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Highlights
- Sainsbury’s board proposed a final dividend payout of 7.4 pence per share to shareholders for FY 2021.
- The fashion retail group French Connection accepted a takeover bid worth £28.98 million ($40 million) from MIP Holdings Ltd.
The retail/supermarket space in the UK is buzzing with action, witnessing some big-ticket investments. These companies are the most sought-after targets among the investor community. Among these, the most recent has been the US-based private equity group Clayton Dubilier & Rice (CD&R) takeover of Morrisons for £7 billion. Increasing pent up demand, rising vaccination rates, and reopening of the economy are all driving sales across retail stores, both online and offline.
(Data source: EODHD/Others)
Here we will explore the investment potential in two retail stocks – Sainsbury & French Connection Group, who are now being said to be on investors radar.
J Sainsbury Plc (LON: SBRY)
J Sainsbury is one of the largest supermarket chains in the United Kingdom. It is engaged in the sales of groceries, homeware, clothing and electricals, among other items. There were reports that Apollo Global Management Inc was looking for a supermarket acquisition after losing on the Asda bid.
For Q1 ended 26 June 2021, the company’s total retail sales (excluding fuel) rose by 1.6% year-on-year. Its overall grocery sales increased by 0.8%, and online grocery sales rose by 29% year-on-year in Q1.
The shares of Sainsbury last traded at GBX 294.10, up by 3.37% at the close of trade on Monday, 04 October 2021. Its market cap currently stands at £6,633.49 million.
For FY 2021, Sainsbury’s profit before tax declined by 39% year-on-year to £356 million. The company’s board proposed a final dividend payout of 7.4 pence per share to shareholders.
The shares of Sainsbury gave a return of 53.50% in the last one year to shareholders.
French Connection Group Plc (LON: FCCN)
French Connection Group is an international retail and wholesale company. The fashion retail group accepted a takeover bid worth £28.98 million ($40 million) from MIP Holdings Ltd.
The shares of French Connection Group last traded at GBX 29.00, up by 20.83% at the close of trade on Monday, 04 October 2021. Its market cap currently stands at £23.19 million.
The group’s revenue for the year ended 31 January 2021 was £71.5 million compared to £119.9 million in 2020, representing a decline of 40.4% year-on-year due to the COVID-19 pandemic causing store closures and a fall in wholesale demand. The company’s net retail revenues were down by 51.8% to £22.5 million, compared to £46.7 million in the previous year.
The shares of French Connection Group gave a return of 405.49% in the last one year to shareholders.
Bottomline
The rising number of foreign investments in UK-based retail and supermarket groups is a major factor driving up investor interest in these shares. Retail stocks offer attractive return and hence investors often have these stocks on their radar.