By Malcolm Stacey | Wednesday 10 January 2018
Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Hello, Share Stackers. Of the four big British supermarkets, I have the most hope for my holding in Morrison (MRW). This is not saying much, as I think they all suffer in comparison to the cheaper prices offered by the Germans. Aldi and Lidl still attract my custom more than Tesco (TSCO) and Sainsbury (SBRY). And I know I’m not the only one. But Morrison reports a bouncy Christmas.
Total sales in the 10 weeks up to the end of January’s first week were up 2.6% on the same time last year. The period between Xmas and New Year saw growth of 3.7%. Yes, it’s not very much, but we’ve got used to supermarkets failing to improve on sales, and this modest Morrisons’ growth is a good start. The company says it is trying to address the problem of pricing. But they all say that. But it is also trying to make its stores more attractive.
There will be some folk who like to shop in cheerful surroundings, where the goods are laid out in a tempting way. With my local Aldi, I find that the place is more functional than appealing. But, when all you want is to stock your fridge and pantry, who cares.
Morrison is also planning to launch convenience stores at petrol stations and flog Amazon groceries (is there any market that Amazon can’t keep its fingers off?) But look at the snags. Our local Tesco Express is full of customers, proving the viability of that branch of supermarketing in a busy world. But Morrisons is currently short of that kind of store.
The shares bear a prospective yield of just short of 3%. So why should I buy into a competition-attacked company for that dividend when I can, for example, grab around 7% from an oil giant which is likely to benefit from surging oil prices? Let’s not forget, chums, that a lot of nosh is imported (though it shouldn’t be). The desiccated pound means Morrison has to pay more for it. Also, wages are not keeping up with inflation. And that’s even more of an incentive to change to German supermarkets.
You may wonder gang, why I still hold shares in three British supermarkets including Morrison. Well, though I’ve lost bread to them all, they have been static or gradually rising over the last two or three years - and I just haven’t got round to selling. Perhaps it’s time.
But for now, I’m calling at the Punter’s Return.
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