Carrefour has announced the acquisition of Grupo Big Brasil SA, the third largest grocer in Brazil. The deal looks a bit expensive at the first glance, but the value of real estate and the guided profit synergies are attractive enough to boost investors’ sentiment. The transaction is a good strategic fit in our opinion. We also do not expect any trouble in regulatory approval.

Carrefour (CA:EPA)Carrefour SA (CA:PAR)

• 24 Mar 21
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FY20 results and current trading highlight the transitional covid lock-down effects on margin mix and costs. However, looking forward MCLS is well positioned in a growth market and, following the recent strategic agreements with its banks and Morrisons, it is now able to execute its margin/mix accretive growth strategy focused on convenience. It is on the cusp of an exciting growth phase. There is understandable near term caution but, if well executed, this plan has the scope to move the dial meaningfully on profitability, FCF and leverage.

McColl's Retail Group Plc

• 23 Mar 21
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Greggs’ FY20 results were in line with expectations and highlight a year of two halves from a profit perspective. COVID-19 wrought the most damage in H120 before ‘better’ revenue and cost management restored the H220 operating margin back to normal levels (10.8%). Although current trading remains negative (-28.8% for the first 10 weeks of FY21), it is better than we and management expected and momentum is improving, leading us to increase our FY21 PBT forecast by c 5%. There is a very clear message that management is looking to the future by re-activating the store opening pipeline, accelerating multi-channel distribution and investing further in the supply chain, with more investment likely as management targets a presence in 3,000 locations, 44% more than today.

Greggs plc

• 17 Mar 21
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WM Morrison has announced FY20/21 preliminary results in line with the street’s estimates. Although the revenue and adjusted operating profit were in line, FCF slumped significantly, on the back of lower operating profit, the temporary decline in fuel sales and working capital headwinds. We continue to see Morrison as a healthy business and believe that the FY21/22 outlook is achievable. We remain positive on the stock’s valuation.

Wm Morrison Supermarkets plc

• 12 Mar 21
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Following the Q4 sales update, Jeronimo Martins has announced FY results slightly below our estimates. In FY21, we expect the Polish banner Biedronka to preserve profitability, and the Colombian banner Ara to improve further. However, the Portuguese business is likely to remain under pressure. The strategy to continue with inorganic expansion (despite the pandemic led hiccups) is also a step in the right direction. We maintain a positive stance on the stock’s valuation.

Jeronimo Martins SGPS (JMT:ELI)Jeronimo Martins, SGPS S.A. (JMT:LIS)

• 04 Mar 21
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Casino’s Q4 and FY20 performance was stronger than our expectations. Management’s success in improving profitability and its progress in new businesses are noticeable developments. However, we do not expect the performance of French hypers to return into the black in FY21. Despite a few hiccups and further needs to reduce debt, we continue to believe in the attractiveness of the stock’s valuation.

Casino Guichard Perrachon (CO:EPA)Casino, Guichard-Perrachon SA (CO:PAR)

• 01 Mar 21
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McColls has announced 2 key strategic developments today, with a new Morrisons supply partnership and the extension of its bank facilities. Conclusion of these vital negotiations represents a significant milestone, and allow management to focus on a new and exciting execution phase as it pivots towards a food-led convenience offer. It will also facilitate the delivery of sustainable profitable growth at a time when the importance of neighbourhood stores has never been greater. The news should be received well by investors.

McColl's Retail Group Plc

• 01 Mar 21
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Despite AD’s strong performance, the investors seem to be concerned by noticeable margin erosion in the US and softer EPS guidance for FY21. However, we continue to believe in the strength of the business / proven track record of management and reiterate that the stock is attractive at current levels, throwing up an ideal entry point for mid/long-term investment.

Koninklijke Ahold Delhaize N.V.

• 25 Feb 21
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Morrisons will announce FY2021 preliminary results on the 11th March. Given January market data and the Prime Minister's forthcoming unlocking news, we set out our expectations for the forthcoming results. In brief, Morrisons guided for FY2021 PTP within a range of £420-440m, a midpoint of c£430m (excl. rates). We expect the Group to come within this range, looking at external trading data for January. With still subdued demand for fuel, positive working capital will take year-end net debt higher, we forecast c£1.8bn, but this should unwind in FY2022. More broadly, after a distinctive year, cost and cash flow comparatives ease as those for sales toughen, whilst the results provide a staging post for the Group to remind the market of the immense achievements of the past year, the beneficial learnings and why Morrisons is a stock that has a place within a UK consumer equity portfolio. House Stock.

Wm Morrison Supermarkets plc

• 22 Feb 21
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Carrefour’s Q4 performance was slightly ahead of ours and market estimates. Strong lfl growth across the key operating geographies and aggressive cost savings resulted in a 16.4% improvement in the recurring operating income (at constant exchange rates). Management’s performance turnaround plan remains on track. An additional cost saving plan should help the retailer to achieve the FCF targets in the forecast years. We maintain the positive stance on the stock recommendation.

Carrefour SA

• 19 Feb 21
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