Top story

Nisa, subject of a takeover bid from supermarket giant Sainsbury’s (SBRY), moved back into profitability in its last financial year despite a 2.6% fall in sales.

The company ended its year to 2 April with EBITDA of £8.6m – ahead of its plan of £8.5m and 17.8% up year-on-year.

Pre-tax profits grew to £2.8m for the year, which represents an £8.1m turnaround from its pre-tax loss of £5.4m in 2015/16.

Gross margin of 10.8% was in line with plan and the previous last year, reflecting desire to deliver better prices from suppliers direct to members.

Turnover was fell 2.6% to £1.25bn, with the fall reflecting a 1.5% drop in like-for-like sales as a result on competitive pressure and price investment as well as the administration of My Local stores in June 2016 which had been supplied by Nisa since opening in October 2015.

During the year, Nisa welcomed 515 new stores compared to 476 in the previous financial year.

Nick Read, CEO of Nisa Retail Ltd, commented: “The uplift in performance throughout FY17 continued to build on the foundations laid in FY16, when Nisa returned to profitable growth. It has also helped us to convey a message of long term sustainability, key to securing the confidence of our banking partners in our recent refinancing discussions.

“The business now has the security of a £120m facility for a period extending to five years, the terms of which are more favourable than our previous facility. Nisa is well placed to continue the execution of its three-year strategy, to grow profitably and create a sustainable business model for the benefit of all its members.”

Nisa added that sales to week nine of its 2017/18 financial year are running 7% higher.

On the potential Sainsbury’s takeover, Nisa stated: “The board has determined that one proposal is of sufficient merit to grant the party involved a period of exclusivity in order to carry out due diligence.

“Should that party wish to make a formal offer for the company, the Board will at that stage determine whether it is appropriate for this offer to be put to members. It will then be for the members to determine whether or not they wish to accept the offer.”

Morning update

Consumer confidence in the UK has fallen in the wake of the general election as fears over the economic prospects of the country over the next twelve months grow.

GfK’s long-running consumer confidence index decreased by five points to -10 in June – just two points shy of its lowest post-EU referendum level nadir of -12.

All five measures of confidence decreased in the month.

Most starkly, the measure for the general economic situation of the country during the last 12 months fell five points to -25, some this is 12 points lower than June 2016. Expectations for the UK economic situation over the next 12 months dropped a further two points to -23, which is nine points lower than June 2016.

The index measuring changes in personal finances during the last 12 months fell by three points to -1, while the forecast for personal finances over the next 12 months fell four points to 0.

Joe Staton, head of market dynamics at GfK, said: “This month’s survey covers the period before and after the UK general election and reveals a sharp drop in confidence among consumers across all measures.

“All this concern will worry the UK’s retailers, with this month’s plunge in the Major Purchase Index (down eight points) reflecting our increased caution over non-food spending and our softening appetite for debt. Strong consumer spending has propped up the economy since last June but now the twin pressures of higher prices and sluggish wage growth are squeezing household finances and adding to widespread fears of a Brexit-induced economic slowdown.”

Elsewhere this morning, snacking group Tayto has expanded its footprint in the vending machine industry by purchasing Bath-based West Country Vending Service.

The deal via affiliate company Montagu Group offers Tayto access to an additional 5,300 operational vending machines across the South West of England and South Wales.

The deal, which also includes West Country subsidiary, Hilton Vending, follows Montagu Group’s acquisition of Freedom Refreshments/LTT Vending in April 2017.

Paul Allen, chief executive of the Montagu Group, commented: “West Country is a long-established, route-based business with robust strongholds in the areas in which it operates. It is both disciplined and highly customer-focused with a family-oriented ethos similar to the Tayto Group.

“Although we are still in the very early days of our expansion into the GB vending sector, we are making large strides, building our profile and presence rapidly. Through our acquisitions of Freedom Refreshments and West Country Vending Service, we have acquired more than 12,500 vending machines in the space of a year which, in turn, has increased the Group’s turnover substantially.”

West Country turns over £11m per annum and manages and outsources vending machines as well as selling them to a range of clients.

In The Grocer this week, the management team behind a buyout at Thomas J Fudge’s Remarkable Bakery have sold their stakes and left the brand amid a shake-up by private equity backer Livingbridge. Click here for the full story.

Plus, UK-based global ingredients supplier Chaucer has posted a 33% jump in earnings in the year it was bought by Japanese food group Nagatanien.

Danish Crown-owned UK meat producer Tulip claims to have “put the brakes on” its decline after plunging to an operating loss of £21.8m in the past financial year.

Also, Warburtons saw annual sales slide by 4.6% last year amid tumbling sales for wrapped bakery goods, but profits edged upwards as it kept tight control on costs.

Check thegrocer.co.uk today for the full details on these stories.

On the markets this morning, the FTSE 100 is down another 0.3% to 7,327.9pts.

Majestic WINE (WINE) is up 1.8% to 331.5p, Associated British Foods (ABF) up 0.9% to 2,945p and Ocado (OCDO) is up 0.7% to 292.1p.

Major fallers include Greene King (GNK), down 5.7% to 649p, Finsbury Food Group (FIF), down 2.6% to 113p, TATE & Lyle (TATE), down 1.2% to 666p, WH Smith (SMWH), down 1.1% to 1,704p and Tesco (TSCO), down 1% to 170.3p.

Yesterday in the City

The pound hit a one-month high at broke the $1.30 barrier briefly yesterday after Bank of England chief economist Andy Haldane once more suggested the time to raise interest rates back up from the historic low of 0.25% is approaching.

As the pound rose, the FTSE 100 plunged, dropping 0.5% to 7,350.3pts yesterday.

However, the FTSE 250 – more weighted towards UK companies trading domestically, also fell in what was a tough day for stocks in the City.

Large fmcg companies relying on international revenues were particularly hit, with Coca-Cola HBC (CCH) dropping 3.6% to 2,251p, Tate & Lyle (TATE), down 3.4% to 674p, Unilever (ULVR), down 2.7% to 4,156.5p, British American Tobacco (BATS), down 2.2% to 5,235p, Reckitt Benckiser (RB) down 1.9% to 7,687p and PZ Cussons (PZC) down 1.9% to 342.5p.

After the news that Tesco and Booker are requesting a swift move to a more in-depth competition investigation into their merger, the pair outperformed the market – with Tesco (TSCO) up 0.2% to 172p and Booker (BOK) down just 0.2% to 187.1p.

Packaging firm DS Smith (SMDS) jumped 8.4% to 481.4p on the news of its acquisition of US firm Interstate Resources and 5% increase in constant currency profits for the year.

Greene King (BNK) was flat at 688.5p after announcing a 6.9% rise in annual revenues to record high of £2.22bn in the year to 30 April 2017.

Real Good Food (RGD) was up 4.1% to 38p as it announced it has raised £15.5m of expansion capital to plough into its Renshaw and Hayden businesses.

Topics