Booker Group a piece of good news amongst British retailers.

(CercleFinance.com) - Tesco's recent profit warning illustrates the difficult situation in which UK retailers currently find themselves.
However, in this sector, which is largely mistrusted by stockmarket professionals, there is a wholesaler - Booker Group - which could hold resist.

As we stated, this morning, the leading UK supermarket group, Tesco, added a profit warning to that it made in July. In an apparent emergency, savings were announced, in addition to a strategic review, overseen by the group's new CEO, Dave Lewis.

Market sanction was not long in coming: down 6% at lunchtime, the Tesco share has lost 38% of its value in one year, in line with its rival Morrison, while J. Sainsbury has fallen by 25% and Marks & Spencer is down 10%.

While the euro zone has been at a standstill in the first half of 2014, UK GDP has been more dynamic (+0.8%). In the second quarter, and in terms of volume, British retail sales have increased by 3.6% year-on-year. However, although there is growth, margins are not following, due to a "price war," exacerbated by the significant presence of online retailers, which have lower fixed costs.

One group, however, seems to be standing out: Booker Group, the leading UK wholesaler for supermarkets, convenience stores, pubs, restaurants, and the like, which has a market capitalisation of 2.3 billion pounds.

In 2013/2014, i.e. to end-March, sales soared 17% thanks to the integration of a competitor, Makro, since April 2013. Organic growth (+2.1% over the past fiscal year) accelerated in the first quarter of 2014/2015 (+3.6%). This disappointed analysts, as the integration of Makro, whose sales fell 12%, does not initially seem beneficial for the group. However, ultimately, management remains confident.

Booker's history seems reassuring: since 2006, sales momentum is improving and steadly growth from one year to the next has enabled the group's operating income to be multiplied by five over this period.

Indeed, the stock's 2014/2015 P/E of 21x far exceeds that of the four other aforementioned groups (12x on average). However, Booker Group has been able to maintain long-term earnings growth of around 10%. The "blip" on the stock market that was recently caused by quarterly sales could also provide investors with a good entry point over the medium term, at around 130 pence.


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