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Sunday Retail News Roundup
SA retail tycoon considered Argos, Jeweller shines, Coupe cunning plan for Argos, Asda 'wonky veg', BHS eyes store closures and pension fix, Short-seller targets Next, Stop whinging Vita Coco tells Tesco suppliers, Ocado and Morrisons relationship fresh pressure, Lidl switch to sustainable bananas.
The billionaire owner of Iceland and New Look considered a bid for Argos before J Sainsbury sealed its £1.3bn takeover of the catalogue retailer last week. Christo Wiese, a South African tycoon whose British empire includes Virgin Active gyms, is understood to have looked over the company with Andy Bond, the former chief executive of Asda. Bond now runs Pep & Co, a discount clothing start-up that is backed by Wiese. He also advises the 74-year-old on new opportunities. A well-placed source said the pair had stalked Home Retail Group, Argos’s parent company, but decided to focus on other deals. J Sainsbury moved closer to clinching Home Retail Group last Tuesday with an offer valuing it at 161.3p a share, or £1.3bn — £1.1bn without Homebase, Argos’s sister, which is being sold to an Australian conglomerate. The Takeover Panel has given Britain’s second biggest supermarket until February 23 to formalise its bid. The deal’s value could move by then as a chunk is being paid in shares.
A jeweller whose creations are worn by the Duchess of Cambridge, actress Kate Winslet and pop singer Jennifer Lopez, is raising £20m to accelerate its overseas expansion. Monica Vinader is rustling up the cash from buyout firm Piper, which has invested in fashion chain Boden, healthy meals maker Diet Chef and soft drinks business Bottlegreen. Piper is investing £14m alongside American investor Winona Capital, which is pumping £6m into the British jeweller. Spanish designer Vinader founded the jewellery maker in 2007. It has revenues of £23m and employs more than 160 staff. Vinader has three stores in London, shops in Hong Kong, Singapore, Dubai and South Korea and concessions in the likes of Harrods and Selfridges. “We undertook a rigorous review of potential partners we could work with on our next stage of growth,” said Vinader, 47, who runs the business with her sister, Gabriela. The jewellery is priced between £30 and £2,600. The founder plans to use the new cash to expand further in America and Asia.
At the London headquarters of Schroders, one of the City’s most powerful investment houses, on the Friday before last, a delegation from J Sainsbury walked into the atrium. The occasion was important enough to warrant a full turnout of the supermarket’s top brass. Accompanied by several investment bankers from UBS were chairman David Tyler, chief executive Mike Coupe and chief financial officer John Rogers. They were hoping to break a deadlock that was threatening to scupper the deal of their careers. For months, J Sainsbury had been trying to take over Argos with a bid for its FTSE 250 parent company, Home Retail Group. The idea was counterintuitive — since at least 2010, supermarkets had been pulling out of Argos’s mainstay electrical goods, such as kettles and TVs, in the face of a relentless assault by Amazon. Yet Sainsbury’s plan was three-pronged: secure a financial boost by moving Argos’s customer loan book into Sainsbury’s Bank; save money by shifting a swathe of Argos stores into Sainsbury’s; and use the catalogue retailer’s network to speed up its own online delivery service.
Mail on Sunday.
Families keen to start eating a healthier diet in 2016 will be able to do so for less in the coming months. At least, those that live near to one of the 128 Asda stores that from today will start stocking large boxes of mis-shapen vegetables for £3.50. Only 20 boxes will be stocked initially as part of a trial. Claiming it is the first supermarket to take this step in an effort to reduce food waste, Asda said the 'Wonky Veg' boxes will contain enough seasonal vegetables and salad ingredients to feed a family of four for a week, 'The exclusive wonky veg boxes are packed with peculiar potatoes, crooked carrots and curved cucumbers which are all in season, as well as knobbly peppers, cabbages, onions, leeks and parsnips.'
The owners of BHS are planning a radical overhaul of the struggling high street chain that is expected to trigger significant store closures, the restructuring of its massive pension scheme and further job losses. The management team has appointed KPMG to draw up options that will enable the retailer to drastically reduce its 170-strong store estate, as it wrestles with attempts to turn it around. The fashion and homeware company lost £85m before tax last year, after Sir Philip Green sold the fashion and homewares chain to a little-known consortium called Retail Acquisitions for £1.
A US hedge fund has taken a £60m bet against Next after the retailer admitted that its online advantage over its rivals might be waning. Lone Pine, which controls $27bn (£28.3bn) of assets, has built up a 0.6pc short position against the high street bellwether since the start of the year. The Connecticut-based fund is controlled by billionaire Steve Mandel, who earlier this year said he would base his investment strategy for 2016 around the growing influence of the internet. Lone Pine also made a £100m bet against Marks & Spencer last year.
The boss of one of the UK’s fastest growing drinks firms has slammed fellow suppliers over complaining about “unfair” treatment by Tesco, claiming they are “whinging” and “wouldn’t have a business at all” without the supermarket giant. Vita Coco’s UK chief executive spoke out in defence of Tesco following the publication of a damning 52-page report from the Grocery Code Adjudicator. The grocery market watchdog said Tesco “seriously breached a legally binding code to protect groceries suppliers” and “prioritised” its own finances over the fair treatment of its suppliers.
Morrisons’ online tie-up with Ocado is coming under fresh pressure as the supermarket chain attempts to loosen the ties between the two companies. The Bradford-based retailer has so far refused to supply goods for two new multi-milion pound Ocado distribution centres. According to sources, the tactic is being adopted to squeeze the best deal out of its controversially restrictive 25-year contract with the online firm. Morrisons chief executive David Potts is understood to be dissatisfied by the deal agreed by his ousted predecessor Dalton Philips. He has highlighted that Ocado does not serve key areas such as Scotland, Cornwall and the North where the supermarket chain has hundreds of stores. However, Morrisons cannot buy itself out of the contract without facing an onerous bill and is barred legally from using another delivery partner.
The Co-op, Sainsbury’s and Waitrose already stock only Fairtrade or organic bananas, while Lidl joined Asda this week in limiting themselves to bananas certified by the NGO Rainforest Alliance. Tesco could follow suit soon. By rough estimates, in the UK we each gobble up more than 70 certified bananas every year. But here’s the contradiction: the UK may be the biggest market in the world for Fairtrade, organic and other certified bananas but it still has one of the lowest retail prices in the northern hemisphere.