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Analyst: Booker Still Has Work To Do Following Takeover Of Musgrave GB Brands

By Steve Wynne-Jones
Analyst: Booker Still Has Work To Do Following Takeover Of Musgrave GB Brands

A leading retail analyst has warned that while UK wholesaler Booker's takeover of Musgrave Group's Budgens and Londis brands is a positive move, there are risks involved with the deal.

Barclays European Food Retail analyst James Anstead said that while Booker management "were complimentary about the Irish operations […], Musgrave GB has had a troubled recent history. Sales have been declining, and FY14 saw an operating loss of c£7 million."

Booker, led by chief executive Charles Wilson (pictured), has announced that it expects the deal to be earnings neutral in FY 2016, Anstead added, and earnings enhancing thereafter.

"Musgrave GB’s gross margins are c11%, ahead of Booker’s Retail gross margins of 7%. […] That Musgrave has not achieved an EBIT margin over 0.65% in the past 5 years suggests that we cannot take margin uplift for granted, but note that Booker’s EBIT margin was 2.9% in FY15."

He added that the deal will likely mean that Londis and Budgens retailers will now be "more competitive, buying at better rates from Booker, enabling improved profits and/or lower prices. Booker stores will also be available for top ups.


"Booker (especially Premier retailers) should also benefit from Musgrave’s chilled distribution infrastructure, and, where relevant, the use of new brands if this suits their local market better."

© 2015 - Checkout Magazine by Stephen Wynne-Jones

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