Morrison (wm) Supermarkets Share Discussion Threads

[essentialinvestor] 15/3/2019 14:53

There is talk of private equity interest in ASDA, I'm unaware how accurate
or otherwise that may be.

Interesting idea, if something like that occurs there is significant upside potential.

That's a big IF to be fair.

[loganair] 15/3/2019 14:32

My idea for Asda, is to sell 50% of their supermarkets to Sainsbury's and 50% to Morrisons in return for Walmart taking a 1/3rd share in each company.

This would give Morrisons about 18% market share and Sainsburys 23%. I do not think that the CMA could complain about such an idea.

If Morrisons then bought out McColl's would give them around 4% share of the convenience grocery stores.

Over the next 5 years the big 3 would lose around 4% market share to Aldi/Lidl, leaving Aldi on around 10% market share and Lidl on 7%.

[essentialinvestor] 15/3/2019 14:20

Sounds about right, where does that leave the MRW market share in 3-4 years time?.

[loganair] 15/3/2019 10:46

I posted a few years ago that I think Aldi/Lidl will keep increasing market share by around 1% a year until they reach a combined market share of around 18%.

So far their increase in market share of 1% per year has and still is on going.

[essentialinvestor] 15/3/2019 10:41

About a 5% chance of that. Not going to happen imv.

I would expect the discounters to increase their market share by very approx 40-50%
over the next 5 years. That's the backdrop MRW have to navigate. It's having to run very
fast to stay around current pre pax profit levels, just my take.

[scotches] 15/3/2019 10:22

Thomas Brereton, GlobalData
"With Brexit still looming over the retail sector in 2019, talks of supply shortages and impending lack of availability across UK grocery are rife. But Morrisons is better placed to withstand such pressures than its Big Four rivals, having successfully secured Authorised Economic Operator status during the year, on top on expanding its dependence on local suppliers (up 27% during 2018, and doubled over the past three years); in fact, in light of this significantly stronger foothold, it would be understandable if some of its management secretly have their fingers crossed for a no-deal situation."

Fiona Cincotta, www.cityindex.co.uk
"Sagging consumer confidence hasn't knocked Morrisons's turnaround plan off track. Sales growth, despite slowing in the fourth quarter, still came in at a commendable 3.8%, indicating Morrisons is negotiating the tough trading environment better than most.

"A highlight is the 12 basis point improvement in underlying operating margin. There were fears heading into this result that Morrisons had to slash prices to keep luring customers but the margin growth indicates it hasn't hit the panic button, despite aggressive competition from German discounters. Wholesale is of course proving to be a strong contributor to Morrison's resurgence, with the McColls partnership humming along nicely. There's still plenty of room for growth in the wholesale division, should Morrisons execute its latest deals with MPK Garages and Big C in Thailand as smoothly."

Russ Mould, AJ Bell
“First things first these numbers from supermarket Morrisons show the excellent job chief executive Dave Potts is doing at the group.Revenue growth is the best seen in a decade and while statutory profit is hit by one-off items, the resilient cash flow performance delivered by the group is probably more relevant. After all it allows the company to deliver a healthy increase in dividends for shareholders.

"However, what Morrisons needs to continue to focus on, and reassuringly Potts references this in his comments accompanying the results, is delivering the best possible shopping experience for its customers. It sounds simple but, at a time when the retail sector and groceries face substantial upheaval, getting the basics right is more important than ever."

Catherine Shuttleworth, Savvy
“A growth story from Morrisons this morning - reporting like for like numbers of 1.5 percent in the core estate including Morrison.com. The real success and growth driver is clearly the wholesale agreement with McColl and the ongoing sales driven by their relationship with Amazon. Not only are these two initiatives growing top line sales growth, but they are the levers of profit. Morrison’s are not immune to the continued pressures on consumer spending.

"Morrisons have much to be happy about, but there are concerns that their third growth lever, .com appears either to have slowed down or their store performance has significantly dropped. The changed dynamic in their relationship with Ocado with M&S now at the table is going to be a concern in the short to medium term.”

Clive Black, Shore Capital
"Morrisons has had another very good year in the big scheme of things in our view. First and foremost, it has continued to self-improve, customer satisfaction is up by 20% over four years, reflected in ongoing revenue and profit growth from its core supermarket business.

"Indeed, two-thirds of the profit growth in FY2019 came from its Retail operations, reflecting growth-on-growth as well as aforementioned investment in the broadening of the Group. Taking the notable increase in the Group’s depreciation charge into account, reflecting its prudent policies and the evolving mix of asset investment, cash profit growth has been especially strong since CY2015."

[scotches] 14/3/2019 20:07

scotches - 22 Jun 2016 - 23:34:12 - 1201 of 1811

Morrison decided to offer a parent company guarantee on the leases such was the level of desperation to get a convenience store estate at any price. An excellent article in the Telegraph last September highlighted Dalton's disastrous deal.



"...Morrisons overpaid for a series of sub-par sites left over from the collapse of video and DVD chain Blockbuster.

Yet, the biggest crime, say those who specialise in snapping up assets in so-called distressed situations, is that Morrisons felt compelled to provide a parent company guarantee on the leases it inherited when it picked up the stores.

Shareholders must surely be concerned about the costs of unwinding the previous management's ill-founded ventures.

Turnaround experts say when you're a company of Morrisons size and strength there is no need to make such a pledge.

Instead it should have been asking: Do you want us to take the lease or not? and walking away from the deal if they couldnt get the sites without a guarantee.

But its commercial naivety means the grocer has been left on the hook for £20m of property leases on the 140 stores it has offloaded, a huge blessing for Greybull, the firm of plucky financiers that has taken over the convenience operations."

[essentialinvestor] 14/3/2019 19:29

Interesting, just shows the lack of quality in the estate then.
I'm in Weybridge Surrey, the former MRW convenience store I referenced
is in Byfleet, a couple of miles away.now a co-op.

[scotches] 14/3/2019 19:27

"Many in the City also thought that Morrisons was bonkers when it took the decision to dump all 140 of its convenience shops at a time when convenience was considered to be a rare glimmer of growth for the food sector.

But Higginson reveals Morrisons was losing £300,000 per shop a year. “It would have been nearly as big a job to turn around the convenience shops as it was to turn around Morrisons, so we reluctantly took the decision to pull back,” he says.

After selling the business to turnaround firm Greybull, the chain of convenience stores went bust within a year."

[essentialinvestor] 14/3/2019 17:49

I realise they came late to that sector and clearly indiscriminately acquired
stores. Many of the best locations were already owned by Tecso and SBRY.
However, MRW may have compounded that error by selling indiscriminately as well,
if my local example is anything to go by. Small part of the business regardless.

[loganair] 14/3/2019 14:16

Many of Morrisons convenience stores were ex-Blockbuster shops, the wrong size in the wrong places.

[essentialinvestor] 14/3/2019 14:14

Possibly. I'm not sure the disposal on their convenience stores was that
astute a move. I have one local example where the Coop now run a former MRW
convenience store, and it looks a goldmine.

[loganair] 14/3/2019 14:11

If it all goes well, maybe taking over of McColl's. £200mln to buy 1,250 McColl's convenience stores, not counting the newsagents that McColl's are slowly divesting themselves of.

[essentialinvestor] 14/3/2019 13:43

On MRW, I'm not sure there is a definite catalyst to drive the share price higher
short term?.

If the ASDA/SBRY merger was allowed, then that's different.

MRW margins remain wafer thin, and there is a good 5 years left of ALDI LIDL
expansion in the UK.

[essentialinvestor] 14/3/2019 13:42

Very surprised at the above.

[loganair] 14/3/2019 10:25

Which on-line supermarket was cheapest in February 2019?


At nearly £9 cheaper than its next cheapest rival for a basket of branded groceries, our pricing comparison shows that Sainsbury’s was the best supermarket for value in February 2019. A basket of 69 popular items cost an average of £131.73.

Morrisons and Asda took second and third place, with a basket of the same branded groceries at each costing £140.51 and £143.50 respectively.

Buying the basket of identical items at online-only Ocado cost a whopping £24.07 more than Sainsbury’s in February, running up a bill of £155.80. Waitrose was the second-most expensive for our selection of groceries, which would have cost £154.36.

How cheap is Tesco?

Tesco is the UK’s largest retailer, and always used to be considered good value against its rivals. In our latest supermarket survey though, it was awarded just two stars for value for money by Which? members. In our annual price analysis to find out which supermarket was the cheapest in 2018, Tesco came in fourth behind Morrisons, Asda and Sainsbury’s. It continued to be in fourth place in terms of cost in January, and is fourth again in February with a basket cost of £149.73.

Towards the end of 2018, Tesco renewed its focus on value for money. It started to promote the ‘Exclusively at Tesco’ range with an emphasis on a low price basket of shopping, designed to compete with Aldi and Lidl. In another move to compete with the German discounters, it launched its own discount store, Jacks. Keep up with our monthly basket analysis to see if these moves start to pay off.

[scotches] 13/3/2019 15:12

Sains/Asda merger comment. "Mr Potts said that while he and others in the industry were awaiting the final verdict on the combination with interest, “our turnround isn’t predicated on anyone else’s deal”."

Brexit: “We are blessed that two-thirds of what we sell is produced in the UK, and 100 per cent of our beef, pork and fresh poultry is British.”
“We’ve looked for alternative routes into the country, we have taken authorised economic operator status, which is a way to be slightly speedier unloading in some checks, and we have brought forward purchases of some goods..."


Analysts said the results were solid and that investors were increasingly focusing on the company’s cash generation. “At yesterday’s share price, this is a 5.6 per cent dividend yield for a company with almost no leverage, solid execution and more earnings and free cash flow growth to come,” said Bruno Monteyne at Bernstein. 

James Grzinic at Jefferies said Morrisons’ high proportion of freehold stores meant that as new accounting standards were applied its cash flow generation would become more evident.

[games] 13/3/2019 12:16

So maybe neutral for mrw

[games] 13/3/2019 12:16

“With Brexit still looming over the retail sector in 2019, talks of supply shortages and impending lack of availability across UK grocery are rife. But Morrisons is better placed to withstand such pressures than its Big Four rivals, having successfully secured Authorised Economic Operator status during the year, on top on expanding its dependence on local suppliers (up 27% during 2018, and doubled over the past three years); in fact, in light of this significantly stronger foothold, it would be understandable if some of its management secretly have their fingers crossed for a no-deal situation.

hxxp://www.retailtimes.co.uk/morrisons-equipped-to-outperform-in-2019-after-a-third-successive-year-of-strong-growth-says-globaldata/

[games] 13/3/2019 09:40

Eu import tarrifs affecting supermarkets in the event of wto. Imo.

[saltaire111] 13/3/2019 09:21

Don’t understand the market reaction. Results are great.

[chinese investor] 13/3/2019 08:01

Good Start !

[sweep stock] 13/3/2019 07:53

Wow! Not a holder. Just seen this. Looks good at first look

[saltaire111] 13/3/2019 07:21

Superb results. Ahead of expectations. Special Divi 4p. Nice.

Salty

[chinese investor] 13/3/2019 07:06

Full-year total dividend up 24.9% to 12.60p (2017/18: 10.09p) !