We think SPP’s diversification strategy is progressively making the company more complex to manage, which could increase the risk to the counter. These risks include the expansion of its owned-store base, the tendency to acquire businesses in some measure of distress, the scattered geographic footprint and the risk that, once the acquisitions are bedded down, it may be difficult to consistently deliver good returns from low normalised topline growth in some of the mature markets. We show the hidden complexities of the more diverse SPP group, by examining the performance stats of some of the businesses acquired in SPP Ireland. We think that the risk associated with SPP’s diversification strategy may not be fully factored in.
