SandpiperCI operates a high-quality portfolio of retail brands covering food, clothing and specialist products. It primarily operates franchise stores but also a number of its own food convenience stores. It is the leading Channel Islands retailer and is also present in Gibraltar and the Isle of Man.
Investment summary
Sandpiper has been able to leverage its relationships with its franchise partners to open their brands in additional geographies: initially Gibraltar and more recently the Isle of Man. It is a dependable operator and upholds the franchisor’s brand values, while the tax differential between the Channel Islands and the rest of the UK allows it to arbitrage the additional logistics and employment costs. It owns a high-quality freehold property portfolio, valued at £60m in January 2020, which provides a barrier to entry for the competition. Over the last three years, Sandpiper has witnessed revenue CAGR of 6.6% and trading EBITDA CAGR of 16.7%. There are some opportunities for in-fill across existing geographies, but we believe that more significant long-term opportunities lie in developing into new territories and an expansion into an adjacent segment such as hospitality. However, this is unlikely to occur in the short term given the ongoing pandemic.
Our medium-term sales growth of 3.5% for Sandpiper reflects consensus RPI forecasts of c 3% and modest space growth, as Sandpiper expands across its existing geographies.
