Lupo di mare
30 Apr 2018
Argos What really strikes me about this merger is the opportunities for Argos within the combined group, and, perhaps, opportunities to expand the brand even further, especially with Walmart now having an interest.Amazon is encroaching on supermarket territory, but in doing so they have created a competitor. At the moment, Argos are a competitor only in the UK, but watch this space, I'd say.Wonder what's happening to Tesco today - must check.
Meanbugger
30 Apr 2018
Re: WOW Asda/Sainsbury merger talks I have to say the merger plan has been very well presented. Of course the CMA will get involved. They stick their noses into almost every deal these days and refer deals to phase 2 for the most ridiculous of reasons. However that said, on the face of it there isn't a clear reason why this deal wouldn't benefit the customers of either store.The key point which they daren't say in public but in private will be arguing with the CMA is the different demographics of Asda's and Sainsbury's customers. I live in an area which is prime Waitrose territory. You wouldn't know unless you were told that Asda, or for that matter Aldi, Lidl or pound shops existed. Just look at where Asda stores are located in London - traditional working class areas with the lowest house prices. The distinction is less stark as you move North in the country but generally you can say Sainsbury targets middle class shoppers and Asda the working classes with less money to spend.I don't hold shares in big companies like Sainsbury but I think the proposed merger is logical and has been well thought out. The CMA will look at the competitive effect in every location where either company has a store. They will find situations where there could be local losses of customer choice and will enforce store disposals to the competition - maybe even to a new foreign entrant like Carrefour. It is what the CMA sees as its job but I can see this merger eventually being cleared. It's not quite Harrods merging with Poundland and keeping the two brands separate but basically that is how the proposal is going to be presented to the CMA.
schwee
30 Apr 2018
Re: Full Year Unaudited results for the 52 w... EPS down nearly 25% on last year does not look too positive to me.
Kool Keith
30 Apr 2018
Re: WOW Asda/Sainsbury merger talks No plans to close any stores![link]
Kool Keith
30 Apr 2018
Re: WOW Asda/Sainsbury merger talks From SkyNews...Sainsbury's has agreed to merge with supermarket rival Asda - and plan to maintain both brands.The deal - likely to face close scrutiny by competition authorities - will create a grocery powerhouse overtaking Tesco as the number one player in the sector.
idontwanttolose
30 Apr 2018
Full Year Unaudited results for the 52 weeks to 10 March 2018 POSITIVE FULL YEAR RESULT!!!!!!!!!!Full Year Unaudited results for the 52 weeks to 10 March 2018Delivering at pace across the GroupProposed combination with AsdaToday, Sainsbury's has separately announced a proposed combination with Asda to create a dynamic new player in UK retail Financial highlights· Underlying profit before tax £589 million, a return to growth; H2 profit increase of 11 per cent· Strong cash generation with free cash flow of £432 million, up £113 million in the year· Net debt reduced by £113 million to £1,364 million. Targeting to reduce net debt by a further £100 million in 2018/19· Delivery of £185 million cost savings in the year, bringing the total to £540 million over three years, exceeding our original £500 million three year target. We will deliver further cost savings of at least £500 million over the next three years to 2020/21, starting with £200 million in savings this year· Underlying earnings per share decreased six per cent to 20.4 pence per share, primarily reflecting the impact of a full year's consolidation of the additional shares issued at the HRG acquisition· In line with our policy of paying a dividend that is covered 2.0 times by underlying earnings, we propose to pay a final dividend of 7.1 pence per share, an increase of eight per cent, bringing our full year dividend to 10.2 pence per share. The dividend is also covered 2.0 times by free cash flow· Sainsbury's Bank profits of £69 million; expected to reduce to around £30 million next year· Profit expectation for 2018/19 is in line with current market consensus of £629 million[1] Strategic highlights· Good food performance: transactions growing ahead of the market and an improving margin trend· Convenience and Groceries Online sales up nearly eight per cent and nearly seven per cent respectively· In the biggest retail change programme we have ever undertaken, we are transforming the way we work in our stores. We propose to simplify our structures and our operations and invest in technology to be more efficient and to improve customer service· General Merchandise and Clothing, including Argos, continue to outperform a challenging market[2]· 191 Argos stores open in Sainsbury's supermarkets; resulting in around 280 by the end of 2018/19, ahead of our plan to open 250 by March 2019. We will also deliver £160 million EBITDA synergies by March 2019, six months ahead of plan· Nectar acquisition supports our strategy of knowing our customers better than anyone else To read the rest[link]
cashpharma
30 Apr 2018
Re: Savings are great but they need to think... As pointed out the potential economies of scale are huge but achieving them is an enormous risky challenge that can easily go horribly them.Full marks to Mike coupe for making life interesting.
Hydrogen Economy
30 Apr 2018
Re: Savings are great but they need to t... I baled out of SBRY a couple of years back but the Asda talks are interesting.There are several options for the combined group but I would think model of positioning Asda to compete with the discounters and letting Sainsbury's move towards Waitrose/M&S (as Eagerbeaver suggested) makes sense. Some switching of store brands to suit locality might be appropriate. Sainsbury tried something similar with the reintroduction of Netto which failed badly, but Asda is a much stronger base to build on with 15% market share and a better brand than Netto to start from and lets SBRY ease it's own brand prices/margins (moderately) upmarket. The customer service needs to be similarly upmarket.There are store overlaps in some areas, brand differentiation and/or store closures makes sense.The deal would provide good opportunity to optimize the Argos offer, probably a better fit to Asda stores.The distribution benefits can still be largely achieved with a single organization, these costs are important but buying power, sales growth and margins will make or break a combined group.The downside is the uncertainty caused by inevitable CMA involvement and political tinkering which could well squeeze the value out of the deal.H2
sound money
29 Apr 2018
Re: Savings are great but they need to t... Numberbiter, "but I cannot see how merging with Sainsbury will help them"Exactly, you have said it yourself, you can't see. The reason is because the rational hasn't been disclosed. Why not do the smart thing and wait until it's clearer.You could end up misreading this like you did with the Melrose/ GKN takeover with spurious arguments that don't add up. Why not wait for the facts. Try also to avoid musleading obscure figures in your arguments. As you know you have form.M
numberbiter
29 Apr 2018
Re: Savings are great but they need to think... Sorry, but this merger just won't work. Not quite on the disaster scale that Melrose's takeover oi GKN was, but an impending disaster anyway. Asda is being thrashed by Aldi and Lydl, but I cannot see how merging with Sainsbury will help them. I believe the reason behind it is to provide a bigger market for USA food after Brexit. But who in their right mind would want (for example) to buy cheap US beef that has been fatted up by drugs rather than good food. Besides lacking taste, such meet that could be harmful to humans , which is why it is rightly banned in the EU. You have to feel sorry for Anericans; apart from the wealthy few, the population has to eat treated fatty food, which is why some of them have to use buggies to get to the end of their drive.The competition will still be Lidl and Aldi who will be selling safe (EU approved) food at competitive prices. If Asda goes upmarket to join Sainsbury, then their customers, not having much to spend, will migrate to Lydl and Aldi. If Sainsbury goes downmarket to join Asda, then their customers will move to M&S or Waitrose.Either way, a merger is guaranteed to lose maket share. All Sainsbury is doing (by trying to buy a failing competitor) is loafing itself with debt for no good reason.
Norman Barrington
29 Apr 2018
Re: All 'Sainsbury' But surly the great unwashed, would baulk at going into a shop called Sainsburys? A bit like classical music over the speakers, keeps the yobs & vandals out of railway stations?
Lupo di mare
29 Apr 2018
Re: All 'Sainsbury' Meant to add that they might like to ditch the 's at the same time. Tends to confuse some folk.
Lupo di mare
29 Apr 2018
All 'Sainsbury' Read that a retail analyst reckoned that the combined group would end up trading under the Sainsbury name. That makes sense, as any perception that the Asda stores might be cheaper would soon be countered by the realisation that the new group will be able to cut prices and compete with any.
Eagerbeaver66
29 Apr 2018
Re: Savings are great but they need to t... I don't see why people are moaning that there is no synergy between the two company? The point is that they both have strengths in complementary market segments and wont need to compete against each other. For example Asda can focus on beating back lidl and aldi with their own-brands while Sainsburys go on the attack against Waitrose and Marks with their own-brands. Where there are both Asda and Sainsburys stores, they can either keep the one that is most suited to that neighbourhood, or keep both stores, if having a choice actually attracts more customers to the location. Their synergy is their complementary markets segments, and they effectively surround Tesco, who probably have most to lose from the deal. I think the focus should be on growing market share, rather than lowering overheads.
Lupo di mare
29 Apr 2018
Some comment - Reuters "Sainsbury’s confirmed on Saturday that it and Walmart, the world’s largest retailer, were in advanced discussions regarding a combination of the Sainsbury’s and Asda businesses, the UK’s No. 2 and 3 UK grocers. It said they will make a further announcement at 0600 GMT on Monday. Britain’s big grocers, including No. 4 player Morrisons, have been losing share to German discounters Aldi and Lidl and must also deal with growing demand for internet grocery shopping and the march of Amazon. Sainsbury’s gave no details of the deal’s structure but a source with knowledge of the situation told Reuters the holding company of the combined group would retain the Sainsbury’s name. Sainsbury’s Chief Executive Mike Coupe, who used to work for Asda, would lead it, the source said. The source described the planned deal — which would consolidate a brutally competitive UK food market while helping Walmart address its underperforming UK arm through greater buying power — as a “merger”. Three sources with knowledge of the situation said Walmart would take a minority stake in the combined business. Two said Walmart would be the biggest shareholder, with a stake of around 40 percent."
