Retail round up The Sunday Papers
'Vulture' funds circle embattled fashion retailer New Look, Whisky sales hurt by 'heather and weather' image, Tesco remains confident despite falling sales in Britain, Wiggle cycles to flotation or sale, Luxury brands stalk Bond's outfitter, New Look casts its eye on upmarket brands to boost e-sales, Tesco and Sainsbury's battle for customers, Rise in people seeking food handouts, Osborne to end 'unfair' offshore VAT dodge, Tesco's prices rise despite pledge, Heatwave forces overdressed High Street into sales, Morrisons tries its hand at gardening, Naughty, but nice results, Payouts rain on Butlins owners, Fitness First shapes up for auction after ditching float.
Fashion retailer New Look is set to come under fresh pressure over its £680m Payment in Kind (PIK) debts as funds that buy up distressed debt look to take advantage of tough trading on the British high street. As the retailer prepares to announce trading has fallen a further 10pc-15pc, so-called "vulture funds" are believed to be buying up portions of its debts. New Look, which is owned by private equity firms Permira and Apax, has accrued approximately £680m of the high interest PIK debt, which the retailer could not refinance when it pulled its £2bn stock market float last year. The PIK debt has fallen to a value of 43p in the pound.
Whisky sales will drop by 10 per cent within five years because its “heather and weather” brand imagery is putting off younger drinkers, according to a report. Pictures of rugged coastline and its reputation as a tipple for connoisseurs are contributing to its predicted decline of up to £300m in UK sales by 2016.Fashionable, sweeter imports such as dark rum and bourbon are the winners, the study added. Mintel’s Dark Spirits report sounds an alarm for Scotland’s whisky industry, which generates £4bn for the economy each year and supports 35,000 jobs.
Tesco is expected to say it can "tough" out falling UK demand for its groceries and household goods this year when it posts its weakest core UK sales for decades this week. The supermarket giant, which has around 30pc of the grocery market in the UK, is forecast to reveal that like-for-like UK sales, excluding fuel and VAT, fell between 0.5pc and 2pc over its second-quarter trading.
Half a dozen investment banks have pitched to float Wiggle, the online retailer of bikes and accessories, as it continues to court trade and private equity buyers. Wiggle, which is majority-owned by Isis Equity Partners, held a "beauty parade" last week. Rothschild, which is advising the retailer, is running a dual track process that will see the retailer lined up for a float and sale at the same time.
Independent on Sunday
Suitors are stalking luxury Italian brand Brioni – known for dressing James Bond and presidents including Barack Obama. Eurazeo, the French private-equity firm, Zegna, an Italian luxury brand, and PPR, one of France's biggest luxury houses, are all known to have had recent talks with the Bond suit-maker about a potential offer. If the company is sold, it could fetch up to €350m (£300m). Brioni declined to comment.
Fashion chain New Look is to sell up-market brands on its website to boost sales and customers. It has agreed deals to sell brands including Miss Sixty, Firetrap and Wonderbra on the website which has customers in 120 countries. New Look has signed up 40 brands for autumn and will have 100 brands live on its website for spring/summer next year. Until now New Look had largely sold own-label clothing.
A supermarket price war was kicked off by Tesco last month but this week sees updates from Sainsbury's and Tesco in the face of tough market conditions. Some analysts say Tesco has taken its eye off the ball at home because it sees greater opportunities overseas. Analysts have warned that supermarkets should review the vast amount of space they plan to open in light of the worsening consumer outlook.
Britain has seen a sharp rise in the number of people receiving food handouts, according to a charity. FareShare, which redistributes surplus food from major manufacturers and supermarkets to social care charities, said its donations now go to 35,000 people a day, an increase from 29,000 last year. Of the charities surveyed by the organisation, 42% reported an increase in demand for food in the past year.
The Mail on Sunday
A controversial tax loophole that costs High Street retailers and small firms billions of pounds in lost revenue is expected to be abolished within months. Low Value Consignment Relief (LVCR) allows firms to avoid paying VAT if they send their goods with a value of £18 or less from the Channel Islands. It allows shoppers to snap up cheap CDs and DVDs online, but High St shops say it is seriously harming their business.
Britain’s biggest supermarket chain has increased the price of about 12 per cent of its fastest-selling products, according to a survey by Financial Mail. Tesco has increased the cost of a significant number of products despite promising the biggest shake-up of its pricing strategy for 20 years with its ‘Price Drop’ campaign. Only ten of 97 items in Financial Mail’s survey were found to be lower in price by more than ten per cent compared with prices collected online at the beginning of August.
The High Street has been forced into snap sales to stimulate sun-drenched shoppers’ interest in seasonal ranges. Despite predictions of a cold snap around the corner, the heatwave has made window displays seem bizarre. Retailers are desperate to capitalise on the number of shoppers on the streets enjoying the fine weather. Financial Mail can reveal that Marks & Spencer will on Tuesday become the latest major retailer to launch a 50 per cent off sale.
Supermarket giant Morrisons is planning to dominate a new field – garden centres. It has asked for sale documents for the former Wyevale group. Morrisons is one of several parties, including private firms Bridgepoint and Duke Street Capital, that have received information in the past few days about the Garden Centre Group, which was put up for sale by owner Lloyds Banking Group last month. Buying GCG, which employs 4,500, would put Morrisons in direct competition with Tesco, which bought rival garden centre group Dobbies in 2008.
Lingerie company Agent Provocateur appears to be recovering from the downturn with a profit of £1m – compared with a £2m loss last year. Underlying earnings, before tax, interest and other finance charges, were £3.3m for the year to March 2011, nearly treble the figure for 2010.
Butlins and Haven holiday parks families take home a £33m dividend, after cashing in on rising demand for short breaks in England. Bourne Leisure Holdings, majority-owned by the Cook, Harris and Allen families, saw a 6% rise in pre-tax profits to £93.4m in the year to December 2010, according to the latest accounts.
The owner of Fitness First, the world’s largest gym chain, is holding talks about a possible sale of the business after shelving a £1 billion float in Asia. BC Partners, the private equity firm behind the leisure group, received several bid approaches from rival buyout companies in the run-up to the proposed listing on the Singapore stock exchange.
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