GROCERY GROUP PROSPECTS
My correspondence steadily bears witness to the state of nervous unsettlement now prevalent among holders of shares in the provisions group of companies. Recent reports have demonstrated the dismaying effect on earnings of the reduction in profit-margins, and it is many months ago since I indicated the general unattractiveness of grocery stores shares in the light of the cut-throat competition in the trade. Falls such as have taken place in International Tea shares, now t6s., against 25s. only a few months ago, and in Home and Colonial shares, now 4s. 6d. against los. last year, have adjusted the position on the Stock Exchange, and at these levels I do not advise holders to sell.
In recent weeks, according to reports in the trade, the big groups have enjoyed a modest improvement in trading, and although competition is still keen the margin of profit per unit sold has increased. Both the International Tea Stores and the Unilever groups of retail stores have the benefit of alert manage- ment. Unless I am badly misinformed, they are now tackling their immensely difficult problems with some success.
The yields on International Tea and Home and Colonial shares are not large in relation to current rates of dividend but a gradual raising of dividends should be practicable over the next two years.
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