December 13, 2012

Edeka plays poker with Netto

Netto Stavenhagen (photo: Carsten Milbret)
Carsten Milbret
Discounter with Scottie dog: Netto Supermarked makes good money in Germany (photo: Carsten Milbret)
Edeka Group's supervisory board meets on Friday, December 14, to decide the fate of its 25 per cent stake in Danish discounter Netto Stavenhagen. The top brass at Germany's largest food retailer are also likely to review its buying cooperation with the Dansk Supermarked subsidiary. Both parties refuse to confirm this story. However, our newspaper believes that Edeka wants to sell its minority holding in Netto Stavenhagen and to let the joint-buying agreement expire at a still unspecified date. Apparently, Edeka and Dansk Supermarked have not been able to agree a price. The original stake was transferred to Edeka for an alleged sum of €60m in 2005, when French retailer ITM (Intermarché) exited Germany. Why is this happening and why now?
December 7, 2012

Lidl hits the debt brake

Klaus Gehrig, CEO Schwarz Group (photo: Lidl)
Lidl
Klaus Gehrig: The Schwarz Group frontman wants to put a lid on Lidl's indebtedness (photo: Lidl)
The Swabians are canny people when it comes to money and have been justly compared to the Scots. Hard discounter Lidl wants to reduce its indebtedness to banks. This is partly a cautious reaction by parent company Schwarz Group to the current crisis in the eurozone. However, Lidl clearly also believes that future capex requirements will be lower than in former boom years. Since 2007/08 (February 29), balance sheet debt has jumped by around €2.5bn to €10.1bn (not including France) on net annual revenues of €45bn. This follows an explosion of overall indebtedness from 2002 to 2009 in the wake of aggressive foreign expansion. The vast European empire of the Neckarsulm-based group currently spans 28 countries. The entry of sometimes three new foreign markets a year required an annual capex of up to €3.5bn. Who can wonder that plans to enter new markets have now been scaled back?
December 6, 2012

Walmart, Dansk, Edeka & Netto

Netto Stavenhagen shopping trolleys (photo: Carsten Milbret)
Object of desire: Netto runs 350 discount stores in Germany (photo: Carsten Milbret)
Anonymous sources claim that US giant Walmart is in negotiations with Danish conglomerate Møller Mærsk regarding the purchase of some or all of retailer subsidiary Dansk Supermarked. If this information is correct, it would have a direct bearing on the German trade. This is because Dansk Supermarked holds a 75 per cent stake in Netto Stavenhagen, a discount store joint-venture with Edeka Group, Germany's largest food retailer. Dansk Supermarked denies these negotiations, and Møller Mærsk refuses to comment. No answer has been received from Walmart regarding our enquiry to date. So where's the beef to this story?
November 22, 2012

Auchan eyes Metro's hypermarkets in E. Europe

An Auchan hypermarket in Russia (photo: Les Linéaires)
An Auchan hypermarket in Russia: Expansion in this vast country is a global strategic priority for the French retail giant (photo: Les Linéaires)
Journalists find it frustrating to chase a story where all parties involved refuse to comment, but it does arouse their hunting instincts. Rumour has it that French retail giant Auchan has been finalising negotiations with Metro Group. The aim is said to be the purchase of the German market leader's "real,-" hypermarkets in Central & Eastern Europe (CEE). Apparently, the main stumbling block to sealing the deal for the 100-odd hypermarkets in Poland, Romania, Russia and the Ukraine are the rental contracts. The store owners are said to have tied rent levels to annual sales, which gross around €3bn for the CEE region. As Auchan is believed to be convinced that it can do a much better job than Metro at running the hypermarkets, it fears that future rental costs will explode. Given that Auchan's 120-odd hypermarkets in Hungary, Poland, Romania, Russia and the Ukraine now make around €11bn in gross revenues this sounds plausible, but is it true?
November 15, 2012

Biedronka opens store number 2,000 in Poland

Pedros Pereira da Silva (photo: Biedronka)
Pedro Pereira da Silva: The CEO of Biedronka is proud that the discounter has passed another milestone (photo: Biedronka)
Portuguese Jerónimo Martins Group is booming in Poland. With justifiable pride, COO Pedro Pereira da Silva sent our newspaper an SMS a few days ago. It was simply to say that discount subsidiary Biedronka had passed the 2,000-stores-mark and increased its market leadership. Clearly, Biedronka (Polish for ladybird) is well on the way to achieving its ambitious goal of 3,000 outlets by 2015. Given the doom and gloom at so many retailers in a growing number of European countries, it's good to hear a success story. So we asked da Silva, who is also country manager for Jerónimo Martins in Poland, to update us on progress in this important Central European country.
November 9, 2012

Advent pokers for Douglas Holding

Ranjan Sen, MD Advent International (photo: Advent International)
Advent International
Ranjan Sen: "Cosmetic surgery is not enough" (photo: Advent International)
Smart, eloquent and persuasive, Ranjan Sen is all that one might expect of an executive at a US private equity investor. Talking at Advent International's stylish Frankfurt office overlooking the River Main, the German-Indian Managing Director was surprisingly forthright. After all, his employers belong to an industry which is deliberately "private" and Advent is in the middle of a controversial bid for German retailer Douglas Holding. "We want to hold talks with the management about developing new formats," he says regarding the "Douglas" perfumeries. "Douglas should also use targeted assortments to win the lady customer who doesn't normally shop in a classic perfumery." O.K., sounds plausible, but what else could the Americans be after at the German "lifestyle group"?
November 5, 2012

Horse-trading at Douglas Holding on Advent bid

Douglas perfumery outlet (photo: LZ-Archiv)
LZ-Archiv
Desired fragrance: A Douglas perfumery in Germany (photo: LZ-Archiv)
Nine months after the confirmation of takeover talks, Boston-based private equity firm Advent International Corporation has presented itself as a potential buyer of Douglas Holding AG. Shareholders in the German “lifestyle” group have till December 4 to accept a bid price of €38 per share. This represents a 42 per cent premium on the undisturbed (four-week volume-weighted) share price before takeover rumours surfaced in mid-January. Enough to satisfy the punters? Advent can already count on the stakes held by three big shareholders amounting to 50.5 per cent. These include Oetker (25.81 per cent), the Kreke family (12.73 per cent) and Erwin Müller (12.01 per cent). However, the bid is dependent on Advent obtaining at least 75 per cent of Hagen-based Douglas Holding, an Mdax-quoted Plc. The question is, of course, will they?
October 31, 2012

German meat industry talks world hunger

H. Giesen, P-H. & P. Wesjohann & H. Schweer (photo: PHW_Lohmann)
PHW_Lohmann
Big Meat: Helfried Giesen (Westfleisch), Paul-Heinz and Peter Wesjohann (Wiesenhof) and Heinz Schweer (Vion) [from left to right] (photo: PHW_Lohmann)
As a spoilt post-war member of the world's "golden billion", it is hard to imagine hunger gnawing at your bowels. At the most, one has tried to diet. Therefore, it is easy to be philosophical about other people's hunger, even when the media regularly provide harrowing images of famine from Biafra to Eritrea in glossy magazines and on TV. It is also easy to be cynical when well-nourished managers from the German meat industry talk world hunger at the 9th Nutrition Symposium of the Heinz Lohmann Foundation in prosperous Hamburg. It is even more tempting to be so when trade representatives conclude in the presence of a former protestant bishop that a radical reduction in meat consumption would not significantly reduce world hunger. But what if the venue was for the good and not just an alibi for a profit-oriented status quo? And did it provide any insight as to how the world is going to feed an estimated 9.3bn people in 2050?
October 26, 2012

Pitfalls for global retailers

pitfalls for global retailers (photo: Kelly Marken_shutterstock)
Where angels fear to tread (photo: Kelly Marken_shutterstock)
Academics are always at their best when they challenge groupthink. Marcel Corstjens, Unilever Chaired Professor of Marketing at Insead, and Rajiv Lal, Stanley Roth Senior Professor of Retailing at Harvard Business School, seem to take almost mischievous pleasure in debunking retail myths. The latest holy cow they have attempted to slaughter is the globalisation of retailing. Admittedly, both men do not claim that there are no retailers who succeed internationally. However, they contend that internationalisation doesn't usually increase sales growth or profit margins for publicly-quoted grocery retailers. Despite their willingness to back their opinion with econometric analysis, this is a brave statement to make when top retailers such as Metro Group and Carrefour already operate in 30-odd viz. 40-odd countries.
October 19, 2012

Retailers & suppliers talk sustainability

Marks & Spencer CEO Marc Bolland (photo: Marks & Spencer)
Green disciple: CEO Marc Bolland is proud to call Marks & Spencer the "world's first carbon-neutral major retailer" (photo: Marks & Spencer)
As mankind relentlessly continues along its path of self-destruction, future researchers from elsewhere in the galaxy will perhaps one day debate the timing of the so-called “tipping point” when the process of cooking ourselves became irreversible. Satellite photography reveals that the arctic ice cap has receded 45 per cent since the year 2000, and some experts estimate that it could disappear altogether during the summer months as early as 2016. Doubtless, alien historians will note with puzzlement that we had due warning of the catastrophe. The World Wildlife Fund computes that the human race is living as if we had one and a half worlds at our disposal in terms of resources. We Europeans are consuming enough for three worlds and our American cousins for five. Add another 2.5bn people by 2050, and most of us are in denial. “Why don’t we act?” asks Keith Weed of Unilever.