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Retail round up - The Sunday papers
Tesco chief attacks City analysts' failings, M&S lingerie slips, Recession risks in Britain remain low, Baugur hit by high street losses, Environmentalists upset at 'Plane A'
The Sunday TelegraphThe finance director of Tesco has launched a surprise attack on City analysts, accusing them of failing to properly understand the supermarket giant's business model and suggesting investors should interpret their views "with a pinch of salt". Andrew Higginson said analysts were often too fixated on producing short-term swings in sentiment. "At the end of the day, that is how they make their money, but that does not mean they really understand how our business is run," said Higginson. "You just have
Marks & Spencer has lost market share in its core lingerie markets, according to leaked figures from Taylor Nelson Sofres.Debenhams, Asda and Bhs all gained share in the lingerie market at M&S's expense, according to the latest confidential TNS Fashiontrak survey for the 12 weeks to the beginning of December. Measured by value - the indicator most closely watched by retailers - M&S's share of the lingerie market fell by 3 per cent. By volume, M&S's share remained stable. The news will fuel fears that the reversal of sales growth at M&S is the result of increased competition on the high street rather than a consumer slowdown. Ten days ago Rose announced that like-for-like sales fell by 2.2 per cent over Christmas. The poor trading wiped almost £1.5bn from the company's valuation in one day and prompted a number of retail analysts to question whether Rose was pursuing the right strategy by trying to compete head-on with discount retailers such as Primark and supermarket chains such as Tesco.
Recession risks in Britain remain low although GDP growth will slow sharply from 3.1 per cent last year to 1.8 per cent this year. The Ernst & Young Item Club expects the Bank of England to cut interest rates by a quarter of a point at least three times this year. Peter Spencer, the chief economic adviser to the Item Club, said: "We have had seven to 10 years of strong growth in the UK based on low inflation, low interest rates and a huge amount of borrowing. "The low volatility allowed lenders to increase their multiples. Obviously that has come to a sticky end and now we are going to pay the consequences. They will be quite severe for some families and companies." Spencer added that there were unlikely to be big takeovers over the year because of plunging share prices. "I think the Scottish & Newcastle bid will be the last really big trade deal," he said.
Whittard of Chelsea and Julian Graves, two of the chains owned by Baugur made a combined pre-tax loss of £8.8m last year, The Sunday Telegraph has learned. The losses were revealed in accounts filed at Companies House by the retailers' Icelandic parent company earlier this month. According to the accounts, Baugur refinanced the business in 2007, injecting £11.2m. Excluding House of Fraser, which was acquired at the end of 2006, the seven main holding companies identified by The Sunday Telegraph had combined sales of £2.8bn and made a pre-tax profit of £26.4m in 2006/07. Combined, the leveraged vehicles - four of which were loss-making - paid an annual interest bill of over £72m. The value of Baugur's quoted retail investments - including Debenhams, Woolworths, French Connection and Moss Bros - has more than halved since the start of the year as shares have plunged amid fears about the strength of consumer confidence
The Observer
M&S has come under fire from environmentalists over use of its corporate plane for domestic travel. M&S has pledged to become carbon neutral by 2012 as part of 'Plan A' The aircraft said to be jokingly referred to as 'Plane A' in some M&S circles is used primarily to carry those working on its store refurbishments programme around the country. A spokeswoman for M&S said the plane was a fast and cost effective mode of transport with journeys logged and offset at the end of the year.
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