A spoonful of Sugar for Woolies

Big news for that venerable but ailing British institution Woolworths: Sir Alan has bought a 4% stake...

Last Updated: 06 Nov 2012

It’s not been easy to find a modicum of cheer this morning. But here at MT we reckon that Sir Alan Sugar’s acquisition of a stake in Woolworths counts as good news. A stock market statement this morning revealed he’s picked up a 3.88% stake, although there’s been no word as to his intentions yet. It’s been a pretty miserable few years for Woolies, the former darling of the UK high street. But if TV star and occasional businessman Sir Alan sees value in it, perhaps there’s hope for it – and us – yet?

Admittedly Woolies shares have now got so cheap that they’re almost giving them away – you can buy a basket of them for less than a bag of cola cubes these days. Yesterday they rallied 5% (possibly due to rumours of the deal), and closed at the dizzy heights of 3.14p. Even by recent standards, this has been a rotten year for the stock – it’s lost 80% of its value, most recently thanks to reports that credit insurers were refusing to cover its suppliers (presumably because they had so little confidence in the retailer staying afloat). And this week’s turmoil across the market hasn’t helped. So it’s no wonder the Telegraph describes this deal as ‘bottom fishing’…

To be honest, we’re not entirely sure what Sir Alan sees in Woolies. The chain has been struggling for years, and recent results have left us in no doubt about just how bad things have got – it lost nearly £100m in the first half of its current financial year. Of course, there’s still a chance that its ‘value offering’ (i.e. cheap stuff) will come into its own if we do end up in a painful recession – and once new CEO Steve Johnson finishes his turnaround plan, the chain should be a lot leaner and meaner. But it’s a little hard to see it recapturing its former glory.

On the other hand, Sir Alan presumably knows his onions, or he wouldn’t have an £800m fortune (even if he did hire that Lee bloke last year). So there’s a great reason for optimism: if one of the UK’s shrewdest investors believes there’s value in Woolworths, perhaps it’s not a total dog after all. And the same is true of the stock market more broadly: if people are starting to sniff out bargains, maybe there’s hope for the FTSE yet.

Either way, we’re looking forward to seeing next year’s Apprentice wannabes desperately seeking better ways to flog pick’n’mix...

In today's bulletin:
Market bloodbath as investors panic
UK and Iceland spat gets even frostier
Healthy = wealthy and wise?
MT's Little Ray of Sunshine: A spoonful of Sugar for Woolies
Going back to basics, with YouTube

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Which values matter most in a crisis?

Have your say on how coronavirus is changing your culture.

C-Suite parents share working at home tips

For many people, the home office is now also a home school.

How to manage remote teams (without becoming a Zoom pest)

Briefing: Former Waitrose boss Mark Price says managers will need to think about how they’re...

Could coronavirus lead to gender equality?

Opinion: Enforced home-working and home-schooling could change the lives of working women, and the business...

Mike Ashley: Does it matter if the public hates you right now?

The Sports Direct founder’s response to the COVID-19 pandemic has drawn criticism, but in the...