Owner Of Superdrug Could Be Heading For Stock Market Listing

CK Hutchison Holdings is reported to be considering a stock market listing for its AS Watson business, which operates the Superdrug, Savers, The Perfume Shop, and Rossmann chains.

According to Bloomberg, the Hong Kong-based conglomerate has been speaking with financial advisers about a potential listing, which could raise $2bn or more. A further report by the Wall Street Journal said that Hutchison was planning a dual listing of AS Watson in Hong Kong and the UK, targeting the first half of next year.

AS Watson operates over 17,000 stores in 31 markets, including the Superdrug chain in the UK and Rossmann pharmacies in Germany. It also runs the Watsons chain of health and beauty shops across Asia, as well as grocery, wine and electronics stores in Hong Kong.

AS Watson’s total revenue increased by 4% (+5% local currency) to HK$190.19bn (£18.91bn) over the year to 31 December 2024, with its EBITDA edging up 1% (+2% local currency) to HK$16.40bn (£1.63bn).

Reports noted that considerations are preliminary and no final decisions have been made, including on the size of the potential offering.

Hutchison and AS Watson have not commented.

NamNews Implications:

• A public listing means more details and accountability at local level…
• …of interest to suppliers and rival retailers in the UK.
• The initiative raises the question of what use the company might make of the $2bn?

Lidl Set To Open 1,000th Store In The UK

Lidl will open its 1,000th store in the UK next week, on Thursday, in East Grinstead, Sussex. The milestone has been reached 31 years after the German discounter made its debut in the country, and comes at a time when it is the UK’s fastest-growing grocery retailer.

As part of celebrations to mark the landmark opening, the discounter is giving away 1,000 kits online for its customers to make a gingerbread version of its latest Lidl store. Ten of the kits will also contain £100 in Lidl Plus vouchers.

Joanna Gomer, Marketing Director at Lidl GB, said: “Reaching our 1,000th UK store is a huge milestone for Lidl, and we want to celebrate in a way that everyone across the country can enjoy.

“Our gingerbread houses have been a customer favourite, so we mixed things up a bit by creating a special kit that not only showcases our new East Grinstead store but also captures the fun and festive spirit of the season.”

After posting a jump in annual profits last month, Lidl GB revealed that it wanted to accelerate its store opening programme to continue winning market share from its rivals.

With it poised to overtake Morrisons to become the fifth largest grocer in the UK, the discounter’s Chief Executive Ryan McDonnell said that he saw an opportunity for “hundreds more stores”.

Lidl is on track to open 40 new sites in its current financial year. “40 is a good run rate and that sort of would set a benchmark for upcoming years,”

McDonnell said, while declining to put a ceiling on Lidl’s store ambitions in the UK. Aldi has previously stated that it has a long-term target of 1,500 sites.

NamNews Implications:

• To think, how much the discounters have achieved in 31 years in the UK!
• A retail format ‘made’ for uncertain times…
• (with a probable Morrisons psychological ‘hammer blow’ to come)
• A break with traditional, sophisticated UK retailing.
• A model still alien to some.
• Now in a position where suppliers have to have a good reason for ignoring this route to consumer…

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Asda Raises Nearly £600m From Store Sell-Off

Asda has raised £568m from two separate store sale & leaseback deals in a bid to shore up its finances ahead of a looming debt repayment to its former owner, Walmart.

The transactions have involved four of its supermarkets (Small Heath, Colindale, Coventry Abbey Park, and Killingbeck) being sold to DTZ Investors and leased back, and 20 stores and its Lutterworth distribution depot being sold to Blue Owl Capital and leased back.

All properties are subject to 25-year lease agreements, with an option to renew for an additional 10 years.

The struggling retailer noted that it will continue to operate all sites as normal, with a spokesperson saying: “Asda’s property strategy is centred on maintaining a strong freehold base while also taking a considered and selective approach to unlocking value from our estate where appropriate.

These transactions reflect that approach, enabling us to realise value from the sites while retaining full operational control.”

A report by the Financial Times stated that Asda intends to use the proceeds to help it repay a debt to Walmart, which retained a 10% stake in the company following the £6.8bn debt-fueled acquisition by TDR and the Issa brothers in 2021.

The structure of the buyout left Asda owing the US retail giant so-called payment-in-kind interest, which is rolled up and added to the principal due. When the investment matures in 2028, Asda could owe Walmart £900m. Sources told the FT that Asda was seeking to settle the debt next year before the interest rate begins to rise.

The latest sale & leaseback deals struck take the total amount TDR has raised from Asda’s property portfolio to more than £3bn.

Despite showing some ‘green shoots’ of progress from Chairman Allan Leighton’s turnaround plan, the latest Worldpanel data suggests that Asda is struggling to win back shoppers from fast-growing rivals Tesco and Sainsbury’s, and the discounters.

Over the 12 weeks to 2nd November, Asda’s market share slipped from 12.6% to 11.6% following a 3.9% sales decline.

NamNews Implications:

• ‘Business as usual’ following sale & leaseback.
• But with the rental costs on those stores hitting the bottom line.
• But the capital gain can help to pay down some debt.
• Watch this space…

More Changes In Asda’s Leadership Team

Following yesterday’s news that Asda’s VP of Marketing, Adam Zavalis, was leaving the business after just over two years in the role, the struggling supermarket has announced several other changes to its senior leadership team to support its turnaround plan.

Andy Newton will join Asda in January as VP of Property, overseeing its estates, acquisitions and store development. He has previously held senior property roles at Safeway, Morrisons, and most recently, Poundstretcher.

Following the new appointment, Jim Townsend will continue in his role as VP of Procurement, overseeing goods not for resale strategy, policy and buying. Meanwhile, Geri Hebberd will “refocus her role” as Senior Director, Strategy.

All three will report directly to Asda’s Chief Financial Officer, Michael Gleeson.

After the unexpected departure of Zavalis, Asda confirmed it was planning to recruit a new VP to lead its advertising, social, creative and design teams.

While it searches for the right person to lead its marketing teams, Pippa Prain will move into a new SD Marketing Planning, Propositions & Operations role on an interim basis, to “provide end-to-end strategic leadership and coordination across the function”.

Jen England is also returning to Asda from Morrisons to take on the position of Interim SD Marketing Communications, covering the supermarket’s advertising, social and design teams.

Meanwhile, Max Hilliard has been appointed as Managing Director of Forza & Kober Foods, which is part of Asda’s sourcing division IPL and provides a range of cooked and sliced meats to the business. The move marks a return for Hilliard, having founded the Forza business in 2007.

Following his appointment, Jon Hornby has been appointed as Managing Director IPL Produce Manufacturing.

Despite showing some ‘green shoots’ of progress from Chairman Allan Leighton’s turnaround plan, the latest Worldpanel data suggests that Asda is struggling to win back shoppers from fast-growing rivals Tesco and Sainsbury’s, and the discounters. Over the 12 weeks to 2nd November, Asda’s market share slipped from 12.6% to 11.6% following a 3.9% sales decline.

NamNews Implications:

• Albeit the team members have the experience to hit the ground running…
• Asda’s dilemma remains a race against the clock…

Can Anyone Save Asda? It Could Be Overtaken By Aldi In Monthshh

If you want to know how Asda lost its way under the Issa brothers, take a trip to South Manchester. At one end, opposite the Heineken brewery in the heart of Moss Side, an Asda superstore is in a deprived community whose cash-strapped shoppers value low prices for essential food and clothes.

Read the full article on This is Money website

NamNrews Implications:

• Given the talent pulled on board thus far, Asda is probably in the best possible hands.
• The only issue is the clock.
• A race against time..
• Fingers remain crossed…

Co-op Opens Third ‘On The Go’ Store

 

After the launch of its new ‘on the go’ micro store format over the summer, Co-op has opened a third site in Aylesbury.

The new concept focuses on serving food ‘on-the-go’, offering breakfast, lunch and dinner in new formats, from traditional meal deals to the inclusion of a hot food counter and deli-inspired selections.

The Aylesbury store follows launches in Solihull High Street and Altrincham’s Stamford Quarter, with the retailer previously stating that it aims to roll out to several hundred sites over the next two to three years.

At less than 600 sq. ft., the latest store takes cues from around the world to meet consumer demand for fast, food-for-now options throughout the day.
Between 7am-7pm, the outlet on Aylesbury High Street will serve breakfast, lunch and dinner, with online home delivery of hot food also available in the evening via Co-op’s quick commerce partners, Just Eat, Deliveroo and Uber Eats.

Gary Williams, Co-op Director of Store Optimisation, said: “We are delighted to grow our ‘on-the-go’ concept with the unveiling of our Aylesbury store. We continually look for new ways to get closer to our customers and deliver added convenience.

“Our new concept brings together an innovative blend of food-to-go propositions, with freshly prepared products designed to stand out in the high street and serve this vibrant and thriving community. Catering to ‘on-the-go’ meals throughout the day you will find delicious products, quick service, quality and value, and all in a great convenient location.”

The new store format joins Co-op’s traditional convenience stores across the UK, and is one of 50 new or refurbished sites the company is opening before Christmas.

NamNews Implications:

• Being retail, ‘try it & see’ will determine the roll-out rate.
• This simple (and convenient) proposition…
• …in minimal, well-placed space…
• …looks and feels good.
• Well worth watching…

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Grocery Inflation Eases As Supermarkets Ramp Promotions; Tesco And Lidl Make Biggest Share Gains As Asda Continues To Struggle

Worldpanel by Numerator: grocery price inflation slowed to 4.7% over 4 weeks to 2nd November as supermarkets increased the level of promotions ahead of the key Christmas trading period.

Take-home sales up 3.2%, spending on deals up 9.4% vs spending on full-priced goods up 1.8%.

Fraser McKevitt, head of retail and consumer insight at Worldpanel: “Retailers are very alive to the financial struggles that some households are facing, not least ahead of this year’s Budget. They’re eager to show how they’re offering shoppers value for money, putting the emphasis on price cuts rather than multibuy offers. It’s not just the Grinch who’s looking for savings, with just shy of 30% of consumer spending at the grocers on promoted items in October, a figure that we expect to go even higher as we get closer to Christmas.”

Worldpanel is predicting record sales for premium lines this year, with the potential to reach more than £1bn in December.

McKevitt: “It’s important to remember that shoppers often look for great value and quality, not just the cheapest product. At Christmas especially, people want to treat themselves, and throughout the cost-of-living crisis, we’ve seen them turning to retailers’ premium own-label lines to do that in a way that’s more affordable.

"Sales of these goods were worth £582m in the latest month, and they are likely to double as Christmas edges nearer, topping £1bn in the month of December for the first time ever.”

Online grocery is the fastest-growing channel, home delivery up 11%
McKevitt: “... existing shoppers value the convenience and make more orders". On average, household online users now buy 3 shops a month, = 61% of their grocery spend.

Ocado had a record 2.1% share (12 weeks to 2nd Nov). At 15.9%, its highest sales growth (4 yrs since April 2021).

Meanwhile, Tesco and Lidl both added half a percentage point of share to their market share positions.

Lidl’s sales up 10.8% (12 week, share now 8.2%).

Tesco 28.2% of market sales up 5.9%.

Sainsbury's sales up 5.2%, share up to 15.7%.

Aldi 10.6% of the market, sales up 4.4%.

Iceland sales up 4.9%

Morrisons sales up 2.3%, market share down from 8.5% to 8.3% ( 0.1 percentage points ahead of Lidl.

Asda’s market share down from 12.6% to 11.6%, sales down 3.9%

Waitrose sales up 3.8%. Co-op sales fell 1.4% (cyber attack)

M&S grocery sales up 8.8%, fastest rate since June.

NamNews Implications:

• As can be seen, retailers are keeping inflation down via promotions.
• Without which, volume would drop off.
• Obviously piling on pressure on those retailers that cannot afford to optimise the mechanic…
• Meanwhile, switchers to premium own-label will prove expensive to win back to brands, inevitably.
• All of which piles increasing pressure on Asda, and to an extent, Morrisons.

Waitrose Unveils New Concept Store For ‘Food Lovers’

Waitrose has opened its first ‘Home of Food Lovers’ concept store as part of its drive to elevate and differentiate its offer in order to stand out from its rivals.

The 27,000 sq. ft. supermarket in Newbury has been selected as a testing ground for several new initiatives and forms part of the grocer’s £1bn investment programme to enhance its existing 317 sites and open new ones. Waitrose noted that once tested with customers, new concepts will be introduced to other shops and become part of the blueprint for new outlets.

The revamped Newbury store features a five-metre Cheese Island, a first for the retailer’s estate, showcasing a curated selection of nearly 100 speciality cheeses. There are also expanded and modernised counters offering a new ‘Meal Maker’ service, where fishmongers and butchers prepare cuts with free rubs and marinades. The area also includes a new Dry-Aged beef counter.

An expanded in-store bakery features a new partnership with premium brand Ole & Steen, which will be rolled out to 35 stores, while the overhauled fruit and veg department focuses on organic, Fairtrade, and regeneratively-farmed produce.

The Newbury store also features 10 new brand partnerships with artisan producers, including Tap Social, Agua De Madre, and The Good Crisp Company.

A new ‘Food Lovers Hub’ offers recipe inspiration, with all ingredients and wine pairings grouped together.

Meanwhile, the delicatessen counter provides a personalised grazing box service and a ‘Fine & Rare’ wine section includes a blast wine chiller that cools bottles to the perfect temperature in minutes.

The supermarket is powered by new technology, including electronic shelf labels (ESLs), cash automation technology, and shelf-edge cameras that help identify stock gaps.

Meanwhile, staff at the Newbury store will be the first to trial a ‘first-to-market’ AI app created by Waitrose, which will provide them with up-to-date product information, enabling them to offer customers a better service.

Responding to either text or voice requests, the app will give shop floor staff answers on product availability and location, nutrition and sustainability, also cooking and recipe recommendations.

“Today is a significant move forward in our strategy to be the undisputed Home of Food Lovers,” said Tina Mitchell, Interim Managing Director for Waitrose.

“We’re deliberately investing in the joy of food – in expert cheesemongers, butchers, and fishmongers, as well as our cafés and bakeries – a strategic choice that champions the in-store experience for our customers.

This vision is backed by our largest-ever tech investment, using AI and new systems to ensure a seamless customer experience, one that has our Partners and their passion for food right at its heart.”

NamNews Implications:

• Waitrose’s best ideas on show in a single outlet.
• Hopefully, rivals’ and suppliers’ store checkers will not outnumber shoppers…