Monday, 6 December 2021

WBA Exploring Sale Of Boots

Following on from rumours last month, a new report has suggested that Walgreens Boots Alliance (WBA) is lining up advisers to explore options for its Boots chain in the UK, including a sale that could value it at as much as £10bn.

According to Sky News, WBA will hire Goldman Sachs to examine the hiving off of the health & beauty chain, potentially via a sale or separate listing.

NamNews Implications:
  • NAMs have two options:
    • Await a formal announcement re new owners.
    • Conduct some what-ifs on possible outcomes and steal a march on rivals.
  • Either way, one outcome will be possible prices & terms disparities re a new retail rival.
  • (…off or online…)
  • In which case, best harmonise now before the new combo do it on your behalf…
  • Or in the case of a PE purchase, prepare for a whole new way of dealing with Boots.
  • See The Implications of Private Equity Takeover of a Mult

#TradeConcentration #Consolidation #Takeover

Thursday, 2 December 2021

Aldi’s Christmas Ad The Most Effective

Research by Kantar, which combined consumer survey responses with facial recognition AI technology, has found Aldi’s ‘Kevin the Carrot’ campaign to be the most effective of 24 festive adverts tested this year.

It scored in the top 6% of all UK ads in terms of being both ‘distinctive’ and ‘enjoyable’, and was also the campaign that sparked the most conversation. After Aldi, Coca-Cola was the second-best overall, followed by Lidl...

NamNews Implications
  • A particular emphasis on friends and family says it all...
  • Note: Retailers (especially discounters!) came late to advertising!
  • Watch again for proof positive

Monday, 29 November 2021

Issa Brothers Mulling Merger Of Asda And EG Group

The entrepreneurs and private equity partners TDR Capital have recently been reviewing options to break up their 6,000-strong global forecourt empire. However, Bloomberg News reported on Friday that a merger of their two businesses is being discussed to create a combined entity valued at around £26bn, including debt.

NamNews Implications:
  • A listing in the short or even medium-term i.e. going public unlikely (debt)…
  • Australian petrol sites sale a probability to simplify holdings (and raise some cash)
  • Suppliers should anticipate amalgamation, if only to optimise buying power…
#Amalgamation #Simplification #CoreBusiness #Optimisation

Thursday, 25 November 2021

Retailers Putting Up Prices At Fastest Pace In 30 Years Amid Early Christmas Shopping

Faced with mounting cost pressures, retailers in the UK are putting up prices at the fastest rate since 1990 whilst benefitting from early Christmas shopping due to fears over supply disruption.

In the CBI’s quarterly Distributive Trades Survey, the balance of retailers reporting higher selling prices stood at +77% in November. That was the highest level since May 1990, with the pace of rises expected to be broadly similar next month.

NamNews Implications:

  • We have all experienced the inflation drivers in 2021.
  • So no surprises then…
  • Only issue is by how much?
  • How about 5% for starters…
  • …or perhaps a more realistic 10%?
#Inflation #CostPrices

Wednesday, 24 November 2021

Lidl GB Returns To Profit; Sets New Store Target

Latest accounts for the year to 28 February 2021 show Lidl GB recorded a pre-tax profit of £9.8m, compared to a loss of £25.2m in the previous 12 months when it invested heavily in store openings, recruitment, and its supply chain.

Lidl’s total sales rose 12% to £7.7bn, boosted by 55 new openings and raised demand for food & drink in supermarkets during the pandemic.

NamNews Implications:
  • NPBT 0.1% is still very slender, but on the right side of breakeven.
  • And these discounters have more experience of excelling on slender margins than most…
  • And Lidl continuing to invest during loss-making lockdown…
  • …shows they are still a threat to the UK mults.
  • Meanwhile, Brexit caused ‘an increase in administration for importing and exporting goods in and out of the UK’
  • ‘Our stores in Serbia and Switzerland are very used to dealing with these issues’…
  • …referring to countries that are outside the EU but do much of their trade with the bloc.
  • i.e. All showing Lidl are still a threat to the UK mults.
#DiscounterThreat #DiscountersProfitable

Tuesday, 23 November 2021

A major first: Aldi Reveals Its Sales And Profits In Ireland For The First Time

The discounter, which has a 12.7% share of the country’s grocery market, usually wraps its Irish figures into accounts filed for its UK business. However, in an extensive interview with The Irish Times, the Managing Director of Aldi Ireland, Niall O’Connor, revealed for the first time its local revenues and profits.

Aldi Ireland’s pre-tax profit margin was 3.6% last year, compared to 2.1% for Aldi UK.

NamNews Implications:
  • A breakthrough NamNews item…a precedent for all.
  • Astonishing that Aldi have lifted the lid…
  • Hopefully this means other retailers will follow?
  • (Especially given the paragraph above on Financial sunlight…
  • …meaning retailers with UK registered HQs have to divulge Irish profits).
  • If Tesco and M&S go it will be difficult for the others not to…
#RetailMarginsIreland #EUDisclosureRules

Niall O’Connor, Group Managing Director at Aldi Ireland. Photograph: Alan Betson

Monday, 22 November 2021

Unilever Sells Tea Business To Private Equity Firm

CVC Capital Partners is buying the bulk of Unilever’s tea division for €4.5bn after beating off competition from rival private equity groups in an auction.

The business being sold is called ekaterra, which controls a portfolio of 34 tea brands, including Lipton, PG Tips, Pukka Herbs, T2, and TAZO, that generated revenues of €2bn in 2020. It employs around 20,000 people worldwide with 11 production factories in four continents and tea estates in three countries

NamNews Implications:
  • NamNews readers are familiar with the PE playbook…
  • Rivals can anticipate a new kind of competition in the brands sold off.