The food business blog from Michelle Russell
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E.Leclerc in push for French retail top spot
20 May 2013 14:20
French retailer E.Leclerc has added fresh impetus to its previous declaration of overtaking rival Carrefour in its domestic market by bringing its target forward a year.
The chief executive of privately owned Leclerc reportedly said a focus on low prices will enable it to overtake Carrefour in France ahead of schedule, by 2014.
According to Reuters, Michel-Edouard Leclerc told a news conference it remains focused on staying ahead in the price war heating up among French retailers. "I thought that in 2015 our chart line and that of Carrefour would cross, I think we will reach that point one year earlier," he told attendees.
Leclerc's market share is currently at 18.8% as of 24 March, according to Kantar Worldpanel data. This is against Carrefour's 20.5%.
Losing the top spot in its home market would be a blow to Carrefour, which has been fighting hard to improve its domestic performance - a market which accounts for over 40% of its sales.
The weak European markets have certainly played their part in making life tough for food retailers in the region, as shoppers' disposable incomes are squeezed by rising prices, subdued wage growth and austerity measures.
But Carrefour saw an improved performance at its core French stores in the first quarter, thanks to its recent pricing initiative.
Leclerc, however, has continued to make lots of noise on price and making sure it offers the lowest price across a number of areas. It also managed to book a respectable performance in 2012, despite the price intensity of its domestic market. It claimed its share of the market grew faster than its rivals last year, with sales up 7%.
Leclerc's chief executive is one of the more vocal characters in the French retail sector but his latest comment are sure to throw down the guantlet to his equally as outspoken counterpart at Carrefour, Georges Plassat.
Wal-Mart continues to play CEO card close to chest
14 May 2013 15:38
US retail giant Wal-Mart has continued to remain tight-lipped over who will succeed current CEO Mike Duke when he steps down.
Two possible internal candidates have been mooted as potential successors: Bill Simon, the head of Wal-Mart's US arm and Doug McMillon, who heads up its international operations.
A spokesperson for the retailer said it would not comment on "rumour or speculation", but that is unlikely to put a stop to the talk over who could succeed Duke.
Neil Stern, a senior partner at US retail consultants MacmillanDoolittle, believes the chances of Wal-Mart hiring externally is "unlikely" given it has always appointed from within for CEO - and particularly given the company is performing "at a fairly strong level".
McMillon and Simon are frequently mentioned as potential successors and are undoubtedly front-runners, according to Stern.
"Both have considerable experience with multiple aspects of the business. Doug is still quite young but has been a rising star for quite some time. Bill has effectively turned around the US, While he doesn't have Wal-Mart experience globally, he is a seasoned global executive. It will be interesting to see which direction they go," he tells just-food.
Whichever direction Wal-Mart chooses to turn, the challenges for Duke's successor are "numerous", Stern believes.
He cites: "Continued US growth and the quest for new format growth ... international growth with particular focus in emerging markets ... the biggest challenge - how to grow e-commerce and multi-channel retail to remain relevant in the future ... and always, the pubic perception of the running the world's largest retailer."
According to a number of reports, Duke isn't expected to step down immediately, but Wal-Mart may name his successor in the coming months.
M&S looks to Friel to further boost food sales
10 May 2013 15:14
UK retailer Marks & Spencer is hoping the voice of actress Anna Friel will add further momentum to its food sales in 2013 with the launch of a new campaign.
Kicking off from Monday, Friel will provide the voice for a series of TV ads focused on different food occasions - from a seaside picnic to lunch on-the-go. The first, maybe a week too late to inspire us get the picnic blankets out, focuses on a summer BBQ.
M&S is hoping the campaign will publicise the retailer as a destination for all events from BBQs and picnics to Sunday roasts.
With the strapline 'Make Today Delicious', it will act as an umbrella campaign for all M&S food marketing, covering online, print and TV.
M&S' food sales have been the star performer for the retailer. Last month the grocer booked a 4% increase in like-for-like food sales in the UK for the 13 weeks to 30 March - a performance that was "well ahead of the market".
Indeed, it has reported three years of rising food LFL sales and found itself relatively unaffected by the horsemeat saga that hit the European food industry earlier this year. This latest campaign is only likely to boost sales further.
Those wanting a sneak preview of the ad can do so by visiting the retailer's Facebook page on Sunday evening.
Delhaize shares climb as CEO steps down
08 May 2013 14:13
Surprisingly, Delhaize saw its share price climb this morning (8 May) on news that its CEO Pierre-Olivier Beckers is to retire at the end of the year.
Of course the share rise could have been down to the fact the Belgian retailer also booked a return to profit in the first quarter, but the news of a CEO departure is usually enough to send share prices plummeting. Investors do not like the unknown.
Speculation will no doubt now be about who will replace Beckers. And they will be big boots to fill. The chief executive has been at the helm for 15 years and seen Delhaize through a challenging few years and implemented a thorough revamp of its US Food Lion stores in a bid to halt falling sales. Any new CEO will need to see this through as well as offering a fresh perspective on the retailer's future, both at home and in its US market where it generates 64% of sales.
Delhaize said it is looking both internally and externally for candidates and expects to have a new chief executive in place by the end of the year. So, watch this space.
Waitrose sets sights on Europe with Eurostar deal
30 Apr 2013 15:07
UK upmarket retailer Waitrose has its sights set on Europe with the signing of a Eurostar deal.
The agreement, which will see the grocer supply food and drink to all standard class buffet cars across Eurostar's fleet, marks Waitrose's first major move into on-board food.
It will also be the supermarket's first significant move into Northern Europe as it looks to expand its business-to-business and export activities.
And it marks yet another expansion abroad for the retail chain, which grew its export business 20% over the past year.
Waitrose already supplies food to 45 countries including Singapore, Thailand, New Zealand and India. It also operates five branches in the Channel Islands, and has nine shops in the Middle East in partnership with Fine Fare Food Market. In the year to the end of January it grew its export business by around 20%.
It will therefore come as no surprise the retailer has expansion on its mind. In 2013 it has already begun supplying to new countries including Gibraltar, Trinidad, Ibiza, the Bahamas, the Philippines and the Turks and Caicos Islands.
This latest deal will give Waitrose access to Eurostar's 10m passengers a year who travel between destinations including Paris, London, Brussels and Calais.
It is a further sign the retailer is growing, despite operating in a highly promotional and competitive UK grocery market. In Kantar Worldpanel's latest figures, Waitrose's latest market share hit a record 4.9%.
Pershing investment adds to PepsiCo/Mondelez rumour mill
16 Apr 2013 15:25
Speculation is once again mounting about a potential marriage between Mondelez International and PepsiCo.
Following the reports last month that activist investor Nelson Peltz had gone on a US$2bn spending spree, building up stakes in Mondelez and PepsiCo, it seems someone else has been shopping too.
According to dealReporter, Bill Ackman's hedge fund Pershing Square has made an investment in Mondelez, fuelling further speculation over a potential merger between the two behemoths.
Rumours have swirled that Peltz has built up his stakes in Mondelez and PepsiCo with a view to pushing for a merger of the companies into a snack food Goliath.
In the wake of the Peltz reports, PepsiCo said it saw "no need" for major deals. It insisted it was seeing "strong progress" in its "strategy to deliver long-term growth and create shareholder value".
However, the reported move by Ackman will only serve to reignite the speculation.
This isn't the first time Ackman's hedge fund has had exposure to a Kraft entity. Pershing owned Kraft Foods shares before the company split but sold the entire stake in the former company in the second quarter of 2012.
As of 31 December, Pershing Square reports owning 5,978,214 shares. While, this could be considered only a small position (worth around $179m, according to hedge fund watcher Market Folly) compared to the rest of its portfolio, it could be significant given it is a new disclosure.
A tie-up between the snack businesses of PepsiCo and Mondelez could have strategic logic if you take into consideration that both see sales growth weighted to emerging markets and their product offerings are complimentary. Moreover, a merger between the two would perhaps serve to calm investor jitters about Mondelez's reliance on the developing world.
More may become clear on which firm might be pushing the board when next month's round of 13-F equity holding filings are published.
"Immodest" CEO proclaims Magnit's Russian leadership
12 Apr 2013 14:18
The CEO of Magnit is afraid to be seen to be blowing the Russian retail group's own trumpet, but what the heck, he will anyway.
He apparently has every reason to be pleased. Magnit, he claimed today in a stock exchange announcement, is now number one in sales in Russia's food retail sector.
The inevitable, then, has happened. Magnit, owned by Russian billionaire Sergey Galitskiy, overtook sales at its rival X5 for the first time since the company opened its first stores 15 years ago.
Magnit had been touted for some time by analysts to overtake its closest rival at some point this year.
Over the last few years, X5 has struggled to defend its market share. Its results today revealed an 8.1% increase in first-quarter net sales and less buoyant like-for-like sales.
In contrast, Magnit reported a sales rise of more than 30% earlier this week, with like-for-like sales growth of 4.8%.
Commenting on the news this morning (12 April), Galitskiy said: "I'm afraid to be found immodest, but for the first time over the last 15 years after opening of the first store we have become the leader in the food retail sector by sales."
Magnit investor relations director Timothy Post had hinted to just-food earlier this week on the release of its results that such an announcement was imminent.
He said: "X5 had always had the largest revenue but that's now flipped, it's just not public yet."
And so the focus for Magnit now will be to continue doing what it does best, expand. The Russian retail colossus already has plans to open almost 10,000 new stores by 2017.
Watch the just-food space for a more detailed analysis on Magnit's position in the Russian food retail sector next week.
Budget garners mixed reaction from industry
21 Mar 2013 12:13
The industry offered a mixed reaction to the proposed actions set out in Chancellor George Osborne's Budget yesterday (20 March), which included a new employer allowance and a business rates rise.
The Chancellor came up against a not unexpectedly rowdy House of Commons on Wednesday when he revealed a recovery of the country's economy had "taken longer than anyone hoped", but that "we are, slowly but surely, fixing our country's economic problems".
Growth in 2013 is now forecast at 0.6%, half the 1.2% rate the Chancellor predicted four months ago during his autumn statement. Osborne, however, vowed to stick the course on austerity, despite intense criticism from the opposition. He said the country would avoid a "triple dip" recession, and predicted the deficit would continue to reduce thanks to the "many tough decisions" made by the government.
The Food and Drink Federation welcomed the measures set out in the budget and said it shared the vision of the Government to grow the sector by 20% by 2020.
"The new employer allowance will significantly lower food and drink SMEs National Insurance bills and give those businesses greater certainty when considering whether to invest in growth while the announcement of a further cut in Corporation Tax and the cancellation of the rise in fuel duty planned for September will be welcomed across the industry," said FDF director general Melanie Leech.
"The increase to the above the line research and development tax credit to 10% also sends a clear message that the UK welcomes investments in innovation."
But while the food industry hailed the Chancellor's budget, and measures to help small businesses drew a favourable response, retailers were less impressed. They warned of more woe on the high street with nothing to mitigate the forthcoming sharp rise in business rates.
From the start of the tax year on 6 April, retailers will face an estimated 2.6% increase in business rates, which are linked to inflation. This is expected to add around GBP175m to their bills and comes on the back of around GBP500m of increase in rates over the past year.
For the retail industry, this will be a big blow given the challenges already facing the sector. Retailers are increasingly having to transform how they go to market in order to entice technology-savvy, cash-strapped consumers into stores and online.
The British Retail Consortium said it wants the Government to "deliver quickly" on its existing commitment to reassess the formula for determining future years' rates increases.
"One in nine high street shops is currently empty. An opportunity has been missed to make a difference to our troubled high streets and the communities that rely on them," said BRC director general Helen Dickinson. "He's done well for hard-pressed households but could have done more to help retail businesses to help him deliver jobs and growth.
"It's now even more important that the Government delivers tangible action on its existing promise to review the formula for setting rates in future."
While the news may have made for pretty dismal reading for retailers, the industry should look to the latest ONS figures for some comfort.
Sales figures released at the same time suggest there may at least be some temporary relief after a difficult January for retailers.
The weekly spend across all UK retailing was GBP6.3bn in February 2013 compared with GBP6.1bn in January 2013 and GBP6.1bn in February 2012. Online sales for the month were estimated at GBP540.5m, an increase of 10.1% on February last year.
With Britain teetering on the brink of its third recession in four years, this should provide some comfort for the industry. At least for a short while anyway.
Asda "eyeing bid for UK music retailer HMV"
12 Mar 2013 15:38
Supermarket giant Asda could be lining up a last minute rescue bid for UK music chain HMV if reports are to be believed.
The grocer is understood to have been in talks with HMV's administrators Deloitte about putting together a bid for the iconic brand, which collapsed into administration in January putting 100 stores at risk of closure.
According to The Sun, Asda could go head to head with restructuring experts Hilco in a race to grab the business. The restructuring specialist bought HMV's debt so is in pole position to acquire the retailer.
Asda, however, appears to have other ideas and could now launch a late bid to try to take control of the entertainment chain.
Shore Capital analyst Clive Black tells just-food: "There is no smoke without fire. I don't think someone has made up the story, which suggests there is some exploration going on on behalf of Asda."
Black believes it "makes sense" for Asda to consider buying the chain, for a number of reasons.
"I'm not sure whether Asda is coming at this with respect to ... buying HMV stores to turn them into city centre or retail park supermarkets or Asda Living stores. The devil is in the detail in that one.
"HMV is still a great brand. To me, it's about how much brand integrity is still in HMV and if it was properly looked after and invested in then it could deliver something for Asda. Could it replace the home entertainment areas of Asda? Could they change the profile and mix of the present HMV estate and take it internationally?"
Conlumino analyst Joseph Robinson believe the credibility HMV has built up in consumer electricals could be what is attracting Asda to the chain.
“These are areas that Asda has got a foothold in, as well as the strong brand position. There was talk at the end of last year that Asda was looking to follow Tesco and Sainsbury into possibly launching its own online downloads for music and video. So the HMV brand would help them do that.”
Invesco's Woodford ups Morrisons stake ahead of FY results
11 Mar 2013 15:22
Invesco Perpetual's Neil Woodford has topped up his stake Morrisons ahead of the retailer's full-year results this week, making him the largest shareholder in the UK grocer.
Woodford may well have taken advantage of BlackRock's disposal of its 155m shares in Morrisons in January with the move, upping his stake to 7.7% from 5.3%, according to The Daily Telegraph. BlackRock reduced its holding from 10% to 4.2%.
Woodford's move comes ahead of Morrisons full-year figures on Thursday and a widely expected and long overdue move into online grocery sales.
Dalton Philips, who replaced Marc Bolland as Morrisons chief executive in 2010, inherited a business that had success emphasising its fresh food offer but one without an online presence or convenience store network.
Earlier this year, Philips emphasised that Morrisons was working to develop its strategy of becoming a multi-format, multi-channel retailer, the bones of which were laid out in 2011. An update to the market on the progress of this strategy and the next steps are expected to be set out on Thursday.
Significantly, the chief executive hinted in January that the group could be gearing up to enter the online grocery space and added Morrisons could even benefit from a "late mover advantage".
Analysts did warn at the time that this may not be the case given how "excruciatingly slow" the grocer has been to respond to emerging consumer shopping trends in food and grocery. However, Philips has been quick to dismiss concerns it has missed its chance to ride the online and convenience wave.
Morrisons has been active in developing its online capabilities by acquiring an online clothing retailer Kiddicare, a stake in US-based Fresh Direct and launching a wine website. But the industry has yet to see any action by the retailer in the food space.
As for its move into convenience, Morrisons had a target of having 70 c-stores open by the end of the year. It has opened around 13 to date and recently bought 62 from the administrators to UK retailers Blockbuster, Jessops and HMV as it looks to catch up with rivals Tesco and Sainsbury's in this channel.
The Invesco buy indicates confidence in Morrisons' strategy but some industry observers see the retailer as under-performing the market.
Shore Capital analyst Clive Black, who is forecasting continuing pre-tax profit to be lower than Morrison's consensus of GBP877m, is looking for detail on what Philips plans to do to improve matters.
Black says he is expecting the chief executive to outline the performance of its fresh format stores, give an update on the group's "broader self-improvement and modernisation plans", its plans for store openings and whether it is planning to fulfil any online grocery activities.
Philips certainly has his plate full if he is to deliver on the turnaround programme. Any thoughts on convenience and online will be watched very closely indeed by the industry come Thursday.