2014 McColl’s grew revenues from £805 million to £922.4 million – a compound annual rate (CAGR) of 4.65%. Underlying operating profits grew over the same period by a CAGR of 10.2% to £25.5 million.

Upon listing on the Main Market in February last year McColl’s raised a net £44.7 million and used this to pay down borrowings. In 2014 this helped net interest costs before exceptionals (mainly associated with the IPO and non-cash share based payments) to more than halve, from £12.5 million to £6.2 million and pre-tax profits to almost double to £19.2 million.

Interims for the 26 weeks to May showed a much cleaner set of numbers:

Total revenues for the period rose by 3.4% to £459.3 million; however a 1.9% fall in like-for-like sales spooked the market and saw the shares fall by 2.5% on the day of results. Net profits were strong at £5.9 million but even stronger was operating cash flow at £9.84 million. As a result the dividend was doubled to 3.4p per share, covered 1.8 times by adjusted earnings of 6.1p per share.

The most recent set of numbers were for the 13 weeks to 30th August and showed total sales up by 3%. However, like-for-like sales slipped by 2%, the company being hit by a 4.6% fall in its standard convenience and newsagents businesses. Nevertheless, good operational progress has been made in the financial year to date, with 46 new stores acquired, 26 food and wine conversions completed, alcohol being introduced to 100 newsagents and the 500th Post Office opened. McColl’s is also exploring additional income generating activities, with an agreement signed with sandwich giant Subway to trial a franchise operation. Overall, results for the full year are expected to be in line with expectations.

August also saw the company agree new terms for its £100 million total banking facilities, extending the expiration date by two years to August 2020 and reducing the interest paid by a minimum of 0.5 percentage points. And last week the company revealed that, after a portfolio review, it would be selling around 100 of its newsagents, for a price no less than asset value. Encouragingly, the decision is expected to be earnings neutral in 2016, with the funds being invested in profitable stores. While the stores might be on the lower side of profitability for McColl's, these are still solvent businesses.


Risks & Opportunities:

As the recent numbers from Kantar show, sales growth in the wider supermarket sector is slow, lagging the overall economy, with consumers having seen falling prices for over a year now. While convenience operators tend to be less price sensitive, recent numbers from McColl’s have shown that like-for-like figures have also been falling, hit by strong competition and price deflation. I note that McColls’ largest fall in like-for-like sales is being seen in the newsagents and standard convenience sector, so it is encouraging that the company has a strategy to upgrade these to the better performing convenience category stores.

Furthermore, the convenience market is one of the fastest growing subsets of the grocery market, driven by consumers moving from large shopping trips at out of town locations to smaller trips at more local venues. Recent figures from industry analysts at IGD suggest that in the 12 months to April 2015 the UK convenience market grew by 5.1% to £37.7 billion. It forecasts further sales growth of 17% between 2015 and 2020, putting McColl’s in a good position to grow given its specialised focus.

Management are incentivised to deliver growth, with the most recent long-term incentive plan awarding the directors with a combined £789,000 worth of shares at today’s price, should targets be met over the three years to November 2017. Most of the incentive plan is earnings based, with the full awards only given if cumulative earnings of at least 61.5p per share are achieved over the three years – quite a challenge given that it assumes a CAGR of around 14.3%. The remainder of the awards are based on total shareholder returns being in the top quartile of certain peers over the three years and there is a two year lock in period after vesting.

Other notable risks include the planned 10.8% rise in the UK minimum wage, from £6.50 to £7.20 for over-25s, from April next year, which will hit many retailers including McColl’s. In the longer term the National Living Wage, to be phased in between 2016-2020, is also a threat to profit margins. While the firm’s net debt remains relatively high at £35.3 million this is entirely manageable, with the company seeing strong cash flow and interest cover for the first half of this year being comfortable at 6.4 times.

Valuation:

Since listing at a price of 191p in February last year McColl’s shares have not performed very well. While being given a temporary boost by a tip in the Daily Mail this August, at the current 145p they trade not far off all-time lows.

The current price puts the shares on a multiple of just 9.2 times market forecasts for the full year to November 2015. McColl’s is also an attractive income play, it targeting a payout of around 60% of profits before exceptional gains and after tax. With an expected dividend of around 10p per share for 2015 the current yield is a highly attractive 6.9%.

These valuation figures compare very favourably with other food retail sector peers.

Overall, McColl’s Retail shares look like a decent value bet on the growth of the convenience sector, with a good yield to boot.

[eastbourne1982] 16/10/2015 09:27

Been buying these recently at under £1.48, great divi, good value and potential of decent sales growth, surprised there isn't more interest at the current price.

[philanderer] 22/8/2015 23:48

MCLS tipped in Mail on Sunday

[katie priceless] 21/8/2015 08:34

A veteran of the convenience retail sector has emerged as the frontman for a bid to gain control of Morrisons’ smaller stores.

Mike Greene, who has twice been chairman of the Association of Convenience Stores and has held senior roles at Spar and newsagents chain McColls, is understood to be fronting a deal backed by investment firm Greybull.

The Sunday Telegraph first reported that Greybull Capital was in exclusive talks with the Bradford-based supermarket chain. The firm, which rescued Monarch Airlines last year, is discussing a deal for between 150 and 160 of the "M Local" convenience stores which together generate between £250m and £350m in sales.

Greybull is expected to invest tens of millions of pounds into the M Local stores.

[katie priceless] 21/8/2015 07:54

A new McColl's thread as been posted on m###yam bb

[katie priceless] 20/8/2015 15:46

There was a mention on Tip TV yesterday

hxxp://www.tiptv.co.uk/archives/finance-show-live-replay-19-08-15/

[scobak] 15/8/2015 21:03

I am new to mcls. Have read the posts and latest reports /comment. At prices under 150p it has a lot of possibilities and potental. However there have been few recent posts on here. can anyone add something meaningful to reinforce a decision to buy or otherwise defer?
Thanks

[minsky] 20/5/2015 17:09

Hope you find somewhere to put your money that isnt like watching paint dry. 4% spreads here don't encourage interest. Good luck yourself.

[philanderer] 20/5/2015 17:03

I`m all out for now ... small capital gain and a couple of dividends, can`t complain.

Luck to all holders.

[philanderer] 18/5/2015 17:28

255,000 @ 170p .. gawd knows if someone`s still dumping these !

[philanderer] 15/5/2015 17:16

Looks like it was Cavendish Square Partners , RNS just out saying they`ve dumped all of their 6 million shares. It had originally held 20% of MCLS but sold down to 5.6% at the ipo.....hold zilch now.

info:

Cavendish Square Partners, a fund which contains the mixed bag of private equity stakes Lloyds Banking Group inherited following its emergency takeover of HBOS in 2008

[philanderer] 08/5/2015 17:09

Hopefully yes, but they`ve been dumping since august last year ;-)

[lord gnome] 08/5/2015 14:56

Hopefully that's your seller cleared.

[philanderer] 08/5/2015 11:39

Jeez that`s got to trigger an RNS

6 million @ 160p
6.3 million @ 161p

Something very wrong here.

[philanderer] 06/5/2015 15:09

2 x 8800 dumped this afternoon ... seller willing to take 162p now.

This don`t look too good.

Not a buyer in sight.

[philanderer] 06/5/2015 09:51

'C-stores attracting more top-up shoppers'

..Convenience stores have successfully won back the lucrative top-up shopper this year, according to the 2015 Convenience Tracking Programme (CTP) from HIM Research & Consulting

[philanderer] 05/5/2015 20:22

Yep , so much stock coming on the market at any sign of strength. Maybe original private holders have so much stock they want to cash in ?

[minsky] 01/5/2015 10:11

I don't know what is going to drive the share price between now and the half year results July 26th. My guess is range-bound between low 160s and high 170s.

[philanderer] 01/5/2015 09:33

xd seems to have been painless ;-)

'5 Top Income Stocks: McColl’s Retail Group PLC, DX (Group) PLC, Low & Bonar plc, Laura Ashley Holdings plc And Manx Telecom PLC'

[philanderer] 29/4/2015 11:38

Another 50,000 @ 165p sold , but I suppose someone has bought them on the other side of the trade ;-)

[minsky] 29/4/2015 11:08

that's when there will be the over-reaction and it will go down more than 6.8p.
Ever the optimist, I'm hoping for a recovery after that based on no evidence whatsoever. Uncertainty around the election isn't helping either.