Mccoll's Retail Share Discussion Threads

[loganair] 23/10/2019 20:23

Most of Morrison's convenience stores were ex-Blockbuster stores they took on when Blockbusters went bust, that were in the wrong place, far too small and also taking on their onerous leases.

[cliff edge] 23/10/2019 19:32

Like them or not it looks like they are here to stay, grow and prosper, the catalyst came in 2008 with the financial crash with people looking to tighten their belts and its stuck ever since. Valuation is a tricky one (if not already agreed) the best analogy is, its like when your buying a house, you've found the exact location you want but the property isn't quite right, so you pay a premium for where you want to be, and make the house into what you want it to be! £250m - £300m for me cannot see the 83% of major investors voting for anything less. MRW can add a minimum of 30% in revenues to the acquired businesses with branding resonance etc. Miller says that the fundamentals of the convenience channel are strong, and they are, Tesco paid £3.7bn for Booker in 2017, they are virtually unaffected by the high street slump and sit well with on line deliveries as a local daily top up shop for forgotten items etc.
MRW`s past failed attempt at convenience was thwarted by inconveniently located convenience stores, cold starts are difficult in a crowded market place especially if they are all in the wrong places! Things could have been very different for MRW if the Sainsbury / Asda deal had of come off, but in the absence of picking up the slack from there, Potts will need a plan B.

[loganair] 21/10/2019 09:22

I agree, when ever I pop into an Aldi or Lidl I always come out with out buying anything.

Their own branded products look so cheap and sweet and sickly, very poor quality.

My local Aldi opened next door to Waitrose a couple of years ago, glad to see the Waitrose had remained as busy as ever.

[spectoacc] 21/10/2019 07:16

As a penny-pinching Yorkshireman, I've drawn the line at Aldi/Lidl - like jumble sales, with branded stuff surprisingly expensive. But I'm clearly in the minority now.

[kazoom] 20/10/2019 18:19

loganair - I agree with cliff, no need to apologise!

I found your summary of the market share peaks for the different players both interesting and useful.

I'll confess I had thought (some years ago) that the Alidldi market share would have peaked by now as it seemed to me that their geographic coverage was getting saturated and they would get diminishing returns on their new store openings.

However, I have changed my view. Up until a couple of years ago, my nearest Aldi was c. 3 miles away (also a couple of Lidl's at the same range) - I rarely went, but for those that were prepared to go a little out of their way for the bargains these stores were well in range.

A couple of years ago a new Aldi opened on a new housing development about a mile from me (it was originally rumour to be a Waitrose). It took me a while to adopt, but I now use Aldi for 2 or 3 of my daily shops each week. So I now have a more positive view of their returns from new store openings. (On the flip side though, some of the staff gossip I have got - particularly about stock levels - suggests to me that despite always seeming busy, my local store is only marginally profitable)

[loganair] 19/10/2019 20:33

Buying McColl's will be a relatively inexpensive way for Morrison's to become a significant player in the convenience store market where McColl's currently has around 4% market share.

£150mln = 130p or £115mln = 100p per share for 1,300 convenience supermarkets.


Forecast dividend for this year and next year to be the same as last year at 4p with basically flat revenues.

[cliff edge] 19/10/2019 19:42

No need to apologise for being you, I respect your analysis and opinion, 12 months or 20 its gonna happen! in the same week recently when Aldi announced 200 new store openings across the uk, MRW announced 7 closures both of which will impact MRW revenues negatively, There are only 3 growth channels currently in uk grocery retail, Discounters, on line & Convenience, MRW have invested in price reductions and on line presence, so the only channel left is Convenience.

[loganair] 18/10/2019 21:06

Sorry for being me, I would say more like 20 months then Aldi will = Morrison's in market share which I believe will happen when both reach 9.4% market share.

In 2003 Morrison's had 14.8% of the grocery market share.

Iceland's highest market share was in 1994 with 3.4%.
Co-op in 1965 had 35%.
Asda in 2013 had 17.6%
Sainsbury in 1994 had 20%
Tesco in 2007 had 31.3%

For several years I have been posting that I believe Aldi/Lidl market share will top out at 18% then will really struggle to get much higher as by then they would have already taken all the easy pickings.

[cliff edge] 18/10/2019 19:29

MRW are about 12 months away from being pushed into 5th place in terms of market share so time isn't on their side, MRW investors will want to see some strategy much before then. you could say that that Aldi has got MRW over a barrel.

[loganair] 18/10/2019 19:09

At the moment it seems McColl's are opening 1 new store with 2 1/2 times the turn over for every 10 smaller loss making stores they're closing.

This means over the next couple of years, McColl's overall revenues will reduce.

Also forecast that McColl's dividend will remain unchanged for the next couple of years.

[spectoacc] 18/10/2019 18:28

Lol perhaps there's not much competition for that title in Estonia?

I feel confident MRW will move on MCLS, and equally confident that it won't be yet. What have MRW got to lose by waiting? Let MCLS take the hit on closing down the PO's as the leases expire. MRW have MCLS over a barrel with the supply agreement, even more so with the MRW-branded stores seemingly doing well. So nobody else can bid, and until MCLS has worked through closing the loss-makers, little danger of the debt getting paid down and the shares taking off.

12-18 months is my guess, could be longer, with MRW having almost a "free option". If convenience turns down or the new stores don't do so well, no need to bid at all.

[kazoom] 18/10/2019 17:51

Is he still the "Estonia's richest man" after his investment here?

How did he make his money? Surely not as a stock-picker.

[outlawinvestor] 18/10/2019 17:37

Understood - thanks.

[loganair] 18/10/2019 17:36

OI - Grocery retailer's, personally I would not invest if not already invested as low margin businesses in a low growth sector.

[loganair] 18/10/2019 17:33

If Morrison's do make a play for McColl's I am confident in saying that Estonia's richest man will not be happy as he bought his 10% stake in McColl's for around 275p per share, as any take over by Morrison's will almost certainly be well, well, well under 200p. Closer to 100p then 200p.

[outlawinvestor] 18/10/2019 17:31

Hi loganair - quick question if you have a moment.

Are there any grocery business specific metrics you look at when researching companies in the sector? I've only recently been following the sector and plan to put together some comparative numbers. I am already aware of general operating metrics like stock turnover, turnover days, etc, as well as profitability and debt/leverage metrics.

Many thanks in advance.

[loganair] 18/10/2019 17:20

The market share of the Big Four supermarkets has tumbled to a 15-year low as the march of the German discounters Aldi and Lidl continues.

Tesco, Sainbury's, Asda and Morrisons now hold just 62.7 per cent of the market.

Aldi and Lidl have raked in an additional £1billion in sales over the past year, boosting their combined market share to 14.1 per cent.

Aldi, which has an 8.1 per cent share, is now rapidly catching up with Morrison's, which has slumped to under a tenth of the UK market.

The discounter has been luring middle-class customers by selling high-end products such as yellowfin sole and Aberdeen Angus steaks under the banner 'Luxury you can afford'.



If Morrison's bought McColl's would give them an immediate increase of 0.4% market share and around 1,300 convenience stores after the Newsagents and smaller stores have been closed.

If Morrison's do make a play for McColl's, they'll wait until the Nisa contract has finished with the 300 stores brought from the Co-op and these stores are being fully supplied with Safeway groceries from Morrison's.

[cliff edge] 18/10/2019 17:18

Exactly, my thoughts are 6 to 12 months and in any event much before the current finance arrangements mature which is sometime around mid 2021? probably suits Morrisons to supply the whole estate first and for mcls to off load some more smaller stores, wouldn't be a problem if there were still some Newsagents / smaller C Stores at takeover as they already supply them anyway, and some of these could be quite profitable. Morrisons are currently being pummelled by discounters with many more new openings planned by them, they have to do something and in my view this represents an ideal opportunity for all concerned.

[loganair] 18/10/2019 16:59

ce - If for example Morrison's is going to make a play for McColl's in the future, say 6 months to a years time or even may be 18 months time, then McColl's would no longer need a Head office.

[loganair] 18/10/2019 16:55

From my 1009 Post, Article on Morrison's - "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."

[cliff edge] 18/10/2019 16:46

I think when you piece it all together, ceo increases holding by 250k shares recently, mcls largest investor increases holding by 1.1m shares to 12% shortly thereafter, there appears to be an escalation of selling off / closing smaller stores not just Newsagents, and the new openings are all much larger premises. mcls supply deal with Nisa ex CO OP stores is due to end early next year? which opens the door for solus Morrison supply and things have been fairly tight lipped regarding the 10 store Morrison Daily trial from both sides since its inception. also Mc Colls recent change of use planning application for their head office from office space to 55 residential dwellings (search Brentwood planning applications: Mc Colls Ashwells road Brentwood)suggests that they will either have no use for these premises or there`s a deal to be done to reduce debt? added to all of this is Morrisons desire to increase their presence into the growth Convenience channel and it makes you wonder.
I am holding out for the bid.

[loganair] 13/10/2019 16:13

These stores will most probably not be bought, will therefore just wait for the leases to run out then close the stores.

40 to 50 newsagents and 20 smaller stores making a total of 60 to 70 stores are closing a year while they are opening around 10 much larger stores a year.

McColl's are most probably down to around 265 newsagents with a further 100 to 150 still to close to bring the number down to around 100 newsagents that due to their locations are most probably still able to make a profit. These closures of newsagents will most probably take 3 to 4 years until they come to an end.

[newsboy1] 13/10/2019 15:54

Have you looked on the internet lately, McColls have about 100 stores up for sale if you add those to closures it will presumably get rid of way more than 40 newsagents

[loganair] 13/10/2019 12:06

It seems to me why McColl's share price will remain pretty static over the next 12 months as the analysts are forecasting static revenues and very low growth in EPS and dividends over the next two years.

Static revenues makes sense as McColl's is closing around 40 newsagents and 20 smaller poor performing stores a year while only opening 10 new stores a year even though these new stores have on average 2 1/2 times more turnover compared to the stores being closed.