Having resurrected its fortunes from loss to a promising profit level, could member-owned food retailer Nisa be about to scrap its structure? 

Reflecting the upheaval taking place in this highly competitive and pressurised sector, Nisa’s board is in talks with financial advisory and asset management firm Lazard. It is believed that the possibility of completely restructuring the company by putting it up for sale is one of the topics being discussed.

Member owned to outside private investors?

Nisa currently operates 3,500 food stores nationwide. Around 1,400 members have earned voting rights by owning up to 250 shares each. Many have been content with this, while others have taken up the option of buying additional equity of up to 250 additional shares.

The working model is that retailer-members trade under the Nisa brand (such as Nisa Local) or their own names. The group supplies the stock and business support, in return for a fee.

Battled from loss to profit

In 2015 Nisa recorded a loss of £3m. Under the newly appointed management of Nick Reade as chief executive it announced an ambitious programme of development. The aim was to take the company to £2bn in sales by 2019.

Considerable progress has been made, as Nisa reached £1.3bn in sales in 2016 and made a £7.3m profit. It also added more owner-run stores to its chain in the latter part of the year.

From this position of strength, the company began refinancing talks with bankers. It is believed the member-owned convenience store chain has a £120m refinancing deal on the table.

Turbulent times ongoing

However, food retail at this level of the market is being squeezed from all sides. Nisa and its biggest rival Costcutter are having to be creative to compete with big brand supermarkets and the growth of discount-food operators.

The need to use “buckle and braces” to underpin growth plans was further exacerbated with the news that Tesco is planning a £3.7bn merger with wholesaler company Booker.

There is also unconfirmed speculation that J Sainsbury is considering buying out P&H.

The same, but different

If Nisa does decide to put itself up for sale, it is believed that the structure will remain much the same. A Sky News source told the station that the sale would be “akin to demutualisation”.

It is another symptom of the shake-up in the convenience store sector, with companies scrambling to build market share.

Jonathan Miller, the chief executive of the UK’s largest convenience store chain, McColls, has announced recently that he has his eye on a share of Tesco’s business. The supermarket may be forced to sell off One Stop or Tesco Express to get the Booker deal ratified by the Competition and Markets Authority.

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