Retail round up - The Sunday papers
FSA to probe 'attack on JJB rights issue', Profit warnings at 6-year low, Punch facing 600m property write-down, Gatwick sale ready for take-off, Sainsbury in finance blitz, Investors take their seats for M&S's talent show hosted in fake store, Former Woolworths boss in line to be JJB Sports chief executive...
The Sunday Telegraph
JJB has asked the Financial Services Authority (FSA) to investigate what it believes was a "malicious" attempt to scupper its £100m rights issue. Herbert Smith, the City law firm, has compiled a dossier on behalf of the retailer which it will hand to the regulator as early as Monday. On Friday, JJB was forced to delay a £100m rights issue as rumours about the financial affairs of Sir David Jones, JJB's executive chairman, circulated the City. Sir David vehemently denies the claims. JJB shares fell as a number of major shareholders, thought to include Schroders and Tosca Fund, refused to back the fund-raising until the rumours were investigated by the board. Full article here.
Profit warnings issued by British companies fell to a six-year low in the third quarter, but Ernst & Young (E&Y) has warned the lagging consequences of a deep recession are likely to hurt companies into 2010. A report by the accountant said the number of warnings, which are issued to correct market expectations of financial performance, fell to 52 in the three months from July to September – 53pc lower than the same period a year ago and 17pc fewer than the second quarter. It compared favourably with an average of 100 warnings between the onset of the crisis at the end of 2007 and the beginning of this year. However, E&Y said the figures were less positive than they seemed because as the downturn had progressed, companies had set expectations at low levels, and were therefore not finding it necessary to guide analysts' expectations down at a later date. Full article here.
Punch Taverns is expected to write down the value of its real estate by as much as 10pc - around £600m - as declining earnings drag down the value of some of its assets. Britain's biggest pub landlord is set to report a significant drop in profits this week, but it won't be an entirely bleak picture. Punch is also likely to report more good news on debt reduction, after paying back around £1bn by August.Pubs which are still trading are valued on their income stream, and Punch has reported an 11pc fall in like-for-like earnings at its leased pubs over the year.Underperforming sites which have been put on the market are valued at their estimated sale price. Some analysts are forecasting an impairment charge of as much as 10pc. Punch's property, plant and equipment was worth £6.27bn at the end of the previous financial year, and £6.06bn at the end of the half year in March. Full article here.
The Sunday Times
Gatwick Airport could change hands within the next few days as BAA edges closer to a deal to sell it to an investment fund. The new owner and operator of the airport will be Global Infrastructure Partners (GIP), a joint venture between Credit Suisse, the investment bank, and General Electric, the American industrial and financial-services conglomerate. GIP owns and runs London City airport. The two sides have been in talks since last year, when BAA put Gatwick up for auction ahead of a Competition Commission ruling that would have forced it to sell Gatwick and other airports. Rival bidders dropped out in May, and BAA appeared to put the sale on the backburner while it challenged the commission’s verdict. Full article here.
J Sainsbury is upping the ante in its battle with rival Tesco to sell shoppers credit cards, insurance and savings accounts. The supermarket giant, led by Justin King, has launched a huge financial-services marketing blitz, featuring a prime-time television campaign offering shoppers extra reward points on their loyalty cards for two years if they sign up for selected financial products. Reward points can then be converted into discounts on grocery bills — equivalent to 1% off every shop — or swapped for treats such as cinema tickets or days out. The promotion centres on home and pet insurance, an Easy Saver account and a credit card. Shoppers will get double reward points on their Nectar card — in store, online and in petrol stations — if they join. Full article here.
About 80 leading retail analysts and investors will gather in west London this week for an update on Marks & Spencer's progress and plans. The event, which is being hosted at a fake store in White City used for staff training and testing new store layouts, is described by one analyst invited as "a bit of a marathon". It starts at midday and includes an afternoon seminar and dinner with senior executives. Investors will be given presentations from clothing head Kate Bostock, finance director Ian Dyson and food boss John Dixon, regarded as the internal candidates for the post of chief executive next year when executive chairman Sir Stuart Rose moves to a non-executive role next year. Investors are known to favour an external appointment, while Rose – who recently said the trio's presentations would be like an "M&S has got talent" contest – is thought to prefer one of his lieutenants.
The Independent on Sunday
Steve Johnson, the chief executive of Woolworths when it collapsed last year, has been approached by advisers to JJB about becoming the struggling sports retailer's chief executive. It's believed that Lazard, which advises JJB, has spoken to Mr Johnson about taking over at the helm of the chain, which is currently without a chief executive after the acrimonious exit of Chris Ronnie earlier in the year. On Friday, JJB was forced to postpone a £100m rights issue after investors in the firm, believed to be Schroders and Toscafund, raised concerns about the financial dealings of the company's chair, Sir David Jones. Earlier in the day the UK Listing Authority held up the cash call over what was described as a "mystery accounting issue".Full article here.
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