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The Retail Bulletin, the complete retail news resource

Retail round up – the Sunday papers

Sunday February 10th 2013

British sugar giant caught in global tax scandal, Aldi confirms up to 100% horsemeat in beef products, Horsemeat scandal blamed on international fraud, Findus fights back, Sales slump hurts battered retailers, Chain owned by hotelier Sir Rocco Forte fails to make profit for fourth year, Calls for beer tax rise to be scrapped, Tesco plans could spark price war, Republic to close high street stores, Wonga signs up PayLater retailer, Choc debt goes down a treat

The Observer
One of Britain's biggest multinationals, whose brands include Silver Spoon sugar, Twinings Tea and Kingsmill bread, is avoiding paying millions of pounds of tax in an African state blighted by malnutrition, a year-long investigation revealed on Sunday. The Zambian sugar-producing subsidiary of Associated British Foods, a FTSE100 company, contributed virtually no corporation tax to the state's exchequer between 2007 and 2012, and none at all for two of those years.

Aldi says it is angry with supplier Comigel after tests reveal 30% and 100% horsemeat in withdrawn ready meals. The environment secretary is due to meet the Food Standards Agency, food suppliers and retailers on Saturday to discuss the horsemeat scandal after Aldi became the latest supermarket to confirm its withdrawn beef products contained up to 100% horsemeat.

Organised criminal gangs operating internationally are suspected of playing a major role in the horsemeat scandal that has seen supermarket shelves cleared of a series of products and triggered concerns about the contamination of the UK's food chain. Experts within the horse slaughter industry have told the Observer there is evidence that both Polish and Italian mafia gangs are running multimillion-pound scams to substitute horsemeat for beef during food production. There are claims that vets and other officials working within abattoirs and food production plants are intimidated into signing off meat as beef when it is in fact cheaper alternatives such as pork or horse.

The Independent
Two companies embroiled in the horsemeat scandal have revealed they are ready to sue further down the supply chain, as the investigation spreads across Europe and a government minister warns more contamination may be found in other food. Findus, whose "beef" lasagne was found to contain up to 100 per cent horse DNA, is preparing a legal case against whoever is found to have caused the contamination. In a statement, the firm said: "Findus is taking legal advice about the grounds for pursuing a case against its suppliers, regarding what they believe is their suppliers’ failure to meet contractual obligations about product integrity.

Mail on Sunday
Battered retailers
have been dealt a fresh blow after households tightened their belts again last month, according to figures compiled exclusively for Financial Mail by Barclaycard. Despite strong figures from the British Retail Consortium for the opening two weeks of January, Barclaycard’s findings show total spending on debit and credit cards down sharply at retailers. Total spending by consumers was almost unchanged (down 0.2 per cent), but with inflation over the same period running at 2.5 per cent this amounts to a marked fall in spending in real terms.

The chain owned by hotelier and triathlete Sir Rocco Forte has failed to make a profit for the fourth year, as the effects of the downturn in business travel continue. Rocco Forte and Family owns 13 luxury hotels on the Continent, Russia, North Africa and the Middle East, including Brown’s in London and the Balmoral in Edinburgh.It increased turnover from £148.6 million to £185.3 million as a result of buying up the shares in its joint venture with Bank of Scotland. But after costs, depreciation and interest charges, it made a £9.3 million pre-tax loss in the year to the end of last April, just up from last year’s £9.6 million figure.

Sunday Express
Taxes on British beer are the second highest in ­Europe and 10 times those in Germany according to the British Beer and Pubs ­Association (BBPA), which is calling for beer duty to be frozen in next month’s Budget. BBPA head Brigid Simmonds also believes that Labour’s beer escalator, which adds above inflation increases to the cost of beer each year, should be scrapped in order to safeguard jobs and help halt the rapid closure of pubs. Britons pay 40 per cent of the EU beer tax bill but consume only 13 per cent of the beer sold across the continent. The North-east of England pays more beer duty than the whole of the Czech Republic, which guzzles the most beer of any nation in Europe.

Tesco is understood to be examining a big investment in lowering prices, a move expected to spark a new price war across the supermarket sector. The investment, likely to herald price drops on a wide range of products, is understood to be slated for March, just after the company’s financial year end. One source said: “The investment will be substantial and aimed at ensuring Tesco’s turnaround plan doesn’t lose momentum. It has been in the pipeline ever since Christmas, when it did particularly well compared to its rivals. Consumers can expect ­significant decreases in food prices.”

Fashion retailer Republic is considering a controversial pre-pack administration or a less radical Company Voluntary Arrangement (CVA) as it looks to shed up to half its 120 stores. Republic, owned by US private equity giant TPG, is reviewing its store portfolio in order to decide which stores to keep and which to offload.One source said: “There are realistically only two ways TPG can get rid of that many stores. One is a pre-pack administration which would allow a new buyer to cherry-pick the best assets and drop the loss making ones. “The other is a CVA, a process that would allow it to exit unprofitable stores, see rents reduced and put the company on a firmer financial footing.”

Wonga, the company famous for payday loans, has signed up a new retailer to PayLater, a service it sees as an alternative to credit cards. Home and garden retailer WorldStores has joined The Cotswold Company, a furniture retailer, in offering customers PayLater. Shoppers using the service pay 7 per cent of the purchase price as an up-front one-off fee to Wonga. This works out as £21 on a spend of £300. Customers can buy goods worth up to £1,000.

Sunday Times
Investors in Hotel Chocolat have developed a taste for its debt. Customers who lent the company £4.1m three years ago, in return for 7% interest paid in chocolate, have overwhelmingly decided to keep their bonds. Of the 1,561 people who bought the £2,000 and £4,000 bonds in 2010, only 52 have chosen to redeem them, the company said.