The Investment Column: Watson & Philip corners a market
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Convenience stores may not seem like the sexiest sector of the retail industry. But Watson & Philip, owner of the Alldays chain, is showing the sort of growth that would turn most grocers green with envy.
W&P is picking up business from traditional corner shops and newsagents that are struggling to cope with the might of the supermarket giants and closing at an alarming rate. Of course, W&P faces the same competitive threat. But it has not tried to beat the likes of Tesco or Sainsbury at their own game. Instead, the group just offers those sort of products that you forgot to buy on the weekend shop. And by offering just one recognised brand, rather than an vast array of own-label goods, it has room for other attractions such as videos or Dunkin' Donuts.
A profits warning in 1996 suggested that W&P's ambitious expansion plan was in danger of coming off the rails. However, the new chief executive, Colin Glass, seems to have sorted out the wrinkles and the group has not looked back since. Now W&P plans to open another 200 stores a year.
Profits grew more than a fifth to pounds 21.1m for the year to November, causing the shares to rise another 11.5p to 529.5p. With plenty of new sites available, its franchise operation taking off and margins rising due to greater purchasing power and distribution economies, W&P's future looks promising.
The supermarkets are beginning to cotton on to the convenience market by opening smaller stores on the high street. However, these are still based around food and W&P is proving adept at fighting off their advances.
Dresdner Kleinwort Benson forecasts current profits of pounds 25.4m rising to pounds 30.8m the year after, putting the shares on a prospective p/e ratio of 13, then 11. Good value.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments