Morrison (wm) Supermarkets Share Discussion Threads

[chinese investor] 04/4/2018 08:22

Good Points !

[muffinhead] 03/4/2018 21:59

Schroders just gone from 5% to 10% holding

"Turnover is vanity, profits are sanity"

No point in copying Tescos or Sainburys retail model and no manufacturing.
It's old school but key strength of Morrisons is vertical business structure. The Co-op model is similar.
Morrisons is leveraging it's manufacturing and going for wholesale profit margins, supplying Amazon and McColls. Leave the capital intensive bricks and mortar stuff to others.

[qantas] 03/4/2018 02:37

Shorters doomed to failure..

Please do your own research.

[loganair] 30/3/2018 23:18

My the end of this year, most of McColl's stores will be supplied by Morrison's through the reintroduction of the Safeway brand.

It seems reasonable to me, with out to huge a financial out lay, Morrison's could become a major convenience store player if they bought out McColl's and called the stores Safeway in a similar way that Tesco's has 'One Stop Shop'.

Any thoughts?

[trcml] 30/3/2018 09:22

"Analysts at Bernstein upgraded their view on Morrisons on Thursday, touting its best-in-class long-term total shareholders' return and arguing that it made for a "great" income stock despite it being unloved by the so-called 'sell-side'.
Although the grocer's free cash flow yield was set for a 'step-down' in growth from the 9% pace observed over the past four years to something closer to between 8% and 9%, it had grown profits and sales for two years in a row and "none of that is running out of steam", they said.

It also sported the lowest gearing in the sector.

Adjusting for leases its net debt was at just twice operating earnings and if you credited the £600m pension asset then its net debt was zero, the analysts also said.

Hence the analysts' projection for the firm to ramp up its pay-out ratio from 83% last year to 100% over the next few years.

On Bernstein's estimates, Morrisons was set to see its dividend yield rise to 6.3% next year, followed by growth of 7.0%, 7.4% and 9.0% in successive years.

"With the doubling of the cash pay-outs and the ample cash-cover, MRW will become a great income stock attracting new investors. Besides a high divi, it is a low beta stock (people keep eating in a downturn, they simply switch to PL) and positively impacted by higher inflation. It fits perfectly our Quant/Strategy team's focus on dividend yield stocks."

"It is the only stock where sell-siders systematically upgrade earnings. It is the underdog of food retail, where execution beats strategy."

On the back of all the above, the broker upgraded its recommendation for the shares from 'market perform' to 'outperform' and bumped-up its target price from 235p to 245p."

[essentialinvestor] 23/3/2018 11:17

Had a small amount.

[chris coxon] 21/3/2018 15:42

Let's hope it recovers from here, check the chart out, there is a lot of fresh air below this level.

[bookbroker] 19/3/2018 16:19

Amazon could really leverage this business for its own purposes in the supply chain, be a great combination.

[bookbroker] 19/3/2018 16:18

I think this will tie up with Amazon, they already have a good relationship, I may be clutching at straws, but I think the right management is in place to do this, maybe they should take over Booths, not a huge overlap in stores, similar ethos, fresh is good!

[smartypants] 19/3/2018 12:04

Nice looking chart ??

Morrisons bounceback continues as it notches up higher sales and profits!

[trcml] 16/3/2018 15:55

"Some of the recent posters may not have been here long enough to appreciate what a transformation has taken place. "

I don't know whether I fall into that category based upon my first post here earlier this week but amongst my treasured possessions is something that Sir Ken Morrison remark to me in response to an article I'd written and sent to him (and others) about Morrisons proposed acquisition of Safeway. (The monopolies commission (or whatever it was called at the time) launched an investigation, whereupon Tesco's share price sunk from its giddy heights at that time to around £1.64.) His remark?"Don't give up your day job."

I am not a customer of Morrisons. I did once buy petrol from the Wolverhampton store, also some dealings in my capacity as a professional adviser with the old guard (can't go into details, but upshot one of their small tenants was put out of business) and have on rare occasions dry cleaning service at another store. Despite years of observing M's share price never really moving much out of a narrow trading range, I bought a few shares this week. I rather think that a supermarket heavily into selling British home-grown foodstuffs and a wholesaler to Amazon and Ocado is in a much stronger position to capitalise on Brexit than other supermarkets whose import costs are volatile.

[scotches] 16/3/2018 14:49

Some of the recent posters may not have been here long enough to appreciate what a transformation has taken place. Under Dalton investors were subjected to constant reverses with falling sales and failed ventures all contracted on unfavourable terms - Kiddicare, convenience, Ocado 25 years, the space race etc. Debt ballooned to pay for this nonsense.

It's hard to think of any obvious Potts mistakes in his three year tenure as he toils to unpick the previous errors.

However the market is now saturated with too many supermarkets and margins are very unlikely to recover to earlier levels. So the ultra competitive background means first rate management has been rewarded with an share price standstill. It closed at 206p the day Potts took office exactly three years ago today. Still it's only a problem if you have to sell. That's a decent yield appearing again if these specials recur.

[mortimer7] 16/3/2018 10:33

An indication on the markets view on Morrisons:
According to short tracker, the declared short positions in Morrisons shares are currently 10.4%. So over recent days they've dipped to the lowest levels for 3 years, since early 2015 when DP took over. As recent as September the figure was above 15%.

A good sign IMO. Hopefully the figure will reduce even further.

[themattbarnes] 16/3/2018 10:19

Mrw bought up a load of blockbusters etc in a land grab that didn't work. Now they are leveraging vertical integration to supply other businesses.The two don't really compare in my view.

[bookbroker] 16/3/2018 10:13

Do you want a safe investment with steady earnings in a business that has seen rapid change with the arrival of discounters, or one that is cyclical in nature and vulnerable to an economic slowdown, it does go without saying that in a downturn there are few companies that escape except to a degree food and pharma!

[oakville] 16/3/2018 09:47

So many short sighted people on here. Under £2.02 is a cert.

[bookbroker] 16/3/2018 08:07

The market is so bloody short-sighted, MRW has turned around under DP., ok so there is more to be done and the pressure will not let up, but they have repaired the balance sheet, as understood by the added dividend, testing all sorts of new things, even opening three new stores, the number of retail casualties suggest supermarkets deserve a higher rating, irrespective of the competition. With this one you are getting the best of British, for all that seems to matter, I think shareholders will be further rewarded in time, and I think there ought to be consolidation at some point, a tie up with Sainsbury’s would be a good demographic fit, big not always best but better able to leverage the scale!

[gswredland] 16/3/2018 06:34

You are the idiot???

[oakville] 16/3/2018 06:20

Heading to an a 18 month low share price but I am the idiot ! Interesting?

[boll] 15/3/2018 23:21

Mrw did have convenience stores but in rubbish locations consequently would never be profitable. I believe they are now rolling out a lower risk lower cost strategy through shops at petrol stations following Tesco and marks and spencer. Much more sensible

[bookbroker] 15/3/2018 13:10

Hang on, MRW did have convenience, it was a complete failure, McColls is convenience, they do not want to go down that route again, blew a lot of capital in writedowns, they are better to focus on their strengths, no other supermarket has food as fresh, maybe Booths in meat and fish, the others are awful for those two items!

[trcml] 15/3/2018 12:24

"Most notably, Morrison lacks a convenience footprint of any scale and its online offering relies on a partnership with Ocado."

Why would Morrisons want to incur the capex, overheads and operational logistics of a convenience footprint when it is easier and more profitable to be a wholesaler? The tie-up with McColls means that McColls shoulder all the risks associated with a retailer (convenience stores), while all that Morrisons does is supply the goods. As for on-line, the combination of Ocado and Amazon is surely unbeatable? Provided the partners are ambitious and hungry for more, it is cheaper to join forces than do-it-yourself. Particularly with on-line where other supermarkets have realised that home delivery doesn't pay but has to be offered because everyone else is.

Seemingly one reason for the market scepticism regarding growth enthusiasm/sustainability is that despite increase in turnover the bulk of the profit in the these results reflects reduction in interest payment. Whether M or any business for that matter should be expected to demonstrate increase in profitability from top line growth in isolation is a moot point. Profit margins are not income-oriented alone, but also expenditure dependent. I'd agree that there is a limit to how far costs can be cut/reduced and that without increase in turnover all that remains is a lean-machine not going anywhere, but that's not happening. And no reason to think otherwise.

As for 'Brexit', most food sellers (shops, supermarkets, restaurants) are complaining about inflation-busting increases in the cost of imported foods. Morrisons emphasis on 100% UK production and sourcing will hold it it good stead.

I don't think the share price will respond to what is clearly obvious business sense (obvious to the experienced, that is) whilst there are so many other factors (nothing to do with M0 influencing the market as a whole. Bearing in mind that most analysts and ilk are youngsters, the fear is rising interest rates and the uncertainly post-Brexit. Analysts are influential so have a responsibility to be cool calm and objective: mostly they're not and often they really haven't a clue! I think investors are fearful that sometime soon the market is going to take a tumble so they are are preparing for the likelihood.

[chinese investor] 15/3/2018 11:11

"CEO David Potts' plans for Morrison make perfect sense; focus on the consumer, reinvest in pricing and improve the stores' appeal.

We're impressed with progress so far.

Customers are coming back and like-for-like sales are firmly back in positive territory.

However, this is far from the end of the journey.

Potts has a vision of a 'new Morrisons', which includes several capital-light wholesale agreements.

Deals have been signed to roll out convenience stores on petrol forecourts in partnership with Rontec, supply Amazon Fresh with groceries and revive the Safeway brand through a deal with McColl's.

The group is targeting annual wholesale sales in excess of £700m by the end of 2018, and more than £1bn in due course.

Profits should be in the £75-£125m region.

With the majority of stores owned rather than leased, the group already has strong cash flows, which help support the dividend.

The shares currently offer a prospective yield of 3%, and analysts expect the payout to rise over the coming years.

However, potential investors should remember that there are still a few weak spots in the business.

Most notably, Morrison lacks a convenience footprint of any scale and its online offering relies on a partnership with Ocado.

Furthermore, conditions in the sector are not supportive.

An increasingly price-sensitive customer has led to fierce competition, squeezing margins across the board.

Inflation is still above wage growth too, but there's at least now signs this may reverse.

Nonetheless, we feel David Potts is steering the ship in the right direction.

A focus on value and service is clearly appealing to customers and a healthy balance sheet gives the company room for manoeuvre."