Retail round up The Sunday papers
Tax rises drive wine makers out of UK, Sainsburys suffers sales slowdown, M&S investors pile on the pressure, Monsoon awash with profits, New Look revives float plan, DSG megastore moves to see off Best Buy, Panel issues notice over Blacks move, Matalan family tax exile, Next staff to share bonuses
The world's two biggest wine producers are scaling back their investment in the UK following punitive tax increases by the Government. Constellation Brands and Foster's Group – which own brands including Hardys, Lindemans and Penfolds and employ thousands of people in the UK – have accused the Government of "decimating" the UK wine trade with constant tax rises. Both companies have cut UK jobs and have already started to transfer investment to other European countries. Excise duty on wine has increased by 20pc since last March, and further increases are still being discussed by the Government. Troy Christensen, president of the European and Australian arms of Constellation, the world's biggest wine producer, said: "The Government has pushed this way too far. Doing what they are doing may be expedient but it is decimating our industry. We are on our knees. We are not asking for a bail-out, just a break." Research carried out for The Sunday Telegraph shows that while the price of a bottle of wine has increased by 25pc since Labour came to power in 1997, the duty on it has increased by 53.3pc.
Sainsbury’s will this week unveil a dramatic slowdown in sales growth when it releases fourth quarter figures. The grocer is expected to say on Wednesday that like-for-like sales – which strip out the impact of new space in shops – rose by just 1pc over its last quarter, excluding VAT and sales of petrol. This compares with sales growth of 4.2pc over Christmas. Appalling weather, tough comparative figures and more cautious consumers are partly to blame, analysts said. They also pointed to price deflation in fresh foods. However the poor figure will lead analysts to question whether Sainsbury's less aggressive recent promotional stance compared with rivals Tesco and Asda has been the correct tactic by the chief executive, Justin King.
Shareholders in Marks & Spencer are calling for a boardroom clear-out after a fresh row over its chairman’s pay.Investors were furious last week after M&S said that Sir Stuart Rose would become the best-paid chairman in the FTSE 100. This was after he agreed to prune his salary by 25% to £875,000 when he steps back from his dual role as chairman and chief executive. The salary is £100,000 less than Marc Bolland, its incoming chief executive, will be paid. The row is the latest showdown between M&S and its investors, who have raised concerns about corporate governance and Rose’s influence. Bolland’s £15m pay package has also drawn fire from investors. One institutional investor told The Sunday Times: “There needs to be a boardroom clear-out. This latest debacle further underlines the need for a new independent chairman, but there also needs to be a bigger overhaul of the board.”
Monsoon has emerged as one of the surprise winners of the recession, delivering an eight-fold rise in profits. The company, founded 38 years ago by Peter Simon, a former market trader, has been boosted by strong performances from its overseas stores. Now Monsoon plans to open 140 stores in the next 12 months. It already has more than 1,000 — 425 of which are in the UK. The rest are in more than 50 overseas markets. Following its recent arrival in Hong Kong, the retailer is expanding in China and is poised to open in North America and Latin America this year.
New Look is preparing to resurrect its £1.7 billion stock market flotation just one month after it was controversially pulled. Directors of the clothing retailer meet on Tuesday to discuss a revival of the listing, which could come as early as June. New Look scrapped plans to join the stock exchange last month, blaming market volatility. It was the second time in three years the group had abandoned a float. City sources said: “The listing was always postponed not cancelled. There has been a lot of soul searching about what went wrong, but the company has delivered very strong trading performance and has a very confident outlook, which gives it a good excuse to speak to investors about a float again.”
Financial Times Sat/Sun
DSG International is to accelerate the development of its biggest stores as it seeks to take on Best Buy, the US electricals giant that is due to arrive in the UK next month. John Browett, chief executive of DSG, said he had identified 70 potential locations for megastores, against previous expectations of 50. The megastores, most of which will contain both the PC World and Currys formats, will be between 35,000 and 55,000 sq ft. The company’s current dual-format stores are between 15,000 and 35,000 sq ft. The company plans to have 33 megastores open for Christmas, when Best Buy is expected to have a number of stores open in the UK. DSG currently has eight megastores.
The Takeover Panel has issued a "put up or shut up" notice to Sports Direct, following an indicative offer it made on Wednesday for Blacks Leisure. Sports Direct, the retailer founded by Mike Ashley, now has until April 1 to formalise its offer for the outdoor wear chain. The Panel said all parties had agreed to the deadline. Blacks Leisure has rejected as "wholly inadequate" the bid approach from Sports Direct, which values the group's equity at £26.4m. It reiterated its belief that a separate fundraising would be in the best interests of its shareholders. The 62p a share offer received by Blacks represents a 3.3 per cent premium to the closing price of Blacks shares on Tuesday. Sports Direct said it was disappointed by Blacks' decision and that the bid was calculated based on the share price the day before March 2, when it originally announced that it was thinking about making an offer. It said that would mean it was paying a premium of 21 per cent. Blacks' share price has risen 17 per cent in the intervening period.
Mail on Sunday
The children of Matalan founder John Hargreaves are expected to follow in their father's footsteps by moving their official residence overseas ahead of a £250million windfall dividend. Hargreaves' favoured adviser, PricewaterhouseCoopers, is said to be looking at options for Jamey, Jason and Maxine ahead of the payment. If successful, the plans will reduce the tax burden on the children, expected to be the prime beneficiaries of the deal.
Employees at Next are expected to get a lift this week when the clothes retailer prepares to pay an estimated £20 million in bonuses as it reports annual profits. The chain’s performance has been better than expected as consumers pending during the second half of its financial year strengthened. Staff are in line for an average bonus of £500.
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