Retail

Altria considers breaking up

5 Nov 2004

This was always in the tea leaves, even if it was not publicly stated. It makes industrial sense and would unlock a fair bit of value. But it s only possible when litigation risk lifts, which would actually be the bigger catalyst for a rerating of the Philip Morris arms.

M&S buys back 28% of its shares at 362p

25 Oct 2004

The price determined by an auction probably allows the hedge funds that had bought stock in expectation of a bid to break even. M&S s shares shouldn t fall much following the buyback, given that dismal trading news would reignite takeover speculation.

Karstadt can’t rely on property to fund turnaround

25 Oct 2004

Investors hope the German retailer can use its properties to recapitalise itself. It could probably pay off its debts if it sold the lot. But that would still leave it with a pensions problem and a huge lease bill to service. And that looks like a tall order. But that would still leave it with a pensions problem and a huge lease bill to service. Servicing that looks like a tall order.

Morrison starts to turn Safeway around

21 Oct 2004

The UK grocer has managed to get a 13% sales uplift on the Safeway stores that it has so far converted to its own brand. Getting Safeway's sales up to Morrison's standards was the rationale behind the takeover. So this is an encouraging sign.

Sainsbury’s turnaround plans look ambitious.

19 Oct 2004

The retailer is promising £2.5bn of sales increases over the next three years from about £1bn of cost cuts and quality investments. Either it's very confident in its retailing prowess or it doesn't want to scare investors by warning that even deeper cuts will be needed.

Merrill suspends two Sainsbury analysts

19 Oct 2004

Andrew Fowler and John Kershaw have been suspended after a note said the UK retailer had helpfully pointed out their numbers were high. This looks bizarre. If it has to do with the possibility they were selectively briefed, it isn t clear why they should be suspended.

WH Smith turnaround will be tough

14 Oct 2004

The UK group s High Street stores had declining sales last year in spite of promotions that killed the operating margin. The group is slowly rebuilding its margins. But its sales are still falling, and Christmas is expected to be difficult once again.

Carrefour warns on sales, profits

13 Oct 2004

The retailer had a dire Q3 as price cuts failed to tempt shoppers back. Likeforlike food sales at its core French hypermarkets fell 5.5%. Carrefour may be right to cut prices further. But this looks like it will be pretty painful.

Sainsbury credibility hit by profit warning

11 Oct 2004

The UK supermarket group has revealed another cut in profits. And the information has come out in an unfortunate way. This could undermine CEO Justin King s credibility ahead of a critical review just when he needs it most.

What’s the best way to break up Gus?

10 Oct 2004

The accepted wisdom is that Experian, its credit checking business, should be demerged or floated. But there s an intriguing alternative: selling Argos. This could be Gus shareholders best bet of getting a premium to current valuations.

Karstadt sends mixed signals on insolvency risk

6 Oct 2004

It isn t clear which story is true. But sending mixed signals certainly won t foster confidence in Karstadt s restructuring. One day the German retailer says it will go bust if unions don t back a restructuring plan. The next day it says insolvency isn't imminent.

Why are retail turnarounds so hard?

4 Oct 2004

A number of the sector s grand old names Sainsbury, Safeway, Boots and M&S have been trying without success to arrest decline. One problem is that the environment is inclement, and getting more so. Another is that turnarounds take a long time.

Schroeder hits out at Karstadt rescue

1 Oct 2004

The German chancellor says the workers are taking too much pain. He's not necessarily right, but he makes a valid point. Karstadt will still be undercapitalised after the restructuring. And that's a product of its shareholding structure.

Boots hit by margin squeeze

30 Sep 2004

The UK retailer's lower prices haven't produced as much growth as hoped, and gross margins have been hit more than expected. Despite the disappointment, Boots is sticking to its guidance for the year. But achieving that looks an increasingly tall order.

KarstadtQuelle sells assets, equity to survive

28 Sep 2004

Selling businesses and cutting costs is a start. But it won't turn round the core department store business. After years in denial, the German retailer has finally faced up to the grim reality of its situation

Could Sainsbury be the next LBO?

28 Sep 2004

A deal has some logic. But probably not at a price that the controlling Sainsbury family would now be willing to accept. Potential buyers will have a better chance if Justin King, the new CEO, slips up.

Inditex sales growth comes at a cost

23 Sep 2004

The Spanish group s costs are rising faster than sales as they have done since 2002. Should likeforlike sales falter, its opearing profit could be savaged.

Carrefour recovery stalls

22 Sep 2004

Recent price cuts haven t restored market share as hoped. The French supermarket group is losing ground again. Sure, more price cuts are on the way and those might work. The worry though is that Carrefour is on a downward slide.

M&S launches buyback amid dismal trading

21 Sep 2004

The trading meltdown is grim. But that isn't the end of the world for CEO Stuart Rose. He has been able to cut back the price range for the £2.3bn buyback to below the 400p Philip Green offered.

Tesco is winning the food fight

21 Sep 2004

The UK supermarket has taken advantage of turmoil at Sainsbury and Safeway to increase its market share. But after the recent share price run, that doesn't necessarily mean there is more value to be had in the shares. The UK supermarket is knocking the socks off J Sainsbury and Safeway and gaining market share. And all that without losing any margin.