Retail round up -The Sunday Papers

Archived article dated Sunday January 13th 2008

ILVA lose money on every customer pound, Somerfield receives offers for the company, Debenhams expected to announce better-than-expected figures

The Sunday Telegraph

ILVA lost £2.33 for every £1 spent in its stores last year, racking up total losses of £62m.Once tipped to revolutionise the UK furniture market, ILVA was forced to write off £24m of investment and stock after a radical restructuring which rescued the chain from the brink of collapse. Private equity group Advent International had ambitious plans for ILVA, sinking more than £50m into it and hiring Martin Toogood, a former director of both Habitat and B&Q, to create a 'market leader'. Advent believed ILVA could take on IKEA but the group struggled from the start and construction delays saw it run up losses of £11.5m before it had even opened its first UK store. The chain has since opened three stores in the UK, but Advent walked away from its investment early last year, selling its stake to Icelandic bank Kaupthing for a nominal sum. Kaupthing has since sold a majority stake to Rumfatalagerinn, which owns rival UK furniture retailer The Pier.

New Look will start a major out-of-town store opening scheme this year, launching up to 100 new stores. The retailer's management, headed by Phil Wrigley, chief executive, believes that New Look can increase store numbers from 580 to 680 over the next 12 months. Wrigley said the retailer benefits from larger store formats, which can house its full ranges of womenswear, menswear and shoes.

The Sunday Times

Debenhams is tipped to shrug off retail-sector gloom this week with news of a forecast-beating rise in like-for-like sales over the festive period. The retailer, touted as a bid target for Icelandic group Baugur, is expected to trump City forecasts of a 2% dip in like-for-like sales after a last-minute surge in Christmas trade and a buoyant start to its winter sale. Retail analysts believe it was sufficient to nudge comparable sales in the four-week period to January into positive territory. Debenhams is also likely to cheer the City with reports that it took market share from rivals over Christmas. But like-for-like sales over the 18-week period to January are projected to be flat because of difficult trading conditions in November.

Little Chef is likely to shelve a planned sale of the business and offload up to 20 of its sites instead. The group, founded in 1958, has been on the auction block since last summer, but it has been hard to find buyers willing to take the whole business. R Capital, the private-equity house that owns Little Chef, is understood to have opened talks with Welcome Break and Moto, the motorway-service-station operators, about selling them a number of restaurants. Between 15 and 20 of about 200 sites are likely to be sold off. Trading is said to have picked up at the chain and R Capital is thought to be comfortable with continuing to own the rump of the estate.

Financial Times Sat / Sun

Littlewoods Shop Direct Group and Findel have bucked the trend of bad results for retailers, posting improved sales figures over the holiday period. They join a small group of retailers, including John Lewis and J Sainsbury, able to find growth in spite of declining consumer confidence over the new year. Littlewoods, owned by the Barclay brothers, said that in the six weeks to January 4, home shopping sales increased by 7 per cent. The company, which has an annual turnover of about £2bn, added that stock levels were 10 per cent lower than last year but gross margins were maintained. Littlewoods' online divisions saw sales growth of 44 per cent. Boosting online sales is a key part of its five-year turnround plan pioneered under Mark Newton-Jones, the chief executive. 'This peak period has further demonstrated that customers would rather shop from home as opposed to battling it out on the high street,' he said.

Rightmove has shrugged off concerns about the housing market with expectations of a record 2007.The company said on Friday that sales rose 69 per cent to £56.7m last year. It expects to report a profit before tax of £29.3m to £32.2m, at the upper end of analyst estimates, in its full-year results on February 29. Rightmove, which operates a portal on which estate agents and developers pay to place adverts each month, has benefited from a rise in numbers trying to sell property in advance of the downturn. It has also profited from the difficulties faced by new-build developers trying to sell property, forcing some to ramp up marketing budgets. The number of new home developments on the site was 39 per cent higher in 2007.

The Observer

Three offers have been received in recent weeks for Somerfield. The expressions of interest are understood to have led its shareholders - a consortium of Tchenguiz, Apax and Barclays Capital - to consider selling the 900-branch business. Any deal could be worth in excess of £1.8bn. It is unclear who has come forward with offers for Somerfield, although sources indicated that two of Britain's biggest household names are among its suitors. Stores such as Asda, Morrisons and Sainsbury's are keen to bulk up their presence in town centres to compete with sector leader Tesco. Somerfield was taken private in a £1.8bn deal in January 2006. It has been trying to build a niche by focusing on the local grocery market, rather than competing with supermarket giants. Its private equity owners have carried out a major restructuring of the business since the takeover. One senior retail insider suggested that the firm's owners are now resolved to sell the business and that it will be carved up between Asda, Sainsbury's, Morrisons and possibly Waitrose, owned by the John Lewis Partnership.

Boots is understood to have bucked the retail gloom and enjoyed strong Christmas trading as shoppers chose cosmetics and perfumes as gifts. Strong demand for No 7 wonder cream Protect & Perfect and fragrances such as Emporio Armani Diamonds, advertised by the singer Beyonce, helped store managers hit sales targets. Like-for-like sales are expected to be 'significantly' higher than the 1.5 per cent increase achieved in the third quarter of 2006. The news will provide succour after a dismal performance from Marks & Spencer sparked a rout among retail stocks. Negative comments from chief executive Sir Stuart Rose on the economic outlook, and a shock profit warning from Curry's owner DSG International have undermined sentiment, with a fifth wiped off the value of quoted retailers this year.

The Independent on Sunday

Figures from the British Chambers of Commerce to be released on Thursday are set to add to the growing weight of evidence showing a marked slowing of the economy. The BCC is expected to unveil "serious problems" in the findings of its latest Quarterly Economic Survey for the final three months of last year. It is understood that the report will show a worrying slowdown in the activities of the service and manufacturing sectors, with many firms putting investment and employment growth on hold. However, the survey will show that firms remain alarmingly confident with their intentions to pass on price increases to customers - a factor that will worry an already reticent Bank of England Monetary Policy Committee. Last week the Bank held interest rates at 5.5 per cent, ignoring pleas for a reduction.

Mail on Sunday

Business partners and best friends Anna Richey and Alla Ouvarova have signed a multi-million pound deal with Sainsbury's to stock their health-conscious cartons of free-range egg whites. Their company, Two Chicks, provides Britain's first pre- separated egg whites product - used in low glycaemic index diet sand for those who want yolk-free omelettes but cannot be bothered to separate eggs. Two chicks have deals with Waitrose, Whole Foods Market, Harrods and Selfridges.

Apple has banned UK retailers of iPhone from reporting sales figures amid evidence that British consumers have shunned the device. In a Christmas season that saw sales of mobile phones soar by number but crash by value, the £269 unit disappointed. But the California-based designer of the phone has told network 02 and retailer Carphone Warehouse not to tell investors the figures, according to industry insiders.

The founding family behind footwear retail group Stylo, whose brands include Barratts, has given the green light to takeover talks and is understood to be open to a possible merger with rival C&J Clark.

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