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Retail round-up: The Sunday papers
September 28 2003
Sainsbury's fears Green takeover; Virgin goes into the gadget game.
The ObserverSainsbury*#*8217;s is on bid alert this weekend, fearing the block on its plans to take over Safeway could make it vulnerable to a bid from Bhs and Arcadia owner Philip Green. Executives at Sainsbury*#*8217;s are worried that he could turn his eye on their company, seen by the Square Mile as the weakest of the big supermarket chains. Venture capital groups are also circling, say City bankers.
Analysts forecast a fall of about 10 per cent in food prices over the next few years. Morrison*#*8217;s products are among the most keenly priced of any supermarket chain, and the demise of Safeway will be good news for consumers, but lead to even more ferocious competition among supermarkets. To offset falling food margins, supermarkets will have to grow non*#*8211;food sales even more strongly, which will be bad news
Sunday Times
Sir Richard Branson is to plunge into consumer electronics with the launch of a range of Virgin-branded gadgets in America. A new company, Virgin Pulse, will sell up to 20 devices, including MP3 players, clock radios, cordless phones, radios and CD players, through US retail chain Target and Virgin Megastores. Branson said he regarded the venture as a trial which would be expanded if it proved successful.
The board of Safeway is to tell Morrisons it needs to offer £3.5bn of shares and cash if it is to win a recommendation for its takeover offer. The risky move is an attempt by Safeway directors to extract the best price from Sir Ken Morrison. Sources close to the Safeway board insisted that if Morrisons is to persuade the directors to recommend a takeover to Safeway shareholders and avoid a possible hostile bid, he will need to offer 277½p a share and 50p a share in cash, representing a cash sweetener of £500m. Safeway insiders also say that Morrisons needs the co-operation of its management if implementation of the takeover is to proceed smoothly.
Boots is planning to open 12 new outlets in the Irish Republic over the next three years as part of a *#*8364;43m investment. This would bring the Pharmacy retailer*#*8217;s stores in Ireland to 45 and increase job numbers by 300 to about 1,500.
Mail on Sunday
Baugur may consider a bid for fashion and design department store Liberty, whose flagship Regent Street outlet is a stone*#*8217;s throw from recent acquisition Hamleys.
Tie Rack is to substantially increase its range of goods, adding leather accessories, hats, chunky knit scarves and jewellery, to appeal to women as well as men. Twenty UK stores will receive a makeover in the next 12 months as Italian owner Frangi, which bought the business four years ago, aims to expand the niche retailer*#*8217;s appeal.
The Serious Fraud Office is to launch a full scale investigation into retailer Iceland, now part of the Big Food Group. A file on the company was handed to the SFO in the spring, with most of the material coming from a DTI investigation into share dealing by former Iceland chairman Malcolm Walker.
Asda has ruled out a legal challenge to the decision to block its bid for Safeway. An Asda source said: "Legal action goes against the culture of being the consumer*#*8217;s friend and champion."
Directors of Boots are planning to hive off most of the retailer's huge own brand manufacturing operations, according to insiders. The company is playing down the suggestion that it will shed most of the remainder of its manufacturing, which supplies almost one-fifth of everything sold in its stores.
McDonalds has launched a range of toys aimed at children as young as three to get around possible curbs on TV advertising. The fast food giant has issued licences to manufacturers to produce toys such as the McFlurry Maker.
Sunday Telegraph
The tense relationship between supermarkets and food producers is worse than ever, according to an NOP survey carried out for the Competition Commission. The report contains a long list of complaints by suppliers about being forced to make payments to supermarket groups and being compelled to use favoured packaging designers and transport firms.
The arrival of Krispy Kreme doughnuts in Britain this week means not just a expansion will not just be in terms of restaurants, 24 of which will open across Britain in the next five years: they pose a serious threat to the growing British waistline. The fat content per ounce of Krispy Kreme is nearly four times the British doughnut equivalent, and they contain up to 390 calories each.
Sunday Express
Fashion retailer Ted Baker is expected to show a surge in profits this week after it hit the spot with spring and summer ranges. While some retailers wilted in the heat, rumours suggest Ted Baker traded well ahead of budget.
Disney has hired heavyweight bankers Goldman Sachs and Bear Stearns to find a buyer for its 480 US and European Disney Store outlets, including 59 in the UK. There is an estimated £300m price tag on the business, but retail experts are astonished that Disney could hand control of its brand to another company.
The Business
Wal-Mart executives are concerned that the decision to block its bid for Safeway was made on political ground, instead of an analysis of the supermarket sector or customer interests. The company is considering appealing against the decision.
Versace may cut back its retail network as part of its long awaited restructuring, retaining ownership of only the stores in the largest cities and farming the rest out through franchise and multibrand agreements.
India ranks fifth among 30 emerging retail markets identified by property consultant Knight Franks as Indians discover consumerism. A retail revolution has seen a move away from small, family owned stores to shopping malls. About 55 new malls will open by 2005
The Independent on Sunday
German bank WestLB pulled the plug on TV service company Endeva during negotiations for a £100m management buyout. However, the deal is not dead and talks about selling the operation to its management are expected to resume next week. Endeva is part of Boxclever, the TV rental operation whose massive debts have caused a crisis at WestLB. The need to put extra finance into Endeva to fund its expansion crystallised Boxclever's financial problems.
Utlralase, Britain's largest chain of laser eye- treatment centres, is to introduce a new iris recognition system for diagnosing eye problems. It is expected to be the first company in the world to use the new technology, called Zyoptix. Ultralase is the market leader for laser eye treatments in the UK, with Boots in second place.
Tagged as: Safeway | Morrisons | Tesco | Asda | Bhs | Woolworths | WH Smith | Virgin | Krispy Kreme | Ted Baker | Disney Store | Tie Rack
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