Supermarkets

Sainsbury’s stagnation adds pressure for new plan

3 Jul 2019

The UK retailer’s sales fell for the third quarter in a row. After the failed merger with Asda, CEO Mike Coupe has cut prices and invested in stores. But his strategy is not bearing fruit, and a chaotic Brexit could further hurt. Coupe needs to come up with a bolder strategy.

Casino takes baby step on road to redemption

28 Jun 2019

The French grocer has simplified its Latin American structure. The bankruptcy of Casino’s parent company Rallye frees it to recapture some value for investors, and offloading stakes in Latam supermarkets would cut leverage. A focused French business could be an easier sell.

Metro raid is an opening salvo in longer battle

24 Jun 2019

Czech and Slovak investors have offered 5.8 bln euros for the German wholesale retailer. Though they speak for more than 30% of the shares, a 3% premium looks measly. To rebuff the assault, Metro CEO Olaf Koch needs to convince sceptical investors about his turnaround.

Parent’s bankruptcy loosens its grip on Casino

24 May 2019

The French grocery giant’s debt-riddled controlling shareholder, Rallye, sought protection from its creditors. For now, Casino will keep sacrificing growth to pay large dividends to owner Jean-Charles Naouri. But a debt restructuring might eventually free the 3.5 bln euro group.

Sainsbury’s Plan B is underwhelming

1 May 2019

The UK grocer will spruce up stores and cut prices. A new strategy was needed after boss Mike Coupe’s failed takeover of Asda. But with discounters and rivals gaining ground, Coupe needs to be bolder. The risk is that Sainsbury’s keeps losing market share as competition hots up.

UK supermarket M&A will return in bargain bin

25 Apr 2019

The competition watchdog blocked Sainsbury’s proposed $9 bln takeover of Asda. CEO Mike Coupe has few palatable options to cope with German discounters and the revival of UK peers. Deal fever will resurface after the rot sets in and the grocer’s share price has fallen further.

Casino sales merely keep its head above water

23 Apr 2019

The indebted 4.2 bln euro French retailer has sold 470 million euros of supermarkets to U.S. buyout firm Apollo. The valuation looks adequate and the group’s shares are well above September lows. But leasing back its own stores will act as a drag on Casino’s recovery.

Magnit’s Lenta counterpunch has yet to connect

5 Apr 2019

The Russian retailer has lobbed in a rival bid for its domestic rival. Magnit’s approach is fuzzy and barely more generous than oligarch Alexey Mordashov’s swoop for a 42 pct stake in Lenta. But it might prompt minority investors to think twice about which offer they back.

TPG leaves Russian retail with a whimper

2 Apr 2019

A decade after first investing, the buyout group is to sell its stake in retailer Lenta to tycoon Alexey Mordashov at an implied valuation of $1.7 bln. A 12 pct return is decent enough, but still below what TPG might have hoped for.

Rare-earth bid reverts Aussie conglomerate to type

26 Mar 2019

After spinning off supermarkets and selling coal, $27 bln Wesfarmers is back adding to its sprawl with a $1.1 bln offer to buy Lynas. The attraction of owning the only major producer of speciality ingredients outside China is clear, but the financial and strategic cases less so.

Oligarch’s Spanish bid is lesser of two evils

19 Mar 2019

A takeover by Mikhail Fridman’s LetterOne could leave investors in DIA with heavy losses. But supporting the management means backing a $680 mln rights issue – almost twice the supermarket’s market value. After accounting problems and profit warnings, the former looks preferable.

Sainsbury’s antitrust riposte barks up wrong tree

19 Mar 2019

The supermarket chain promised to deliver 1 bln pounds of price cuts to ease fears about a tie-up with Asda. That might help its image with customers, but probably not change the regulator’s mind. Arguing that the grocery market is rapidly changing would be a smarter move.

U.S. No. 2 grocer caught in Walmart-Amazon squeeze

7 Mar 2019

A 70 pct profit drop in the fourth quarter and a weak outlook wiped more than 10 pct off Kroger’s value. The company is trying to keep pace with the biggest players’ store revamps, e-commerce and delivery. But with additional pressure from discounters, it’s a race against time.

Ocado will do better than M&S out of a tie-up

26 Feb 2019

The online specialist may sell a 50 pct stake in its retail division to Marks and Spencer for up to 900 mln pounds. That can fund investment in its fast-growing tech unit. The buyer will pay a hefty price for a delivery service that might struggle to hang onto current customers.

African retailers get sobering reality check

26 Feb 2019

Shoprite, the continent’s biggest supermarket chain, suffered its first half-year earnings drop in a decade. The big hit was from inflation and devaluation in frontier markets like Angola. Chasing Africa’s billion-plus consumers is one thing; doing so profitably is another.

Walmart UK buyout would stretch even KKR

25 Feb 2019

The private equity group might bid for the U.S. giant’s Asda unit if a 7.3 bln pound sale to rival Sainsbury’s is blocked. To get a decent return, KKR would have to crank up sales and margins – and write a big equity cheque. It’s not impossible but UK retail woes make it unlikely.

Homeplus shopping pain will resist Korean IPO cure

22 Feb 2019

Asian buyout firm MBK will list some of the hypermarket buildings it bought from Tesco. This $1.5 bln REIT should fly in yield-hungry Seoul. Yet the split could make it harder to sell the rest. Separating property and operating units was a boom-era trick that ended badly.

Walmart is smallest loser in UK supermarket salvo

20 Feb 2019

British regulators released a damning view on the 7.3 bln pound tie-up of Sainsbury’s and Asda, owned by the U.S. group. The pair need a plan to fend off German discounters. But the verdict limits M&A options. Asda’s global clout helps. Sainsbury’s looks set for further decline.

Sainsbury’s M&A sweep may end with empty trolley

21 Jan 2019

UK competition watchdogs will soon opine on the grocer’s $9 bln acquisition of Asda. Its share price suggests investors think the deal will get the thumbs-down, or need painful disposals. A failed deal would put pressure on CEO Mike Coupe to come up with a new growth plan.

Tesco festivities will spill into 2019

10 Jan 2019

Britain’s biggest grocer outsold rivals over a difficult Christmas period and fought off discounters like Lidl with cheaper offerings. Its operating margin targets are attainable even though Brexit-wary consumers are counting pennies. The company deserves a higher valuation.