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Sunday Retail News Roundup
Sale is last piece for Jigsaw, Yoghurt maker churns out cash, Close to the rocks, Cameron retail giants EU referendum secret No.10 summit, Caffè Nero paid no corporation tax despite £23.6m profit, John Lewis may offer new bond, Can Darren Topp revive BHS chain, Curb inefficient charity shops that clog up high street.
Jigsaw, the high street retailer that employed the Duchess of Cambridge before her marriage to Prince William, has held talks with investment banks including Rothschild in recent weeks. A sale would bring a windfall for John and Belle Robinson, the former husband and wife behind the brand’s success. The pair are considering the sale of a majority or minority stake, or a float of the company. An adviser has not yet been appointed. Last year, Jigsaw’s holding company, Robinson Webster, made underlying profits of £5.4m on revenues of £89m. The business, run by former John Lewis director Peter Ruis, would be worth more than £50m.
Britain's biggest maker of natural yoghurt nearly doubled its profits to £6.6m last year after buying the farm that produces most of its ingredients. Yeo Valley’s sales increased 3.3% to £284.2m in the 12 months to May after consumers lapped up more of its organic yoghurts. But thedecision to buy Coombe Farm Fruits put a rocket under its pre-tax profits, which jumped 92% in the year. Coombe Farm makes fruit conserves used in many of Yeo Valley’s products, including its yoghurts and compotes. Since launching in 1992, Yeo Valley has grown from small regional brand into a household name. It owns 1,500 acres of farmland and churns out more than 2,000 tons of organic produce each week. The business is owned by the Mead family, including 77-year-old Mary and her son Tim, 52, who is chief executive. Yoghurt consumption has risen for decades as consumers become more health conscious.
A year ago Topshop boss Sir Philip Green sold the ailing BHS chain for £1. Now the deal to get rid of it has come back to haunt him. Last Tuesday a Peterborough clothing supplier called Tango Group International filed a winding-up petition against the chain in the High Court. Although the dispute was settled quickly, BHS paid Tango’s £15,000 debt the same day, it hinted at the stress the company is under. On Thursday evening, BHS was forced into an early announcement of a controversial insolvency process known as a company voluntary arrangement (CVA) after news of the plan leaked. The retailer said it would ask landlords for rent cuts on more than half its 164 stores and threatened to close up to 40 shops, putting thousands of jobs at risk, unless there were “substantial” reductions. BHS has until March 23 to secure the backing of 75% of its creditors for the CVA. The alternative is bleak: without a radical restructuring, the 88-year-old high street stalwart faces almost certain collapse. At 9.30am on Friday, BHS’s boss addressed several hundred staff at the Marylebone Road HQ to deliver more bad news. Darren Topp, who has been with the company for eight years, said there would be 150 job losses at the head office and 220 in stores, not counting redundancies that might come through shop closures. BHS has not been the only problem. Topshop continues to perform well but many of Arcadia’s other brands, Evans, Miss Selfridge and Wallis, have become tired and dated. As retailing changes from a high street industry based on gut feeling to an online game run by entrepreneurs with smart algorithms, some believe the fashion game has passed Green by.
Mail on Sunday.
Major names from the high street, including Tesco, Sainsbury’s and Asda, voiced fears that soaring business rates bills and the Government’s new National Living Wage and Apprenticeship Levy could devastate the retail industry at the summit last week. It is understood that Cameron used the meeting to raise the question of the EU referendum, a subject on which several of the country’s largest retailers have so far flatly refused to comment. Tesco chief executive Dave Lewis and Sainsbury’s boss Mike Coupe were at the talks on Tuesday, which also included representatives from Asda, Marks & Spencer, pharmacy giant Boots and electricals group Dixons Carphone.
Caffè Nero has hundreds of branches across Britain, saw sales in the UK and Ireland grow by 8.5 per cent to £241million in the 12 months to May 31, 2015. But it did not pay a penny in corporation tax on its £23.6million profits as these were offset against interest payments on debts held by its parent company. Caffè Nero
has not paid corporation tax since 2007. Sales for the group, which includes 120 stores in Poland, Ireland, Turkey, Cyprus, UAE and the US, were £243million, leading to an operating profit of £17.8million, but finance costs of £42million and a share of a joint venture loss led to a pre-tax loss of £28.4million.
The John Lewis Partnership has said it will consider issuing more bonds after subscribers to a previous issue received a windfall of as much as £3,250 in cash and vouchers over the past five years. Participants in the £50million scheme launched in March 2011 could invest as much as £10,000 each. In return they received a
4.5 per cent annual dividend payment and a further 2 per cent in vouchers to spend at the department store or at its sister supermarket chain, Waitrose. The bond’s maturity date is next month. It is expected to say on Thursday that profits before exceptional charges fell from £343million to about £300million last year
BHS chief executive Darren Topp had to face his staff on Friday morning last week and tell them hundreds would lose their jobs and dozens of stores are likely to close. Just one year after Topp and a group of investors bought the stores group from fashion billionaire Sir Philip Green for £1, BHS is coming apart at the seams. ‘The truth is we have a chunk of stores that lose BHS millions and millions of pounds so much money that they drag the whole group down’. Ever mounting pressure from rivals such as Marks & Spencer, Next and Primark has lured away its customers, but Topp says that would all have been manageable if not for the store leases which hang like a millstone around the business.
Thousands of charity shops are on average less profitable than some high street retailers, despite benefitting from an extensive network of volunteers, free donated goods and 80 per cent off business rates. More than 4,000 charity shops, run by the likes of Scope, Age UK, Sue Ryder, Marie Curie and the British Heart Foundation, made a profit of less 17p in the pound. In contrast, Next plc was more profitable, making an operating profit of 18 per cent over the past six years, despite not receiving the extensive benefits that charity shop receive.