Thomas Tassone

12 week kantar update. Similar theme as previous quarters…Tesco and Sainsbury’s lead the pack with a market share increases of 0.6% and 0.5% respectively. Interesting numbers for the shareholders as we head to the mid way point of many businesses financial year. No doubt both Tesco and Sainsbury’s are capitalising on the worrying decline at Asda. Another record low market share and on the back of scathing comments by Lord Rose. They are in desperate need of a captain to lead the rudderless ship. Is a CEO on the way? Discounters continue to accelerate with Lidl in pole position on terms of growth. Aldi slowing down but still in double digits and with the news they are launching instore bakeries that could drive some much needed footfall and volume.

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Sales Momentum Building At Morrisons After Progress With Recovery Plan Morrisons has delivered another “solid quarter of progress” as new CEO Rami Baitiéh implements his recovery plan, which has focused on improving the chain’s product availability, loyalty scheme, and price competitiveness. In its second quarter to 28 April, group’s like-for-like sales up 4.1%, total sales up 3.7% to £3.8bn.,underlying EBITDA H1 as a whole up 16% to £321m. Morrisons also revealed the group’s debt down by 35% to £4.0bn from £6.2bn after acquisition by PE firm CD&R. The group completed £2.5bn sale of its petrol station business to MFG, and bought 38 Channel Islands convenience stores from SandpiperCI. McColl’s conversion programme concluded, now targeting 2,000 Morrisons Daily convenience stores in 2025, up from 1,600. “I am pleased with the overall performance of the business in the second quarter with supermarkets, convenience, wholesale and online all delivering growth,” said Baitiéh. “Over the last eight months, we have listened carefully to over 340,000 customers, colleagues and suppliers, and the insights from this exercise are helping to refine and shape the activity in all three pillars of our strategy: commercial excellence, operations optimisation and new value creation. It’s clear that availability and our loyalty scheme are the two areas our customers talk about the most and so we are focusing intensively on these areas.” Baitiéh noted that its Aldi and Lidl Price Match scheme introduced in February had given shoppers increasing confidence in the chain’s competitiveness. He also revealed that the investment made in its More Card loyalty scheme had been “very positive”, with over five million active members and transactions using the card growing by around 35% in the last eight months. Morrisons is now aiming for 70% of transactions to go through its More Card over the medium term, up from the current 50%. Chief Financial Officer Jo Goff concluded: “This has been another solid quarter of progress with sales and volume improvements right across the business. Our debt has now reduced by over a third, and we made further progress on our cost savings programme with £78m delivered in the quarter, taking the total since the start of this year to just over £450m, in line with our £700m three year target.” Currently celebrating 125 years since Sir Ken Morrison’s father established the first Morrisons store. Despite sales improvement in 12 months, Morrisons’ market share slipped from 8.8% to 8.7% over the year to 9 June 2024 [Kantar]. NamNews Implications: * Improvements patently taking place in terms of - product availability, - loyalty scheme - price competitiveness. - Debt reduction of 33% - EBITDA up 16% * i.e. key improvements for a PE financed company * Key that it soon results in growth of market share… * Watch this space! #Morrisons #GroceryMarketShare

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Today we’ve published research that shows half of girls preparing to leave school aren’t offered the same opportunities in the Trade industry as boys are.   It’s important to me that we continue to try and attract more women into trade professions, and that starts at school. The research we’ve published today highlights a clear disparity between rising female interest in Trade careers and the support they receive to pursue these ambitions. A career in Trade has so much to give to any young person, so we must improve its inclusivity for women and girls.   At B&Q – in addition to identifying gender barriers – we’re encouraging women and girls to take up trade apprenticeships from our £1 million fund. We’ve already supported 110 apprentices and would love as many of the remaining places as possible to be taken by women and girls.    This is a critical journey for the future of the Trade industry, and we hope others will join us in moving it forward.  

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'A culture of price undercutting by UK Salads over the past two years'. As a Buyer one of your jobs is to assess risk, this is actually more important than hitting your sales / profit plan. If you make a bad call on risk then the impact on your business can be significant. I always took the view, as a Buyer, that if something seems too good to be true then it is too good to be true. How can one Supplier be 30% cheaper than any of the others in an industry where margins are wafer thin? The question to ask though is why a Buyer in any Retailer would think that this is sustainable. The answer is that that Buyer was likely to be more focused on short term profit than a long-term. sustainable. The industry has been severely affected by the reckless behaviour of one supplier at a time when it can least afford it. Apparently before it faced financial difficulties, UK Salads had increased turnover from £45m to £69m in 2022 and expanded its farmland from 15 acres to 55 acres. But as we know, sales are for vanity, profit is for sanity. We are currently in a period where risk is higher than ever before, the swings are so extreme that one wrong call can mean the difference between small profit & huge loss. It would seem that UK Salads too enormous risks in a sector that can least afford it & the impact on their employees & those who they sourced from has been massive. Will those who lent them money survive, highly likely. Will the energy companies survive, of course. What about the 39 fruit & veg growers and suppliers? Managing risk is more important than ever before. Suppliers will be assessing which Retailer is riskiest to deal with, either in terms of personnel or finances. Getting the big calls right is more important than ever before, backing the right Retailer or Supplier can potentially bring big rewards but always make sure that they are sustainable. #theretailmind #groceryretail #GSCOPexpert #riskmanagement

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Our latest article for the Grocer….

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