Mccoll's Retail Share Discussion Threads

[loganair] 13/10/2019 10:27

Morrisons - last paragraph of this short article maybe of interest:

FTSE 100 retailer Morrisons also appears to offer long-term growth potential. The company’s recent update showed it’s making progress in growing its wholesale supply initiatives, as it seeks to reach £1bn in wholesale revenue. It’s also investing in its online growth potential through the expansion of its store on Amazon.

The company is gradually reducing its debt levels as it seeks to de-risk its balance sheet during a period of intense competition and change for the wider retail sector. This may provide greater financial flexibility to invest in online growth opportunities, as well as enhance its appeal to a broad range of customers.

Morrisons is seeking to expand its convenience store presence in order to increase the size of its potential customer base. This has the potential to boost its financial performance, with the company forecast to deliver a rise in earnings of 7% in the next financial year. Since it trades on a forward P/E ratio of 13.5, it seems to offer good value for money at the present time.

[loganair] 04/10/2019 11:21

As I've posted several times I think Morrison's will wait a couple of years before making a bid for McColl's and that is if they do at all.

Waiting to see which is best selling Safeway products or the Morrison's own branded convenience stores.

In this two years will also give McColl's the opportunity to continue closing newsagents at a rate of around 40 per year when their leases expire and a further 25 smaller under performing stores a year while opening 10 stores per year that on average are 70% larger with 2 1/2 times more turn over then the stores they are closing.

In 2014 McColl's had a little over 500 Newsagents, in two years time this number would have reduced to a little under 200. Currently McColl's have around 280 newsagents, many of which are highly unprofitable.

[aleman] 04/10/2019 10:49

Strong support at 45p and the downtrend looks well broken. It even looks to be creeping back up as the rest of the market falls. (Spread is 48.0p/48.4p. ADVFN's chart is in a coma.) Perhaps it's time for the Morrisons bid? I still wonder if Lidl or Aldi would be interested now they're testing convenience stores. Only £55m + premium for a big chain wanting to enter the convenience sector to take out a significant player and gain loads of good sites. It's ridiculous.

[aleman] 29/9/2019 19:04

Yep. It looks like the 2-year downtrend has broken.


free stock charts from uk.advfn.com

free stock charts from uk.advfn.com

[loganair] 29/9/2019 11:27

What I really like about McColl's is how they continue to Eliminate under performing and loss making stores when their leases expire or there is a break clause come up in their lease.

I just with I knew how many more of these stores McColl's still have left in their portfolio of stores.

I would say at least a further 200 newsagents to be closed and maybe 100 of McColl's smaller convenience stores to also be closed while at the same time opening 40 larger profitable stores which will mean an over all reduction in revenue.

[loganair] 26/9/2019 10:50

It seems to me at the moment many posts on most threads are either personal toxic attacks on posters they disagree with or self congratulatory pat on the back on how well their investment choice is, especially if it is a poor investment choice the poster made.

[sailing john] 26/9/2019 10:22

loganair - agreed great post
Much better thread here than most or indeed Parliament!
GL - SJ

[loganair] 26/9/2019 10:19

I have always felt that these threads are for posters to engender dialogue, discussion and involvement of other posters, posting information and points of view of both sides in an objective, informative and hopefully sometimes interesting manner so others can carefully explore, examine and interpret the value of the information while not necessarily intended to change other posters attitude towards investing in the particular stock concerned. As seems to be happening at the moment on this thread about McColl's.

[loganair] 26/9/2019 10:11

The questions I ask are:

1. How much does a companies profits cover its interest payments?
2. How easily is the company able to reduce it's debt?

In other words how much of a burden is a companies debt on it.

3. What are the growth prospects for the company. What curbs are there on the company growing and growing their profits?

4. Is the company in a sector that is running down and getting smaller, like the tobacco companies or is it in an area that is growing?

5. How well are the directors running the company?

[loganair] 26/9/2019 09:40

Thomas Cook went bust because it needed to sell 3m holidays per year just to be able to pay the interest on it's debt.

Toys R Us went bust as its profits would no longer even cover the payment of the interest on its debts.

[spectoacc] 26/9/2019 09:38

@loganair - I may be a holder, but I fear you put too much faith in the ability of institutions to stock-pick ;)

[loganair] 26/9/2019 09:34

Sailing - it seems to me what you're looking at is mainly what has happened in the past where as Nortrust have the ability to look forward at what is likely to happen in the future.

1. As McColl's closes its newsagents and smaller unprofitable stores hopefully their profits will rise.

2. The level of debt is not so important, what is important is how well and easily are McColl's able to to pay the interest on the debt and able to reduce the debt. In other words how much BURDEN is McColl's debt and interest payments on them?

3. When Nortrust did their thorough research, much more than the small private retail investor is able to do, what Impression did McColl's leave Nortrust with? Seems a good one as they have picked up 2% of McColl's stock in 3 months.

[aleman] 26/9/2019 09:17

I might try get a better chart later but it looks like the downtrend has broken.


free stock charts from uk.advfn.com

[aleman] 26/9/2019 09:17

Probably time to start watching the averages, too.

[spectoacc] 26/9/2019 09:08

@sailing john - do you compare apples with apples tho? Convenience store b/s's are very different (as are supermarkets).

Which isn't to deny MCLS has a heavy debt load regardless.

[loganair] 26/9/2019 09:04

McColl's are currently yielding over 8%.

McColl's continue to close their Newsagents and smaller unprofitable stores while opening larger profitable stores.

McColl's are closing more stores than they are opening therefore their number of stores is reducing as may turnover, however hopefully profitability will rise.

I can see in a couple of years McColl's may have reduced their portfolio of stores by around 150 from were it is today.

[sailing john] 26/9/2019 09:02

Loganair - I mainly look at balance sheets and cash flow when assessing businesses. Having very briefly looked at the accounts in August I described the balance sheet as a car crash and given this is a steady mundane business that isn't likely to change in the short term. Just my two pence worth for balance and haven't looked at the business or prospects beyond the balance sheet, cash flow and P&L numbers.
I hope investors see a recovery and clearly Nortrust need a change of direction.
GL - SJ

[spectoacc] 26/9/2019 08:58

I still have faith in MCLS, & added recently.

[loganair] 26/9/2019 08:55

Unlike the small private retail investor, the institutional investors are able to go a long and have a chat with the company and good look at what is going on.

Nortrust maybe seeing something that the small private retail investor is not:

1. In the medium term the tie up with Morrison's will be highly profitable for McColl's, just not yet short term.
2. Nortrust may have had a chat with Morrison's and came out with the impression that at some time in the future Morrrison's will buy out McColl's.


At the moment, the institutional investors in McColl's are adding and not selling.

[loganair] 26/9/2019 08:44

Sailing - What I think has been happening is many small private retail investors have been doing the usual BUY High and SELL Low leaving the institutional investors to pick up the same shares on the cheap.

The question is, as a private retail investor do we follow the bellwether of Norttrust?

Warren Buffet has often said that an investor must be prepared at first to see their investment fall by 50%.

A good investor looks 5 to 10 years ahead, only speculators and traders look short term.

It is only luck that an investor gets in at the very lowest point of an investment.

[sailing john] 26/9/2019 08:16

loganair re your post above another view of Nortrust's performance!

Presumably one or more sellers of 1.1m shares think it isn't good value at 47p

And presumably Nortrust thought it was good value at just under 70p in July when they added 1.6% (just 2 months back)

They were holding over 11% late 2017 when price over 250p - and have watched price collapse to sub 50p - presumably caught in the headlights!

ergo - not a great bellweather for likely price movement going forwards (that's the polite version of my thoughts!)

[aleman] 26/9/2019 08:11

Chart forming a bottom and breaking the downtrend?

[loganair] 26/9/2019 00:17

On Monday Aberforth/ Nortrust bought 1,107,073 shares (0.96%) @ 47p per share costing £520k, bringing their total share holding to 12.62%.

Nortrust must think there's good value in McColl's at this price.

24 Sept 12.62%
23 July 11.66% from 10.07%

Other major share holders are:

Klarus Capital...............11.40%
Premier Fund..................7.73%
FIL Investment................5.76%
Chelverton Asset Management...5.17%
Caird Capital.................5.09%
Fidelity......................4.43%
L&G...........................3.83%
Minton........................3.68%
Laxy Partners.................3.36%
CI Investments................3.13%
Cavendish.....................1.55%
Hargreaves Lansdown...........1.41%
M&G...........................1.35%
Henderson.....................1.21%

Total share holding in McColl's of these companies is 71.72%

[loganair] 16/9/2019 09:01

I think McColl's will reduce their store numbers to around 1,300 after closing most of their unprofitable newsagents and smaller stores.

Currently McColl's seem to be closing 10 stores of every new store they open.

Each new store that McColl's open has on average of 2.5 x more turnover and 70% bigger then the average store they close.

[spectoacc] 16/9/2019 08:28

Low teens, lol. Well, anything's possible. Looking to add here.