Retail round up the Sunday papers
LK Bennett bags bumper sales, Tycoons clean up in soap sell-off, Giraffe reaches new heights, Jessops over-exposed and now out of the picture, Ex-Baugur chief banks on burgers, River Island invests as Hut prepares IPO, Next boss backs PM on Europe, Inflation to outpace pay, Disaster for M&S fashion division, Millions ploughed into Net-A-Porter, Beds chain Dreams put up for sale this week, Jessops customers left with £800,000 of gift vouchers, Subway's fight over VAT, Dixons hopes to see growth following its rivals' demise, Marks & Spencer chief faces a less than happy new year.
A surge in demand for shoes and handbags fuelled a jump in sales at LK Bennett last year. Turnover at the chain rose 15% to £94m in the 12 months to July. Part of the increase was due to expansion in America, where it has five stores. Underlying earnings rose 37% to £11m last year. However, after interest on shareholder loan notes and other non-cash charges, the retailer is thought to have delivered a pre-tax loss broadly similar to 2011’s £9.7m.
A giant Asian trading house has pounced on some of Britain’s best-known toiletry brands, including Vosene shampoo and Simple soap. Li & Fung, the £10bn Hong Kong conglomerate, has bought Lornamead, a personal care company based in Surrey. It paid £250m to take control of more than 20 household names including Lypsyl lip balm and Goldspot breath freshener spray.
Giraffe, the family-friendly restaurant chain backed by Luke Johnson, saw takings boom in the run-up to Christmas. Sales jumped 17% in December, helped by the continuing expansion of the business. Stripping out the impact of new sites, the 48-strong chain was 5% ahead of last year. The company’s last set of accounts, for the year to end March 2012, showed profits of £4m on turnover of £40m.
HSBC became Jessops’ lender and controlling shareholder after a rescue restructuring in 2009. Some in the City believe HSBC inadvertently pushed the company over the edge by bringing in a management team that botched crucial relations with its two main suppliers, the Japanese giants Canon and Nikon. David Adams, the former chairman, also accused HSBC of rebuffing a takeover approach last June that could have saved the company. He is understood to have had backing from Lloyds Development Capital.
The man whose name was once connected with retailers including Hamleys, House of Fraser, Oasis, Whistles, Iceland Foods and Whittards, can now add one more British brand name to his long career history. In what is believed to be his first investment in the UK since the collapse of Baugur in early 2009, Jon Asgeir Johannesson has taken a 25pc stake in Muddy Boots. Mr Johannesson has invested in the Worcestershire-based premium burger business founded by husband and wife Roland and Miranda Ballard.
The family behind River Island has invested in The Hut Group as part of a pre-IPO fund-raising designed to boost acquisitions. The Lewis family — which has increased the size of the fashion brand from a wool shop in 1948 in London’s East End to a chain of more than 300 shops — invested in the multi-website retailer as part of what is believed to be a £10m fund-raising. The Hut Group, the websites of which include music site Zavvi.com and nutrition supplements site MyProtein.com, is expected to float on the London Stock Exchange later this year with a value in excess of £300m.
The chief executive of Next, Lord Wolfson, has backed the Prime Minister and said that business should have nothing to fear from a renegotiation of the UK’s relationship with the European Union. In an intervention that will cheer Number 10 which has faced attacks for “threatening” Britain’s influence in the EU, Lord Wolfson said that although the UK should remain part of the EU it had nothing to fear from being in the “slow lane”.
Mail on Sunday
Figures this week are set to show that the headline rate of inflation has climbed to 2.8 per cent, thanks to upward pressure on energy and food costs plus dearer public transport. And economists predict that the rate of increase of the Consumer Prices Index could peak at three per cent or more in the coming months. By the traditional Retail Prices Index measure of inflation, George Buckley, economist with Deutsche Bank, expects December’s figure for annual inflation to have been 3.2 per cent, up from 3.0 per cent in November. Government statisticians last week decided not to change the composition of RPI in a move that would have lowered the rate. Pensioners are among the winners from the decision, as they will continue to see their benefits rise by a higher amount. But retailers, whose business rates are also benchmarked against RPI, are among the losers.
Marks & Spencer is losing market share at its clothing division after a disastrous Christmas when fashion sales nosedived. The chain’s share of the market dropped 0.4 percentage points to 12.1 per cent by volume in the 24 weeks to the end of November, figures released to senior industry sources late last week show. In the same period Primark increased its share by 0.4 per cent to 13.1 per cent and Asda was up 0.3 per cent to 11.3 per cent.
The ever-expanding online fashion retailer Net-A-Porter increased sales by 55 per cent last year, but made a £27million loss after investing heavily in the business. The designer label dealership spent £22.9million setting up new automated distribution centres in Britain and the US and launched a new centre in Hong Kong. It paid £6.6million for Asian online fashion dealer Shouke, which it relaunched in order to break into the huge Chinese market.
Dreams, the bed retailer, will formally go up for grabs this week as advisers send a sale document to interested parties. Accountant Ernst & Young, which has been hired to sell the company by its owner, Exponent, will send out an information memorandum to about 20 private equity firms and possible trade buyers. Mike Clare, who founded the business in the Eighties and sold out to private equity firm Exponent for £200million in 2008, is said to be in the running.
Customers of camera retailer Jessops were struggling to reclaim £800,000 spent on gift vouchers this weekend as staff returned to work to return the remaining stock to suppliers. On Friday, administrators said they were closing the chain’s 187 stores just two days after taking charge. Suppliers are understood to have been anxious about the prospect of their stock being sold at huge discounts.
Subway is to take its fight over VAT on toasted sandwiches to the Court of Appeal. The fast food chain has won the right to appeal over whether toasted sandwiches are ‘hot food’ and subject to VAT. The test case is the latest skirmish over VAT boundaries. Other fast food outlets are taking similar action. Paddy Behan, a VAT expert at tax adviser Behan & Co, said he expected more claims to follow if Subway won. Revenue officials are understood to have said £1billion could be at stake.
Independent on Sunday
The chief executive of Dixons Retail will make good on a promise that the owner of PC World and Currys would capitalise on the demise of Comet with strong trading figures this week. Sebastian James said late last year that the collapse of the 236-strong Comet chain would be "helpful from a market share perspective". Dixons should also benefit from camera chain Jessops being forced into administration last week.
They say 13 is lucky for some. After a miserable Christmas, Marc Bolland, the embattled chief executive of Marks & Spencer, will need more than luck to get through 2013 with his job intact. Things did not get off to a good start last week when leaked news of M&S's poor festive clothing sales forced him to rush out a financial statement late on Wednesday evening. The incident added fuel to rumours that Bolland is facing rebels within his own head office, as well as issues with knitwear and pants.
Don't miss these vital retailer events from the Retail Bulletin:
Multichannel Retailing Summit, 6th February 3103. Click here for programme details.
International Expansion Summit, 26th March 2013. Click here for programme details.
Email this article to a friend
You need to be logged in to use this feature.
Please log in here