Supermarkets

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

21 January 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 January 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.

Amazon throws darts on the Indian high street

24 October 2018

The e-commerce giant is pumping money into local bricks-and-mortar stores. Turning offline, as it has done at home, underscores boss Jeff Bezos’ ambition. It’s also a hedge against rival Walmart, should New Delhi allow foreigners freer rein in supermarkets and department stores.

Suppliers are main hurdle to UK supermarket tie-up

16 October 2018

Regulators will include online and discount retailers when deciding whether J Sainsbury’s $10 bln takeover of Asda restricts competition. That is likely to mean fewer store disposals. But the watchdog’s focus on combined buying power squeezing suppliers could yet block the aisle.

Tesco gives investors reason to shop elsewhere

3 October 2018

Britain’s biggest grocer is charging lower prices in its home market to fend off discounters, making it harder to hit operating profit margin targets. Doubling down with the launch of a new bargain chain may push shareholders into the arms of smaller rivals, such as Sainsbury’s.

Casino is loser in slanging match with Carrefour

24 September 2018

The troubled French grocer says it talked with its larger rival about a potential tie-up. The latter denies anything of the sort. An informal chat may have occurred but the Rallye-owned supermarket has scuppered a potential fix for its problems by revealing too much too early.

Banks double down on Casino’s owner

17 September 2018

The French supermarket’s heavily indebted parent got a fresh 500 mln euro unsecured loan. That buys Rallye time to sell assets and avoid handing over its 51 pct stake in the grocer to creditors. For banks which are already on the hook, it’s an attempt to avert a messy collapse.

Bondholders face risky last bet at Casino owner

6 September 2018

Credit markets are growing increasingly nervous about Rallye, the indebted parent of the French grocer. Luckily, owner Jean-Charles Naouri can draw on bank lines to repay debt. But the more Rallye borrows from lenders, the fewer assets will be left if it eventually collapses.

Alibaba channels old-school conglomerates

23 August 2018

Quarterly sales at the Chinese e-commerce firm soared 61 pct to $12 bln, but earnings were flat compared to a year ago. That's due to investments in cloud computing, supermarkets, video streaming and other bets. Alibaba's unwieldy mix of businesses may merit a valuation discount.

Hong Kong death offers humbling reminder to CEOs

21 August 2018

Shares of snack store operator CEC doubled following news that its founder had unexpectedly died. Research suggests such investor reactions are common, albeit usually less dramatic. Boards and bosses often contribute less value than they otherwise might think.

Walmart sharpens as Amazon efficiency edge dulls

16 August 2018

The $270 bln retailer increased quarterly sales 4 pct. That pales next to its Seattle rival’s latest 39 pct rise. But Walmart’s workers are as productive as ever while Amazon is employing many more, and getting less in return, as it expands stores, warehouses and distribution.

Collapsing deals point to tired M&A bull market

9 August 2018

Tribune and Rite Aid terminated plans to sell themselves after shareholders and regulators objected. Perceived double-dealing also played a role. But crummy transactions falling apart is to be expected from a late-stage of a merger cycle that has run its course.

Casino shares go wrong way in risky debt punt

8 August 2018

The grocer’s shares fell 9 pct after an analyst flagged its related party deals. A sinking price may force its indebted parent to pledge stock to repay bonds, which could end up on the market. Investors have more to worry about than a grim outlook for French supermarkets.

Amazon’s growth is leaving the shop behind

26 July 2018

Jeff Bezos's outfit gets only about half its revenue from its online stores, down from two-thirds two years ago. E-commerce is growing, but the businesses Amazon has built around it are expanding faster and producing much more profit. That makes its valuation a little less crazy.

Supermarket buying pacts dodge primary problem

16 July 2018

Alliances to pool purchases, like one signed by Carrefour and Tesco, have in the past boosted grocers’ operating margin by up to 1.5 percentage points. Wringing savings without all the hassle of a merger is great. It does less to stop Aldi and Lidl grabbing market share.

Rotten food is least of UK grocers’ Brexit worries

11 July 2018

British supermarket operators worry that failure to reach a deal with the EU would see goods stuck at the border. More serious is the prospect of tariffs on imports from the bloc. That would leave them scrambling to protect thin margins and their market share from foreign rivals.

Carrefour tin ear puts fat cats in Macron’s sights

18 June 2018

The supermarket’s ex-boss forwent part of a 13 mln euro payoff after pressure from the French government. It shows that the ex-banker President Emmanuel Macron is no slave to laissez-faire economics. His move to liberalise firing rules makes corporate excess a legitimate target.

Casino sell-off is part of a bigger debt gamble

12 June 2018

The French supermarket is selling 1.5 bln euros of assets to pay down loans. Controlling shareholder Rallye relies on dividends to service its own heavy debts. The risk is Chairman and CEO Jean-Charles Naouri is running the grocer for financial needs higher up the food chain.

Morrisons can pilfer from larger rivals’ trolley

7 June 2018

The merger of J Sainsbury and Walmart-owned Asda leaves the UK grocer in a distant third place. Boss David Potts could counterbid, but drumming up similar synergies looks tough. Better to lobby against the deal, and grab market share and the best shop locations if it goes ahead.

Viewsroom: M&A gets carried away

3 May 2018

Dealmaking is breaking records. But more tie-ups are being pulled. And recent proposed unions like T-Mobile US with Sprint and Xerox with Fujfilm come with regulatory or boardroom drama. Crisis throwbacks and the careless brag-song of Sainsbury’s CEO are sending warning signals.