Sunday Retail News Roundup
Philip Green faces £280m BHS bill, £100m boat comes in, Go Outdoors on its bike, Sainsbury's set to raise Argos bid £1.5bn, Casual Dining Group losses almost double £13.5m, Customers are women so why aren't the bosses?, Clarks shoe scion seeks cash, Nectar fraud plot thickens, Lidl trumpets latest clothing bargain.
Sir Philip Green could face a demand of £280m over BHS’s pension deficit, more than three times the sum he has so far offered to pay. The Pensions Regulator is pursuing the billionaire boss of Arcadia for a contribution a year after he sold the lossmaking department store chain for £1 to a little-known consortium. BHS’s retirement schemes, which have a shortfall of £571m, are due to enter the Pension Protection Fund (PPF) as the company tries to stay afloat by negotiating rent cuts from its landlords. The move into the PPF leaves about 13,000 current and former staff below retirement age facing cuts of at least 10% to their benefits. The cost to the PPF of covering BHS’s pension liabilities would be about £300m. Green could be asked to pay £280m of that, with BHS in line for £20m. The tycoon has so far made an offer of £80m, £40m in cash and £40m in the form of a charge held over BHS assets.
At a shipyard in Livorno, on Italy’s Tuscan coast, the finishing touches are being put to project FB 262. At 295ft long, the superyacht is thought to be the luxury shipbuilder Benetti’s biggest for more than three decades. The vessel is believed to have six bedrooms and room for 40 crew. It cost an estimated £100m and has taken four years to build. But for Sir Philip Green, project FB 262 is now a headache. BHS current and former staff under retirement age facing pension cuts and the debacle has prompted anger towards Green, 63, who paid more than £400m of dividends from BHS to his wife, Tina, in the tax haven of Monaco during his 15-year ownership. One of Green’s problems as he haggles with the regulator is the sheer scale of his wealth. His family fortune is £3.5bn, he commutes from Monaco in a Gulfstream G550 private jet and then there’s the new superyacht, named Lionheart after his current boat.
A surge in demand for mountain bikes has led Britain’s biggest outdoor retailer to invest £10m in expanding its store network. Go Outdoors will add an extra 250,000 sq ft of retail space before the end of the year, including three new megastores and cycling concessions within most of its 53 existing shops. The retailer will create more than 2,000 jobs, many will be temporary roles in peak summer season. Last year posted pre-tax profits of £3.1m on sales of £181.4m. The expansion comes as Go Outdoors is rumoured to be planning a stock market listing later this year. Rival chain Mountain Warehouse has hired Rothschild for its own float, which would value the company at about £200m.
Mail on Sunday.
Supermarket giant Sainsbury's is considering raising its offer for retailer Argos to £1.5 billion after its parent group waved a £100 million 'carrot' at bidders last week. The grocer has until Friday to table an updated offer for Argos's parent, Home Retail Group. It bid £1.3 billion last month before South African retail giant Steinhoff gate-crashed the deal with a rival offer worth £1.4 billion or 175p a share. Sainsbury's is understood to be considering a bid worth up to £1.5 billion in a mixture of cash and shares. A higher offer has been made possible by a surge in Sainsbury's own share price and the revelation late last week that Argos has £100 million more than previously thought in reserves. A £1.5 billion indicative offer would value HRG at 185p a share.
Cafe Rouge and Bella Italia owner Casual Dining Group has revealed losses of £13.5 million for its latest financial year, but directors say they expect to focus on expanding the number of outlets following a restructuring. Last year it sold off non-core outlets. It also sold off the whole Strada chain to restaurateur Hugh Osmond’s Sun Capital Partners for £37 million. The company, which underwent a debt for equity swap too – issuing shares to creditors in return for writing off some debts, recorded sales of £216 million for ongoing operations in the year to May 31, 2015, down from £236 million the previous year. It also revealed a loss of £13.5 million compared with a £7.8 million loss the year before.
It's high time a woman ran Marks & Spencer. So declares Kate Bostock, the group's one-time fashion boss and herself once thought to be a candidate for the top job at Britain's best-known stores group. At M&S, 15 of its 21 operational directors are men. Of course, M&S is not alone. Women do the vast majority of shopping yet none of the retailers in the FTSE 100, as well as the major fashion names, Next, Debenhams, House of Fraser and New Look is run by women. According to executive search firm Korn Ferry, only 15 per cent of the 45 newly appointed retail chief executives last year were women, even less than the previous year.
Clarks, one of Somerset's biggest employers, has been a leader in the footwear market for 190 years, but last month said it would cut 170 jobs due to a 'highly demanding' environment. Vivobarefoot founder Galahad Clark is a sixth-generation member of the Clarks shoe making dynasty, but the new brand is a separate business. Vivobarefoot, a maker of 'barefoot' shoes with patented ultra-thin soles, has launched a campaign to raise £750,000 on crowdfunding site Crowdcube. The company, which claims 'conventional shoes make your feet shoe shaped instead of foot shaped', has sold more than a million pairs of shoes since launching in 2012 and is growing at 30 per cent a year. Vivobarefoot is offering up to four per cent of its equity and hopes to increase turnover from £9.5 million this year to £29 million in 2019.
Clearly, there is a security flaw somewhere between Nectar and Argos. It even seems that one person can spend points from multiple cards. An Argos spokeswoman admitted: ‘We are aware of an issue involving Nectar cards. Our stores have been briefed to ensure customers are only able to redeem points from one card in a single transaction, and we are in discussions with Nectar to ensure this is dealt with.’ Nectar said 'We and our partner are aware of low levels of fraud, and we are working together and with the police to try to limit these incidents of criminal behaviour.’
Lidl, the German retailer, continues assault on the traditional supermarket giants by targeting the high street fashion-conscious with jeans selling for an astonishing £12 less than a similar pair in Tesco. Primark, no slouches in the cost-cutting field, have only managed to get their lowest price down to £8. How can you sell jeans for £5.99? Easy … pay people 23p an hour to make them.