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Retail round up - The Sunday Papers
Retail round up - The Sunday Papers
Shoppers could face VAT on food, John Lewis staff in line for bonus, Morrisons considers retention package for FD, Matalan founder takes home £250m pay cheque, Cath Kidston comes up roses, Gucci turns to Asia for bulk of investment
Sunday Telegraph
The imposition of VAT on groceries is being actively considered by Whitehall officials as a radical means of reducing the national deficit. The feasibility of introducing the food tax is being raised informally between civil servants, industry bodies and retail insiders. So politically-sensitive is the move that all the talks are occurring "under the radar", according to retail industry insiders. Basic supermarket groceries are currently immune from VAT, along with books, newspapers and children's clothes. However a VAT levy on food of between three and five per cent would raise billions of pounds in tax and help reduce Government borrowings, which are expected to hit £180 billion this year. Food sales from supermarkets are estimated to total £120 billion a year. The tax would be controversial as it would disproportionately affect poorer families. Any move to impose it would be vehemently opposed by the UK's large food retailers, who argue that it would be a 'tax on living'.
John Lewis Partnership’s 70,000 staff are this week expected to receive around 14 per cent of their annual salary as a bonus as the retailer reveals strong full – year profit figures. The retail group is expected to say that pre-tax profit over the year to January 31 was £315million compared to £280million a year ago.
Wm Morrison, which is expected to show A 16 per cent increase in full-year profits this week, is considering putting together a retention package for finance director Richard Pennycook in a bid to prevent him from defecting to another company. Mr Pennycook was one of the leading contenders to become Morrisons’ new chief executive earlier this year after Marc Bolland.
Sunday Times
John Hargreaves, founder of Matalan, is planning to pay himself a £250million dividend as part of a refinancing of the budget fashion chain. The Monaco-based tax exile is in talks with banks and other investors about a £525million refinancing that would be used to repay Matalan’s debt, estimated at £260million. The rest would be used for the bumper payment to himself.
The designer Cath Kidston is in talks to sell her fast-expanding retail empire to TA Associates, an American buyout firm. The deal will value her business at £100m, writes Matthew Goodman.Kidston, who started out with a single store in London’s Notting Hill in 1993, owns a third of the company. She is selling only part of her stake — but many of the firm’s 40 other shareholders will sell up. They bought in seven years ago when Kidston first sold part of the company. The investors include Quayle Munro, the corporate finance firm that is advising on the sale.
Financial Times
Gucci Group is targeting Asia for the lion’s share of its investment this year and is also eyeing expansion in Latin America in a further sign of luxury goods companies’ dependence on emerging markets for growth. Robert Polet, chief executive of Gucci Group, part of France’s PPR, told the Financial Times that the worst was probably over for the luxury goods industry. But he saw no return to the free-spending, conspicuous consumption that characterised the era before the economic crisis. “We’ve hit the bottom and I do feel a lot more confidence about the future now than I did 12 months ago,” he said.
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