Food retailers

Article Abstract:

UK food retailers are seeing shares suffering and City analysts reduced their profits estimates for supermarket operators. Although buying is more efficient and sales of non-food and high value-added products have increased, gross profits margins are under pressure, with costs rising faster that the prices of goods. The Office of Fair Trading (OFT) is also investigating prices charged and profit margins obtained by supermarkets, which has led to further uncertainty. Supermarkets need to invest in available sites quickly before stricter planning regimes are introduced, but the UK market is also close to saturation. Both Sainsbury and Tesco have planned international expansion.

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No Kwik fix

Article Abstract:

Somerfield has been discussing a link with Kwik Save, a discount retailer. The two companies have a total of 1,480 stores, and would rank fifth in the sector with combined sales of 6 billion pounds sterling. This move is likely to spark off further moves toward consolidation in United Kingdom food retailing. Somerfield stockholders would have some 63% of the new group. Kwik Save holds 3.3% of the UK food retailing market, though its sales have fallen, and Somerfield holds 3.7%.

Mergers, acquisitions and divestments, Somerfield Fine Fresh Foods

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No frills, no thrills at Kwik Save

Article Abstract:

Kwik Save is a discount food retailer which has been affected by price competition among UK food retailers. Real growth in UK food retailing was 1% in 1995 and capacity is increasing with more space adding to competition. Tesco and Sainsbury have launched loyalty cards. Kwik save is upgrading its stores and increasing its fresh produce range, but this is adding to costs. The group is unlikely to be an acquisition target and dividend growth does not appear likely.

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