Retail round up Â– The Sunday Papers
Tesco goes to the movies, Office gains at expense of rivals, Morrisons to decide on chief executive, New Look board to consider sale or float, House of Fraser parent company making lossses
First it was groceries, then banking. Now Tesco has emerged as an unlikely new player in the British film industry. Britain’s biggest retailer has teamed up with Amber Entertainment to launch a multi-million-pound production arm that will make films of books by bestselling authors. The first release will be called Paris Connections, based on a Jackie Collins thriller. It is being shot on location in Paris next month. The film, about an investigative journalist who tries to uncover the truth behind a series of murders of size zero models, will go straight to DVD.
Office, the chain of shoe shops owned by Sir Tom Hunter, is set to deliver a 70% rise in underlying profit to £17million in the year to January 31. It capitalized on rivals going out of business to deliver stellar growth. Sales in the six weeks to January 4 climbed 30% to £28million. Like-for-like sales rose 19%.
Wm Morrison will hold a board meeting today to decide on its new chief executive. The group will choose between Richard Pennycook, its highly regarded finance director, and two candidates from European retailers.
Financial Times Sat / Sun
The board of New Look is poised to meet next week to consider whether to press ahead with a £1.8bn ($2.9bn) listing of the fashion retailer. The board is expected to consider all its options, including an initial public offering, or a sale, given recent private equity interest in the group. Tesco veteran John Gildersleeve took up his post as chairman of New Look last week, while the retailer recently revealed strong Christmas trading figures, making next week’s board meeting an ideal time to take stock. Last year, New Look appointed JPMorgan Cazenove, Deutsche Bank and Credit Suisse to advise it on a float. Sentiment has since turned against the retail sector, amid concerns over the outlook for consumer spending this year in the face of tax rises and cuts to public sector employment. New Look also has about £1bn of net debt.
The Mail on Sunday
The parent company of House of Fraser is making significant losses, according to the latest accounts. Highland Group Holdings lost £61.5 million in the year to January 24, 2009 compared with a loss of £19.6 million the previous year. The bigger loss was blamed on a charge of £38.3 million due to a property revaluation. Interest on debt also hit the business. Several stores have since been sold and leased back.
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