Panmure’s Michael Stewart’s RETAIL REVIEW

  • Just Eat management sell their shares. It was announced on Friday 4th March that Just Eat’s CEO and CFO had sold 3.2m and 1.7m shares, respectively. The market rarely digests this type of newsflow well and that was certainly the case on Monday- the stock opened down c10%. We can understand why the market may view this announcement as a particularly bearish signal but the share price reaction in this instance was overdone. A significant proportion of shares sold were awarded under a pre-IPO scheme (JSOP) which required the executive to pay down the loans held on the shares immediately. Note that Just Eat’s management have the highest mandatory holding requirement in the FTSE 250 at 4x salary and still hold 18x their FY2015 salaries in equity, post the disposal. The CEO and CFO now hold 0.5m and 0.35m shares directly and are to be awarded a further 1.46m and 1.0m shares under the JSOP in addition to those they will receive under the company’s long-term incentive plan as a public company.


  • Strong cash balance at Home Retail Group as Argos LFLs improve. Home Retail Group announced details of the final eight-week trading period for the financial year ended 27th February this week. Total sales at Argos increased by 1.9% to £515m over the aforementioned period with LFLs sales down just 1.1%, half the rate they were falling through 3Q2016. This rate of growth is marginally more encouraging than it appears, in our view. With net new space increasing by 3.0% and 94 new digital concessions providing a cannibalisation impact of circa 1%, underlying LFLs for the period were broadly flat. Note that the gross margin improved by 75bps over the comparative period, 25bps more than we thought. The group’s cash balance, excluding the impact of the Homebase transaction, was £100m than we anticipated also with an underlying net cash position of c£310m at the year end. The closing net cash position, including the proceeds from the Homebase disposal amounted to c£625m. With a stronger than anticipated closing net cash position and Argos showing signs of stabilising, a new and improved offer from Sainsburys could be on the horizon.

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