Mccoll's Retail Share Discussion Threads

[loganair] 15/5/2017 12:25

If I was in McColls shoes and they do decide to buy I would raise the money via a Rights Issue therefore negating the need to take on any more debt.

[neilyb675] 15/5/2017 12:22

Hmmmm. You might have a point, I'm always concerned about too much on ones plate....

It all costs money.

[loganair] 15/5/2017 12:20

Usually I would agree, however Tesco would be a forced seller therefore McColls may have an opportunity of buying some good assets at a great price. Otherwsie somebody else will buy thereby increasing competition for McColls.

[neilyb675] 15/5/2017 12:14

They bought the co-op stores and that programme needs to be fully sorted before thinking about any further expansion Imo.

[loganair] 15/5/2017 11:54

Anyone with any thoughts about the possiblity of McColl´s buying either One Stop or some of Tesco Express convenience Shops if they come up for sale due to their take over of Bookers???

[loganair] 15/5/2017 11:43

I believe One Stop was brought my Tesco´s either in the late 1980´s or early 1990´s and I know the one nearest to me has been going for many, many years.

[aleman] 15/5/2017 11:34

Could just be a maturity thing. If they are newer, footfall hasn't stabilised yet and they might be still experimenting with more expensive lines they can stock. Draw people in with staples and increase margin with luxuries.

[loganair] 15/5/2017 11:04

I ask myself why isn´t McColl´s outlets doing better as One Stop seems to be going from sterngth to strength and may have to be sold by Tesco´s if they wish to take over Bookers.

´It is widely expected that the deal will lead to a protracted “phase two” inquiry by the UK’s competition watchdog. Industry experts have suggested that the deal might force Tesco to offload its One Stop arm or shed thousands of its Express convenience shops.´

As I´ve posted in the past I hope McColl´s buy ´One Stop´if the opportunity arises.


Tesco's convenience retailing subsidiary has reported that its growing One Stop division, now with 160 stores, enjoyed outstanding performance in the 2016/17 financial year. In particular stores trading for more than a year saw a 7% like-for-like uplift in sales, well ahead an overall grocery market that struggled to stay positive in the face of deflation over the 12 months.

As well as seeing basket sizes increasing by 3.2%, footfall in its stores was up by 3.2%. And furthermore profits margins improved by 5% year on-year, with more than £120m in total sales over the period. As the network continues to expand the average sales uplift for stores coming into the format has been 23%, with individual cases up to 77%.

[aleman] 27/4/2017 16:33

13% vote against 4 directors - what's that about?

[loganair] 10/4/2017 09:50

If Tesco have to sell their ´One Stop´ store chain I for one will be happy to see McColl´s buy them as long as it is at the right price and hopefully they will be able to as Tesco would be a Forced Seller.

[loganair] 10/4/2017 08:44

Daily Telegraph:

Peterborough is due to become the unlikely battleground for Tesco’s multi-billion pound takeover of Booker as the competition watchdog decides whether the deal will hand the pair too much power over the grocery industry.

Exclusive data obtained by The Telegraph shows the two companies run 37 of out of a total of 117 food shops in the city, 31pc of the local market.

The research by the Local Data Company shows the scale of the task facing the Competition and Markets Authority as it assesses all the postcodes across Britain where there are overlaps between Booker and Tesco’s convenience shops.

Industry experts believe that Tesco will have to offload hundreds of its ­Express stores to secure regulatory clearance.

Tesco ‘s chief executive, Dave Lewis will hope to deflect concerns this week when the supermarket chain is expected to reveal a jump in pre-tax profits to £780m from £435m the year before. He will also provide further evidence of the cost pressures for consumers and food retailers from the weaker pound

Senior retail sources say that the Booker deal will mean Tesco will have an even greater level of influence on the nation’s food supply chain than it does at present, with 28pc of the grocery market. Booker and Tesco have tried to argue that the deal does not “add more stores” because the wholesaler operates a franchise model for its Londis, Premier, Budgens and Happy Shopper retail chains.

However, rival retail chains are expected to lobby the competition watchdog to show that Booker and Tesco do have influence over the stores and a greater purchasing power will only heighten this.

They will also highlight that since Tesco’s takeover of One Stop, workers at the convenience chain are paid less but goods are more expensive than at the rest of Tesco’s stores. This, they claim, punctures Mr Lewis’s argument that customers will be better off.

Andy Higginson, chairman of Morrisons and former Tesco finance boss has said that the UK's competition watchdog should scrutinise the deal.

Despite two of Tesco’s biggest shareholders, Schroders and Artisan, objecting to the Booker takeover, Bruno Monteyne, an analyst at Bernstein, has estimated that the deal would be approved by 70pc of shareholders, based on a poll of 137 fund managers, including 57 that held Tesco shares.

Analysts have suggested that if Tesco seals its Booker takeover, it could pave the way to the supermarket selling-off its eastern European or Asian operation, where trading is deteriorating.

[loganair] 10/4/2017 08:33

Barns - I do not agree and dislike companies taking on more debt for what ever reason, especially as interest rates are now on the rise.

[aleman] 07/4/2017 16:24

It looks like these must have been tipped somewhere just before 2pm.

[barnesian] 07/4/2017 14:40

Interest on debt (2-3%) is much lower than the cost of equity through dilution (10%) so debt should always be used if the resulting interest cover is manageable.

Interest cover is currently 8 times which is very healthy. Lots of debt capacity here.

Edit: In the meantime, while I was typing that, whoosh! :-)

[aleman] 07/4/2017 14:07

Thanks for that information, loganair. Very useful. I still think you are worrying too much about a bit more debt if the company might be acquiring 50% more cashflow - taking EBITDA up to £70m, from say £45m+ now and £37m pre-Coop ?. That might allow about £70m more debt but probably rather more equity in any deal.

[loganair] 07/4/2017 11:04

Aleman - If McColl´s wished to buy the whole or a significant part of ´One Stop´ I would much prefer all the money to be raised via a Rights Issue rather than taking on any more debt, especially as interest rates are starting to rise.

I do not think McColls would have too much to worry about from the competition authorites. If they did decide to buy ´One Stop´ McColl´s would still be much, much smaller than the combined Tesco Express, Budgens, Londis etc.

The total number of convenience stores stands at 46,161 which means McColl´s combined with One Stop will only have around 4% market share of the convenience store market.

A convenience store - the store must be under 3,000 sq ft.

[aleman] 07/4/2017 10:48

Ok. Thanks for that. I had not appreciated the direct competition. Don't you think it would just create another competition issue if McColls took on 100s of the Tesco stores? I would guess the watchdog might look for someone else to buy them or just let McColls have some. I fancy banks might be okay with the extra debt os long as the Coop stores have bedded in well. They should nearly all be trading as McColls now. Conversions were supposed to take from January to April, if I remember correctly, so the McColls board should now know how much cash they are generating. I would be interested to look at another equity and debt deal, like the Coop one, if the board wanted to have a go at the Tesco estate. McColls forecasts have benefitted significantly from the Coop deal and so, presumably, could do so again.


Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield
2016-11-30 950.40 20.06 16.00p 12.2 0.5 25% 10.20p 5.2%
2017-11-30 1,137.93 24.95 17.29p 11.3 1.4 8% 10.27p 5.3%
2018-11-30 1,270.77 32.17 22.38p 8.9 0.3 29% 11.06p 5.7%

[loganair] 07/4/2017 10:25

Matt Evans, competition partner at international law firm Jones Day, said that the competition watchdog will probably only clear the deal if Tesco agrees to dispose of some convenience stores.

There are suggestions the grocer might be forced to sell its 635-store strong One Stop-branded shops which generated sales of just under £1bln.

[loganair] 07/4/2017 10:14

Aleman - These are not the small own brand Tesco convenience stores rather their One Stop store chain.

The only two One Stop shops I know are both in housing estates and therefore seem to me are in similar markets to McColl´s.

Tesco´s themselves said about One Stop "One Stop aims to be best in neighbourhood, offering value for money and fast and friendly service."

[aleman] 07/4/2017 09:57

I think Tesco stores are likely to be in the wrong location, i.e. on high streets whereas McColls are neighourhood stores. I think they are different markets.

[loganair] 07/4/2017 09:26

I´ve been hearing that for Tesco to get clearance by the CMA to take over Booker that they may have to sell their One Stop Convenience store chain which is around the same size as McColl´s.

I wonder who would be the buyer and would the chain be sold to one buyer or a combination of buyers which may include McColl´s.

If McColl´s decided to be in the mix I would much prefer them to pay via a rights Issue rather then taking on more debt.

[aleman] 07/3/2017 20:33

Budgens are not just convenience shops. Some are small supermarkets for large villages and small towns, I believe. I think they are about twice as big as McColls on average. Maybe it's cheaper to just buy (or lease?) the building rather than the business. Maybe McColls have enough on their plate with the Coop stores. I doubt the closures make much difference but it's possible some places have a Budgens mini market and a McColls convenience store, where a closure would result in a surge in business. The closed buildings might be reopened by an independent in time. In the overall scheme of things, I don't anticipate we'll notice one way or the other when turnover is about to rise strongly as the slightly larger than average ex-Coops come on stream this spring.

[lord gnome] 07/3/2017 17:43

Interesting find Aleman. Our nearest Budgens in Acle, Norfolk, has just be taken over by errr... the Co-op. They will close their existing small Acle store and turn it into a funeral parlour. The main store will move to the much bigger Budgens site. I am very surprised that this sale wasn't of interest to McColls, but perhaps they can pick up any sites they fancy off the liquidator without the hassle of taking over the whole business.