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Retail round up - The Sunday papers
Top City duo vie to lead Sainsbury, Marks & Spencer starts hunt to replace Rose, DIY giant Focus aims to strike deal with creditors, White Stuff blooms despite the gloom, DSG to post 80% profit collapse,Investors weary of rights issues,Primark steals march on High Street rivals by signing to payment code....
The Sunday Times
City heavyweights John Peace and Niall FitzGerald have been shortlisted to replace Sir Philip Hampton as chairman of J Sainsbury.Sainsbury is hoping to pick its preferred candidate for the £396,000-a-year role to head the country’s third-biggest food retailer by its annual meeting on July 15. Peace, 60, is chairman of Burberry, the fashion brand, and Experian, the FTSE 100 business information group. He is also acting chairman of Standard Chartered. Peace is expected to step down from the bank once a successor is found. Sir Win Bischoff, a veteran banker, is seen as a strong external candidate to replace him.FitzGerald, 63, is deputy chairman of Thomson Reuters and is keen to take a chairmanship. In recent months he has been approached on three occasions to become chairman at BP but turned down the offers. Full article.
Marks & Spencer will start searching for a new chief executive in September, paving the way for Sir Stuart Rose, its executive chairman, to make an early exit next year. The high-street bellwether has been inundated with calls from headhunters keen to win the prestigious instruction to find Rose’s replacement. The City is convinced M&S will appoint an external candidate. Justin King of Sainsbury, Andy Bond of Asda, Charles Wilson of Booker, Terry Duddy of Home Retail Group, Ben Gordon of Mothercare and Kate Swann of WH Smith have all been touted as possible runners but, given M&S’s overseas expansion ambitions, a wider field of international executives could be considered.Sir David Michels, deputy chairman of M&S, is in charge of the search. Full article
The chief executive of Focus, Britain’s third-largest DIY chain, is considering a company voluntary arrangement (CVA) in an attempt to secure the struggling group’s future. Bill Grimsey has instructed the KPMG restructuring team to prepare a CVA as part of a review of the business. Until recently, a CVA was a relatively unknown and little-used legal procedure. It lets companies reduce their debts and interest payments without going into administration – but it requires the consent of at least 75% of creditors. Sports retailer JJB and caravan trader Discover Leisure both recently used CVAs to restructure their businesses.Grimsey’s advisers have also agreed in principle with the company’s banks to renew a two -year credit facility, which runs out at the end of 2009.Full article.
White Stuff has bucked the economic gloom by notching up record profits for the 2009 financial year. The company has posted a 42% rise in underlying profits to £13.3m in the year to April 26, 2009. Total sales at the 60-strong chain, whose slogan is “lovely clothes for lovely people”, rose 34% to £58.4m, with home-shopping sales up 70%. The sales did not come at the expense of profit margins, which edged up by 1.3%.
The Independent on Sunday
Further pressure is expected to be heaped on DSG's chief executive, John Browett, this week when the electricals group posts a near 80 per cent drop in profits to around £42m. It's now just over a year since Mr Browett unveiled a five-point plan to overhaul the retailer's fortunes. He said it could take as long as four years.The retailer has posted a number of profits warnings since Mr Browett, the former chief executive of Tesco.com, took over the top job in December 2007. DSG group recently raised more than £311m in a rights issue, but it has been battered by a number of headwinds including the fall in discretionary spending and the withdrawal of credit insurance for suppliers to the firm.Its shares shed 6p over the week closing on Friday at 23p.
Some of the City biggest institutional fund managers are said to be furious at the "opportunistic rights issues" tabled by Sainsbury's chief exectuive, Justin King, and pub group Marstons last week.British companies have raised more than £30bn since the turn of the year with the Square Mile's biggest firms backing numerous cash calls in recent weeks. However, the glut is taking its toll with the £1bn cash calls by Sainsbury, Marstons and GKN testing investor patience. One leading institutional investor said: "As institutions we've backed the lot this year without so much as a squeak. We've helped these companies out of some pretty dreadful problems. But these two rights issues take the piss – Marston's in particular. Many of us think that enough is enough and we've told the banks as much." However, the summer is likely to see further cash calls from the likes of Rio Tinto, Debenhams and Great Portland Estates. Institutions are also furious at the banks' perceived profiteering, scooping nearly £2bn in rights issue fees.
The Mail on Sunday.
Primark has stolen a march on High Street rivals by signing up to a Government code that allows it to boast about paying suppliers on time. The discount clothing chain last week formally adopted the Prompt Payment Code, which is being championed by Baroness Vadera in the new Department for Business Innovation and Skills in an attempt to help small firms through the recession.She has already persuaded Asda, Tesco and John Lewis to sign up.But some of the country's biggest retailers - including Marks & Spencer, Next and Debenhams - have so far failed to back the register, which aims to stop large companies conserving their cash flow at the expense of small suppliers. Full article
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