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Morrisons – Oh for Archie Norman, Or Even Our Ken
As expected, Morrison’s (MRW) results are fairly horrendous with the total full year dividend slashed from 13.65p to 5p, like for like sales down 2% and total turnover down by 4%. The only positive signs are that in quarter four, like for like sales rose by – wait for it – a tenth of one per cent, which is hardly going to set everybody calling their stockbroker with buy orders. But they did at least manage to turn the previous years thumping loss into a profit before tax of £257. Plus the Amazon deal, which does seem to have added some hope for the future.
David Potts the Chief Executive, proudly claims that the team now comprises a wealth of internal and external talent. What a condemnation of the previous team. How and why were they allowed to get away with it for so long and to cause such damage to the company. And what, may one ask, was the Board doing whilst the old team so mismanaged the company. Will any heads roll there, where it matters? Potts blathers on about the company having started a the journey to turn the business round but makes no mention of how long this journey will take.
In the early nineties Archie Norman saved ASDA and turned it round in a matter of months, not years. He made his presence felt within weeks. England was once a nation of shopkeepers. Ken Morrison, the founder was a shopkeeper. He knew how to sell a tin of beans as did the Lords Marks and Sieff. Now they have been replaced in Retail UK not by bean sellers but by bean counters. And one dreaded word receives not a single mention – Lidl.
Despite the Amazon deal, the management of Morrisons seems to think it is still living in a world where they have plenty of time and Tesco is the standard setter. It isn’t and they haven’t.
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Has Morrisons Seen The Future And Stolen It
And not only seen the future but stolen a march on its competitors by seizing it. Two announcements today could change the future of retailing and give Morrisons a big step up over the competition.
Firstly it will provide a whole supply service to Amazon with hundreds of Morrisons (MRW) products becoming available online on Amazon including both fresh and fozen products. Could this give it a big leap in sales without it having to open a single new store or spend massively on increasing its on line presence.
At the same time MRW has reached agreement in principal with Ocado which, if implemented, will give it space in Ocado’s grandly named Customer Fulfillment Centre at Erith thereby enabling morrison.com to sell to customers all over Great Britain without having to build its own massive distribution and delivery network, by joining together Ocado’s delivery capability with Morrisons store assets.
Over the past 3 months months, shares in Morrisons have leapt from 145p to 195p compared to their 2013 high of 300p.
Chamberlin (CMH) the specialist castings & engineering group, is making good progress in difficult conditions and announces that underlying profit before tax should be above current market expectations for the current year, showing that it has the ability to deliver a world class product at a competitive price. All this, despite a slowdown in its core markets including steel, oil and gas, giving the lie to those who claim that the UK has no industry left.
In addition it has signed a major new automotive contract worth 3.3 million per year, with the benefits starting to flow as from the second half of 2017 and a new milling facility which will commence operation early in 2017 will make the group the only fully integrated supplier in Europe of grey iron bearing housings.
Results will be announced towards the end of May, together with a further update. The shares have fallen from 92p a year ago to their current 64p.
Alan Green discusses Morrisons (MRW), Debenhams (DEB) & Greggs (GRG) on TipTV
Alan Green discusses Morrisons (MRW), Debenhams (DEB) & Greggs (GRG) on TipTV with Nick ‘Moose’ Batsford.
Debenhams & Morrisons delighted but Greggs leads the way
Morrisons MRW claims to have benefited over the 9 weeks to the 3rd January from what it repeatedly describes as an improved shopping trip for its customers. Like for like sales, excluding fuel rose by 0.2% which may be seen as a good result against a background of the closure of 140 local stores plus further supermarket closures.
Xmas online sales surged by 100%.
Price deflation, especially to someone brought up in an inflationary world, seems to be staggering. Over one year Morrisons prices have fallen by 3.2 % and over 2 years by 7%.
Second half profits are now expected to be greater than first half.
Debenhams DEB is one of the few retailers who can claim to have got its planning right. Firstly it got its stock levels right and even more importantly it planned for the weather which we actually got rather than the weather which all the other retailers expected. The result is that it was not left with a huge overhang of unsold outdoor wear.
It claims to have experienced strong multi channel sales growth over the 7 week Xmas period to the 9th January but despite that, growth at 2.9% was down on 2014’s 3.3%. Reported like for like sales growth fell from 2.4% to 1.8%.
Over the 19 week period to 9th January Debenhams experienced a substantial all round improvement over the previous year, with gross transactions up by 2.5% and reported like for like sales up by 1.9%.
But the real Xmas winner so far appears to be cheeky little Greggs (GRG). 2015 was a year of excellent progress and its seasonal favourites, mince pies and Festive Bake, made a strong contribution to Xmas sales. With 122 new shops as against only 74 closures in 2015, total sales rose by 5.2% and like for like sales in company managed shops were up by 4.7%.
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TipTV Daily Market Roundup – Nick ‘Moose’ Batsford, Zak Mir and Alan Green
Nick Batsford, CEO of Tip TV, was joined by Zak Mir, technical analyst for Zak’s Traders Café, and Alan Green, CEO of Brand Communications, on the Tip TV Finance Show to discuss the Chinese import and export data, the falling commodity prices, an outlook for Centrica and Hornby and a view on global producers.
Weak Chinese imports trigger risk-off
Batsford highlighted FX Street, who noted that exports in China dropped 6.8%, whilst imports fell 8.7%. Weak exports is not surprising with global demand being relatively low, but falling imports is a more serious issue for China as it highlights weak consumption. They continued that the global economy is to continue to face aggregate demand deficiency, and interest rates are likely to stay closer to zero, the new normal, so long as Chinese consumption does indeed remain weak.
Commodity melt down threatening the Santa rally
Mir outlined that we don’t know where commodities are going or how bad the situation is going to get, but with oil now falling as well there is certainly a chance for this melt down to impact the potential Santa rally. Green agreed with this, and commented that commodities may well put the brakes on a Santa rally.
Outlook for Centrica and Hornby
When concerning Centrica, Green believed that it shares have opened this morning lower, and with a trading update on Thursday unlikely to change the situation, he expected more downside for the stock.
In terms of Hornby, he expressed that we are seeing a convergence of the 50 and 200 day moving averages, and their upcoming trading statement may spark a recovery heading into next year. Green added that this is a pivotal time for Hornby.
Incredibly low prices impacting producers
Batsford highlighted Elliott, who commented that heavily weighted to both energy and precious metals, both Bloomberg’s Commodity Index and the older Commodity Research Bureau’s Index of basic materials and food are down at the sort of levels not seen in this century. Trading approximately 22% below 2009’s lows, and 65% below 2008’s record high, its impact is being felt by producers all over the world.
– See more at: http://www.tiptv.co.uk/finance/daily-market-roundup-commodities-applying-the-brakes-on-a-santa-rally-outlook-for-centrica-and-hornby/#sthash.gpvAqMDE.dpuf
Unexpected Lifeline for Tesco (TSCO) & Morrisons (MRW)
“Government guidelines are responsible for all major banks, many supermarkets and pub companies suffering colossal business and financial problems” – Tim Martin, chairman of Wetherspoon (JDW)Looking for villas and houses for sale in Greece – http://www.hiddengreece.net