UK convenience player Nisa Retail has brought in bankers from financial consultancy Lazard to explore refinancing options which could include a sale, according to Sky News. Discussions are at an early stage and could conclude without a ‘demutualisation’, although this is being mooted as a possibility. Nisa Retail is currently owned by its approximately 1,400 members.
The retailer operates over 3,000 stores, some 1,000 of which are operating under one of Nisa’s symbol fascias (Nisa Local, Nisa Extra, Loco). Nisa is mid-way through a turnaround strategy, under the leadership of Nick Read, who joined the business in 2015.
Nisa Retail has had a rocky few years, most notably the loss of the Costcutter contract in 2013 which accounted for around 30% of the retailer’s turnover and whilst notice was given, the change was not planned for well enough. Nick Read was drafted in two years ago with the onerous task of turning around a business which finished its 2014/2015 financial year with an EBIDTA loss of GBP 7.2m (EUR 8.8mn). A strategic review followed and a year into its three-year recovery plan, the business is back in the black. The retail group also has ambitious growth plans to reach sales of GBP 2 billion (EUR 2.4bn) by 2019, from GBP 1.3bn last year (EUR 1.59bn).
So why the ‘shock sale’ rumours? Well, the truth is that all players operating in the UK convenience sector have been rattled by the announcement of Tesco’s proposed takeover of Booker. Both are leaders in their respective parts of the UK grocery sector (for Tesco, big stores and online grocery; for Booker, cash & carry/wholesale) and if the deal goes ahead, this would represent a combined turnover of nearly GBP 60bn (EUR 73bn) according to LZ Retailytics figures. That puts Nisa’s turnover aspirations in context.
Nisa, like every other player in the convenience channel, is thinking about its future. It’s a business that is still in turnaround and still a relatively small player within the total UK grocery market. Just like all its peers in convenience, Nisa must face into growing competition not just from the supermarkets opening small stores and discounters luring shoppers away; but now from a combined Tesco/Booker, which looks set to fundamentally change the sector. Nisa therefore has no choice but to consider its options, which could ultimately lead to further consolidation within the UK grocery sector.