Retail round up - The Sunday papers

BBC Dragon lines up bid to rescue Woolworths, JJB Sports lender Barclays piles on pressure, Bidders spring up for Land of Leather, Whittard looks for a buyer, Tesco posts worst figures in 16 years, Property tycoon enters race to rescue Woolies, City predicts further 1% cut in base rate, Havoc for retailers as Woolworths hits buffer.....

The Sunday Telegraph

Theo Paphitis is among a pack of potential bidders who are this weekend circling the high-street chain Woolworths, which collapsed last week. Mr Paphitis met Deloitte, the Woolworths administrator, on Friday at the retailer's Marylebone headquarters, according to people close to the company. Attempts to find a buyer for Woolworths, the most prominent name in British retailing to collapse for many years, accelerated this weekend as the outlook for the rest of the high street grew increasingly bleak. Paphitis is understood to be focusing on Woolworths' high-street business rather than EUK, the arm which distributes CDs and DVDs to retailers. Friends insisted last night that his interest in Woolworths was tentative. "He looks at everything," said one. Such is the troubled state of Woolworths' high street business that Mr Paphitis may decide not to make an offer. Almost 700 of the Woolworths stores have planning permission to sell food and several food retailers - believed to include Tesco, Sainsbury and Iceland - have already registered their interest in buying parcels of the shops.

A key lender to JJB Sports has drafted in an accountancy and restructuring firm amid growing concerns about the chain's future. Barclays, which has lent JJB about £60m, has appointed Grant Thornton to advise the bank on JJB's future business plans. Advisers from KPMG are working with JJB on its negotiations with lenders. JJB has already been in dispute with HBOS, another lender to the company, over its banking covenants. In September, JJB said HBOS was wrong to say it had breached a key lending covenant. Speculation is mounting that Barclays is now worried about the company's financial position. Meanwhile, rival sportswear groups have bought stakes in the company as JJB has struggled. In October, Mike Ashley's Sports Direct snapped up a 22pc stake and last week JD Sports Fashion acquired 10pc shareholding, triggering speculation Mr Ronnie's company will be bought by one of its rivals. Late on Friday night, JJB announced it had sold stores in Cardiff Bay, Salisbury, Worthing and York Davygate to Sports Direct for £3.4m. The company said "the proceeds from the transaction will be used by JJB to reduce its level of borrowings".

The Sunday Times

Land of Leather is believed to have received a number of bid approaches. The chain, headquartered in Kent, is understood to have received several preliminary takeover inquiries in the past few weeks through its main financial adviser Investec, the investment bank. Among those thought to be interested in the retailer is Hilco, the turnround specialist. Another firm understood to have made an approach is Sun European, a buyout business known for its interest in consumer-related companies. Sun owns SCS Upholstery, a rival furniture retailer. Other brands it has invested in include Lee Cooper, the jeans maker. Talks are said to be at an early stage, but Investec has sent out limited financial information on Land of Leather to those parties that are serious about making a bid. The company may be forced to confirm the approaches in an announcement to the stock exchange tomorrow.

Tea and coffee merchant Whittard of Chelsea has been put up for sale by its Icelandic owners Baugur. The Icelandic retail investor has been searching for a buyer for Whittard, which has 135 UK stores and 30 worldwide, for several weeks following a strategic review of the business, which has performed poorly. Industry sources said Hilco, which failed to save Woolworths last week, and US-based Gordon Brothers were interested in the firm. A deal could be agreed within weeks.

The Observer

Tesco will reveal its worst sales performance since the early 1990s recession this week as concern mounts that more high-street retailers are facing financial collapse. On Tuesday, Tesco will report third-quarter like-for-like sales growth of just 1.9 per cent, its worst financial performance since 1992. Its trading update will concern investors in the UK's biggest retailer, whose shares have fallen sharply in recent months. Tesco, led by Sir Terry Leahy, has been hit by rejuvenated competition from Asda and Sainsbury's as well as the discounters such as Aldi and Lidl. Analysts believe the UK's biggest retailer has been fighting the wrong war as it rebrands itself as the country's 'biggest discounter' in a battle to protect its dominant market share. It has also been hit by problems expanding abroad. Unusually weak numbers from Tesco are likely to contrast with a strong performance from rival Morrisons on Thursday. The country's fourth-biggest grocer is expected to report like-for-like sales growth of 7.2 per cent. Also this month Sainsbury's boasted an impressive 13 per cent profit hike.

The Independent on Sunday

Ardeshir Naghshineh, whose 10 per cent equity stake in Woolworths was wiped out when the company fell into administration last week, is one of several potential bidders lining up to buy the 800-shop retailer. Deloitte said that it had received "more than a dozen inquiries", with interest coming from raft of rival retailers, private equity firms and individuals. Mr Naghshineh is this weekend thought to be putting together a deal team and a financing package. His plan to resurrect the fortunes of Woolies includes the disposal of key leases to rival retailers that would yield around £150m and the sale of the retailer's stake in 2Entertainment, a DVD publisher, to the BBC. Supermarkets including Tesco, Asda and Iceland are believed to have tabled an interest in picking off prime sites, while discount retailers such as Netto, Aldi, Lidl and Primark are also said to be keen on acquiring some leases, should the group be carved up. The likes of HMV, Boots and WH Smith are also thought to have expressed an interest. Neville Kahn, partner at Deloitte who is leading a 100-plus team working on the administration and potential sale of Woolworths, said: "We remain very confident that we can sell the business to someone who will keep it as a going concern. We have commitments to keep Woolworths trading until after Christmas, by which time we should have a buyer."

Interest rates will be cut again this week by up to 1 per cent when the Bank of England's Monetary Policy Committee has its monthly meeting. Economists predict that Mervyn King, the Governor of the Bank, and his MPC team will sanction a cut of at least a half a percent to 2.5 per cent on Thursday. Mr King hinted at last week's cross-party Treasury Select Committee that further reductions in interest rates would be necessary to ensure that the banks pass on the recent falls in full. "We may need to cut the rate more than we would otherwise have done," he said. More than 60 economists polled last week in a survey forecast that rates would come down by a full 1 per cent, with one predicting they could fall by as much as 2.5 per cent. Base rates were cut in October by 1.5 per cent in a dramatic attempt to loosen monetary policy and persuade banks to start lending again. But lending remains stubbornly tight, as banks are still nervous about trading with each other as well as the corporate sector.

The Mail on Sunday

Retailers have been scrambling to find new suppliers of CD's and DVD's in the run up to Christmas after Woolworths distribution arm, Entertainment UK went into administration. Entertainment UK had been supplying several major chains including Asda and WH Smith. Zavvi, who's sole supplier was Entertainment UK is understood to have been hard hit.

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