Staple Retail

Staple Retail equity research

Explore the most viewed and latest equity research and media content for companies within the Staple Retail sector. Stocks in this sector provide goods and services in the food wholesale and drug retail industries.

Staple Retail equity research

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Etablissementen Franz Colruyt

Profitability under pressure

Colruyt reported good top-line growth in FY16/17 but profitability disappointed. Reported revenue increased 3.4% (vs FY15/16: 2.9%; FY16/17 includes an additional month of sales of the disposed French foodservice business ‘Pro à Pro’). Excluding the disposed French business, top-line growth came in at 2.8% (+30bp vs our estimate), largely driven by the good performance in the retail segment (contributes c.76% to group revenue). The segment clocked 2.4% revenue growth despite an unfavourable calendar impact (there was no Easter in FY16/17, whereas, it fell twice in the last FY). Colruyt’s stores in Belgium and Luxembourg recorded 1.4% revenue growth (vs +2.8% in FY15/16), supported by sales price inflation and ongoing store modernisation. Likewise, French Colruyt stores also performed satisfactorily (+5.0% vs FY15/16: +5.2%), thanks to new customer additions and an increase in the average shopping cart value. Wholesale & Foodservice segment was up 2.7% (vs FY15/16: +3.0%; contributes c.18% to group revenue); the strong performance in the Foodservice business (+5.0% yoy) was offset by a flattish Wholesale business (+0.4% yoy). Revenue growth from other activities also returned into the black (+8.1% yoy vs 9.0% decline in FY15/16; contributes c.6% to group revenue), underpinned by volume gains, higher fuel prices in H2 FY16/17 and new filling stations. Despite the 10bp gross margin improvement, the underlying operating margin tanked 30bp to 5.3% (vs our estimate: 5.5%), largely due to increased operating expenses (+40bp yoy as a percentage of revenue) and a higher depreciation charge (+13% yoy). The company proposed a gross dividend of €1.18 per share (+5% yoy). Management is anticipating a competitive environment in 2017/18, with no significant upturn in the short-term economic climate in both Belgium and France.

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15 Sep 17
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Sonae SGPS

Anchored on a successful expansion strategy

Sonae’s H1 17 interim financial statements reveal an 8% yoy increase in the holding’s revenues to €2,603m, fuelled by growth of 10% in Q2 17. Sonae’s underlying EBITDA increased by 9.2% to €116m, on a yoy basis. Thus, Sonae’s underlying EBITDA margin increased from 4.4% in H1 16 to 4.5% in H1 17. However, Sonae’s EBITDA suffered a sharp decline of 24% to €142m, i.e. a 5.5% EBITDA margin, down from 7.8% in H1 16. Indeed, over 2016, Sonae benefited from the positive impact of non-recurrent items (mostly from the capital gains arising from the sale and leaseback transactions completed by Sonae RP in H1 16). Consequently, Sonae’s direct results were down 35.5% to €43m, driven primarily by non-recurrent items. Earnings from joint ventures rose by 24.5% in H1 17 to €32m, benefiting from the positive effect of the valuation of Sierra’s assets, as well as from a capital gain driven by the deconsolidation of MDS. Thus, Sonae’s bottom line gave up only 2.5% to €75m.

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14 Sep 17
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Carrefour

Profitability hit hard by competition; hopes pinned on new CEO

Subsequent to the Q2 FY17 results published last month, Carrefour reported disappointing H1 FY17 numbers (sales growth was good but profitability slumped). Lfl sales – excluding petrol and calendar effects – increased 2.1%, largely due to strong promotional activity in Europe. France clocked revenue growth of 1.3% (contributed c.45% to group sales), driven by convenience stores (+5.6% yoy), while hypermarkets were in the red (-0.5% yoy). Other European countries (+2.2% yoy; contributed c.26% to group sales) and LatAm (+7.3%; contributed c.21% to group sales) also held up well, while Asia remained in negative territory (-4.3% yoy; contributed c.8% to group sales). The reported revenue advanced 6.2%, underpinned by the scope impact (+0.9% yoy; integration of the Eroski stores in Spain and the Billa stores in Romania) and FX tailwinds (+2.8% yoy; largely due to the appreciation of the Brazilian real vs the Euro). The recurring operating profit at current exchange rates declined sharply by 12.1% yoy to €621m (vs our estimate: €680m; street estimates: €675m), dragged by poor performance in France (profit margin down 70bp yoy). LatAm’s profit margin also came under pressure (-60bp yoy) amidst the challenging consumption environment in Argentina. Management has cut FY17 sales growth guidance to 2-4% (vs 3-5% earlier) and anticipates the operating environment will remain difficult in H2 in some countries. The full-year recurring operating profit is expected to register a similar evolution to the decline recorded in H1 FY17. Capex is now estimated at €2.2-2.3bn (excluding Cargo Property) vs an earlier estimate of €2.4bn and free cash flow to remain at the same level as in FY16.

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05 Sep 17
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AMYT JAN OBT EMAN MCLS

Breakfast Today

Amryt Pharma (AMYT.L) | Jangada Mines (JAN.L) | Obtala Limited (OBT.L) | Everyman Media Group (EMAN.L) | McColl's Retail Group (MCLS.L)

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04 Sep 17
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Galenica

Good start to the year; full-year guidance upgraded

Vifor Pharma released H1 17 results broadly in line with our estimates as well as market consensus. Reported revenue came in at CHF625.7m (+13.6%) on the back of sustained growth in the iron deficiency business (+9.1%; accounts for c.45% of H1 17 sales). Within the iron franchise, Ferinject/Injectafer was the primary growth contributor (+18.7%; accounts for c.31% of H1 17 sales) led by robust demand in the US. However, sales for the other intravenous/IV iron drug ‘Venofer’ fell 12.9% (accounts for c.9% of H1 17 sales) due to a cannibalisation effect from Ferinject and order phasing issues outside the US. The biggest positive was the 80.4% increase in sales for the nephrology drug ‘Velphoro’ (accounts for c.6% of H1 17 sales) which benefited from strong volume growth in the US, Europe and Japan and the continuing roll-out in other key geographies (currently available in 24 countries). The upward growth trajectory continued for the hyperkalemia drug ‘Veltassa’ (CHF24.3m vs CHF7.4m during September-December 2016) as more prescriptions were dispensed in the US. As anticipated, sales for Mircera were flat (+1.1%; accounts for c.25% of H1 17 sales; erythropoiesis stimulating agent/ESA) as the penetration level within Fresenius Medical Care ‘FMC’ dialysis centres exceeded 80%. Excluding the launch cost of CHF119.4m for Veltassa, EBITDA increased by 20.2% on the back of operational leverage and strict cost control measures (the EBITDA margin reached 40.3% vs 38.1% in H1 16). However, including Veltassa, the EBITDA margin fell to 21.2% (-36.7% yoy in absolute terms). Note that, the proceeds from the IPO of Galenica Sante in April 2017 (CHF1.8bn) were partially used to repay the loan undertaken to finance the Relypsa acquisition (CHF1.5bn). To strengthen its nephrology pipeline, Vifor concluded three strategic licensing deals during H1 17. Following territory expansion rights for Avacopan/CCX168 in February 2017 (currently in phase III for a renal disease; licensing agreement with ChemoCentryx to develop/commercialise the drug globally, excluding the US and China), the Japanese rights were out-licensed to Kissei Pharmaceutical in June 2017. In addition, Vifor entered into an agreement with Akebia Therapeutics to commercialise Vadadustat in FMC clinics in the US (currently in phase III for anaemia associated with chronic kidney disease/CKD). For FY17, management has upgraded its revenue and profitability guidance. Both net sales and EBITDA (excluding Veltassa) are expected to increase by more than 10% (vs earlier revenue guidance: high single-digit and EBITDA guidance: mid to high single-digit).

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28 Aug 17
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MSG PEN EOG NASA THR UVEN AOR NAK EDL SRES

AIM Breakfast

LoopUp—The provider of conference calls and online meetings is seeking to join AIM. 2015 revs of £9.2m and EBITDA of £1.02m | Bacanora Lithium— To list on AIM around 28 Sep as holding company for TSX listed Bacanora Minerals at £100m market cap | Aura Energy—ASX listed uranium developer (ASX:AEE) expected to join AIM 6 September | Autins Group plc - The acoustic and thermal insulation specialist now looks to join AIM late August

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15 Aug 17
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Greggs

In balance

Greggs’ interims show a company in balance in several ways. First, operational and site development initiatives are driving consistent sales growth despite a challenging market. Second, the balance between low-price value and perceived quality is allowing it to cover peak input cost increases without a serious impact on margins. Third, the financial model is operating to support the dividend with a stable balance sheet.

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09 Aug 17
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METRO

Metro Group splits into two; food goes out

After the demerger, the food business has been listed separately as Metro Wholesale & Food Specialist (MWFS), while the remaining (consumer electronics) business has been renamed as Ceconomy. Each shareholder in the previous Metro AG has received a share in both MWFS and Ceconomy, with dividend entitlements for the financial year beginning 1 October 2016. Ceconomy still holds 10% in MWFS.

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08 Aug 17
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McColl'S Retail Group

Supply chain partnership and acquisition

In a significant move, the neighbourhood retailer has partnered with Morrisons for the long-term supply of fresh food and groceries. Financial performance in H117 was robust despite challenging economic conditions. The acquisition of 298 stores from the Co-op creates a platform for further development. We believe that McColl’s has identified a clear strategy in the UK convenience channel, which is forecast to grow 18% to £47bn by 2022, according to IGD.

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07 Aug 17
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McColl'S Retail Group Ryanair

Breakfast Today

With second quarter corporate earnings presently the principal driver of US equity sentiment, traders were taking not taking any big bets yesterday. The major averages closed mixed, with both the Dow Jones and S&P-500 fractionally in negative territory despite firm Financials, following disappointing existing home sales data and weak Oils while still smarting from Friday's disappointing reports from General Electric and EBAY; the NASDAQ by contrast held on to a modest gain as techs found buyers ahead of Alphabet's release post close. Emerging from the OPEC meeting, WTI crude prices advanced slightly for the first time in three sessions, up 0.6% to US$46.64 during the session, as news that Saudi Arabia had agreed to limit its exports to 6.6m bbl/day and Nigeria planned to restrict production emerged, although this move was not sufficient to significantly rally quoted oil majors in a market that traders believe still remains oversupplied. They also remain nervous ahead of Donald Trump's son-in-law, Jared Kushner, facing a second day in front of the Senate Committee today; while he denied any "improper contacts" or colluding with Russia in an 11-page written statement, many believe his grilling simply adds further downward pressure on an already tumbling US$ which, in turn reflects of the President's declining credibility and inability to deliver on 'market friendly' campaign pledges. Diverting attention from politics, however, this week's slew of scheduled results includes Caterpillar, General Motors and McDonald's today, followed by Boeing, Coca-Cola, Facebook and Ford on Wednesday, before Twitter, Amazon and Intel report on Thursday. Alphabet itself produced more consensus-beating revenue and net income numbers late yesterday and although seemingly taking the EU's giant US$2.7bn fine in its stride, the shares still traded down 3% in the after-market on fears that rising traffic acquisition costs could slow ad revenues. The scheduled FOMC meeting that starts on Wednesday is not expected to light any fireworks; Janet Yellen's semi-annual testimony has already taken the heat out of any near-term rate move expectation although, as always, traders will scrutinise the accompanying statement for any hint of change to existing expectations of 'gradual tightening' given four consecutive months of dull inflation numbers. Having trended higher in recent sessions, Treasuries yesterday saw modest weakness, taking the yield on the benchmark ten-year notes up by 1.8 basis points to 2.250%. Asian markets were mostly mixed to fractionally down late in their early morning session on Tuesday. The S&P/ASX 200 stood out, however, staging a reasonable rebound boosted by Financials and Oils having been sharply down yesterday, while just about all other local bourses saw low volumes despite Monday's injection of liquidity from China's Central Bank. European stocks fell Monday, setback early on by the EU Composite PMI Index falling to a six-month low of 55.8 against expectations of 56.2. Shares of German auto makers were also all distinctly weaker following a report that Volkswagen had asked Europe's antitrust watchdog to investigate decades of coordination efforts by the country's manufacturers amid growing concern they might have jointly breached antitrust regulations. Although Financials ended firmer, Ryanair (RYA.L) results spurred another spate of Airline sector profit-taking as analysts raised concerns of looming industry overcapacity leading to more intense ticket pricing pressure. The STOXX Europe 600 was off 0.24%, with the Xetra Dax off 0.25% standing out as the region's biggest loser while the FTSE MIB rose by 0.59%. London's FTSE-100 ended off 1% under similar pressure from Airlines, Oils and Consumer stocks after giant Reckitt Benckiser (RB..L) reduced its annual net revenue target. The UK today releases its CBI Industrial Trends Survey for July, while MPC Member Andrew Haldane is also due to make a speech. Nothing is expected from the EU, but the US is due to provide a good batch of numbers, including its weekly Redbook Index, the S&P/Case-Shiller Home Price Indices for May, the Richmond Fed Manufacturing Index for July and API Weekly Crude Oil Stock numbers. UK corporates due to report earnings or trading updates today include Provident Financial (PFG.L), Croda (CRDA.L), Fevertree Drinks (FEVR.L), Virgin Money (VM..L), Domino Pizza Group (DOM.L), and Fuller Smith & Turner (FSTA.L). Having been hit hard relative to its Continental peers yesterday and with Oils likely to recoup some of their losses as traders reflect on yesterday's OPEC announcement, London is likely to rebound somewhat this morning, with the FTSE-100 seen rising around 35 points in early trading.

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