Retail round up -The Sunday papers
Former HBOS chief Andy Hornby in talks about Alliance Boots job, Carphone Warehouse founder David Ross buys out US bank, Shoppers scarce on the ground during May, Carphone and Vodafone reconnect, Ashley draws up bonus plan for Sports Direct staff, Commercial mortgage lender to offer loans again after months in hibernation, Barclay twins join tax-haven CD retailers, Top fashion graduates swap Paris for high-street stores, Few green shoots in Scotland,Poor sales crush retail recovery hope...
The Sunday Telegraph
Andy Hornby is among several candidates who have been in discussions in recent weeks with Stefano Pessina about becoming the group's chief executive. Pessina is leading the search as he prepares to move into the role of executive chairman. A decision about the appointment is expected to be made in the next two weeks, and it remains possible that Mr Hornby will not be offered the position. If Mr Hornby does become chief executive of Alliance Boots, which is one of the world's largest pharmaceutical wholesalers, it would represent a return to familiar territory for him, having spent several successful years in senior jobs at Asda. Full article.
David Ross has bought out Morgan Stanley from his £185m commercial property joint venture property group Kandahar. The move, for a nominal sum, came as it emerged that the company will breach its loan covenants when it revalues its portfolio next month, according to accounts filed at Companies House. A statement in Kandahar's accounts warned of a "material uncertainty" over the ability of the company to continue as a going concern because of the high level of debt it is carrying. The accounts for 2007 showed the company made a loss of £95m largely due to falling commercial property values. Full article.
High street sales fell in the fifth month of the calendar year as shoppers continued to rein in their spending, figures will show this week. Like-for-like sales from a combination of 70 mid-tier non-food retailers, comprising more than 10,000 shops, fell by 1.5pc over the month. Fashion chains saw sales decrease by 3.4pc while homewares retailers saw sales fall by 7.2pc, according to figures from BDO Stoy Hayward. The poor month for high street chains is likely to be confirmed on Tuesday when the British Retail Consortium releases its own sales figures for May. Rupert Eastell, head of retail at BDO Stoy Hayward, said: "Despite some tentative signs that the economy is starting to improve, retailers are still finding life on the high street especially tough – particularly as concerns about unemployment continue unabated." Full article
The Sunday Times
Vodafone is set to end a three-year dispute with Carphone Warehouse by resurrecting a sales agreement with the mobile-phone store chain. Talks between Charles Dunstone and Vodafone’s senior management are believed to be at an advanced stage, with an announcement expected imminently. The deal would lead to Vodafone mobile contracts being sold in Carphone’s 800 UK stores for the first time since 2006. Vodafone ended a previous deal with Carphone and switched to an exclusive agreement with rival Phones4U, which committed to signing up 30,000 Vodafone customers a month. Full article.
Mike Ashley is drawing up plans for a £50m bonus scheme that could see more than 2,000 staff at his Sports Direct retail chain bag one-year’s salary in free shares.The bonus plan would hand employees a share windfall worth an average of £25,000 if the company meets profit targets over the next two years.It is understood the sportswear billionaire will begin consultations with shareholders about the proposed scheme in the next few days. Under the draft terms of the plan, the payday bonanza will be put into effect if Sports Direct generates more than £200m of underlying profits by the 2010-11 financial year. That would beat the £188m of profit the retailer generated when it floated two years ago. The bonus payments would only be paid out to full-time staff who have been with the company for more than two years. Full article
The Independent on Sunday
Commercial First, the Essex-based mortgage lender that was forced into hibernation after closing its doors to new business last year, is set to recommence lending to its customers. The lender is believed to have struck a deal with a number of banks that will allow it to advance loans once again. Before the de facto closure of the securitisation markets, Commercial First was lending more than £1.5bn to small- and medium-sized enterprises. The group's ability to lend once more is another sign that the worst of the credit crunch could be over.
The Barclay brothers are poised to join a fast-growing band of retailers exploiting a controversial Channel Islands tax loophole in order to sell VAT-free CDs, DVDs and video games over the internet, undercutting prices in struggling independent high street stores and depriving the Treasury of millions of pounds in lost revenues.The planned move comes after Treasury minister Stephen Timms privately assured struggling high street businesses unable to compete with offshore websites offering VAT free prices, that there are "only two major exporters in the audio visual market in the Channel Islands". In fact, contrary to Timms' claim, all household-name CD and DVD retailers - including HMV, Amazon, Play, Tesco, Asda, Argos and WH Smith - run substantial "free home delivery" internet export operations from Jersey or Guernsey in order to exploit the tax advantage. An Observer investigation has found a Scottish government quango is even a shareholder in one of the most established VAT loophole companies. Full article
As couturiers struggle to keep their heads above water in the global downturn, they have become more interested in cutting costs than in sourcing fresh new talent. In response to the slump, the creators of Graduate Fashion Week, which begins today at London's Earls Court, have joined forces with big fashion retailers, including River Island, Asos, Mulberry and John Lewis, to help graduate designers ride out the recession. The companies will hire young designers to work in their head offices for six months or more, earning at least the minimum wage, allowing the graduates to gain invaluable experience. Richard Bradbury, chief executive of River Island, said: "This scheme provides students with a valuable short-term contract, and provides some of the UK's top brands with young, innovative design talent."
Scotlands economy faces a "slow grind" as it recovers from the banking crisis, and it will be 2017 before employment returns to pre-recession levels, according to a new study.In its summer update, the Ernst and Young Scottish Item Club predicts that the economy will contract by 3.1% this year, and stagnate in 2010, before finally nudging back to growth in 2011."The patient is still a long way from recovery and there is more pain to come in the form of significant job losses," said Dougie Adams, the report's author.
The Mail on Sunday
Poor figures from the British Retail Consortium this week are expected to dampen recent hopes that 'green shoots' are signalling the end of recession.The BRC's figures for May, sponsored by accountant KPMG, are expected to be downbeat, although this will be partly caused by the timing of Easter.Food sales are likely to have held up better than non-food items, but some observers will be disappointed after last week's better than expected first-quarter profits from B&Q owner Kingfisher. Full article
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