Retail round up the Sunday papers
Tesco faces new blow with £3bn hole in pensions, City Link to start lay-offs, Sainsbury's squeezes builders on payments, JJB alerted to Ronnie years ago, Tesco takes on Aldi with discount trial, 10,000 retailers launch in boomtime for Britain, Serious Fraud Office targets JJB boss, Fat Face bosses get fatter bonuses, Harold Tillman in bid to buy back Jaegar fashion chain, Cuts threaten survival of supermarket suppliers, Sainsbury's beseiged by short-sellers in 2014
Tesco faces the threat of a new blow to its finances next year when it is likely to be forced to plug a multibillion-pound hole in its pension scheme. The company will have to put as much as £300m of extra cash into the fund every year, analysis suggests, further denting its efforts to restore profitability. The value of Tesco’s pension fund and its projected liabilities are currently being assessed, and the result is due by next June at the latest. But the company’s last annual report suggested that it had a deficit of almost £3.2bn: its assets were valued at £8.1bn, and liabilities were put at £11.3bn.
Thousands of workers at City Link will be made redundant this week as hopes fade for finding a buyer for the stricken delivery company. Better Capital, a private equity firm run by Jon Moulton, bought City Link from Rentokil for £1 last year. After ploughing £40m into the chronic loss-maker, Better Capital appointed EY as administrator on Christmas Eve. The firm’s creditors also face being wiped out.
J Sainsbury has been accused of “blatant and unfair dealing” after delaying payment to the contractors that build and refit its stores. Britain’s third-biggest supermarket wrote to contractors through the law firm Dentons last Monday telling them of the change. Under the regime, the builders will have to wait 82 days for payment, up from 30 days.
JJB Sports was warned about former chief executive Chris Ronnie’s behaviour years before he was jailed for a £1m fraud, according to a letter seen by The Sunday Times. Ronnie, 52, who ran JJB from 2007 to 2009, was jailed for four years this month for accepting backhanders from suppliers to the sportswear chain. He received three separate six-figure cash payments, buying property in Florida. JJB entered administration two years ago. Roger Lane-Smith, JJB’s former chairman, said he was not sure he had seen the letter. “As to the whole process contravening the standards of a public company, I simply don’t accept that,” he said.
Tesco is testing a discount format in its One Stop chain, suggesting Britain’s biggest grocer is looking for new ways to hit back at Aldi and Lidl. One Stop, owned by Tesco since 2003, has turned three of its 780 stores into discount outlets with limited ranges and prices to match the German rivals. The stores — at Solihull and Burntwood in the Midlands and Northern Moor in Manchester — have been trading in a discount style for seven weeks.
Mail on Sunday
An extra 10,000 retail firms have opened for business this month compared to the same time last year – the biggest jump since the financial crash six years ago. It is one of the clearest signs yet that entrepreneurs are leading an economic revival. 'Retail is a big indicator of confidence,' said David Knowles, marketing director of Creditsafe, which supplied the exclusive research.
Jailed sportswear boss Chris Ronnie faces an even bleaker New Year behind bars since the Serious Fraud Office has begun confiscation proceedings to forensically examine his career over many years. The executive was convicted of a 'very greedy fraud' last month and jailed before Christmas for four years, after a jury unanimously found him guilty of taking £1 million in backhanders, then trying to cover up his crime. But though the jail door has slammed behind him, his troubles are far from over. The SFO has now launched a new action against Ronnie and is demanding his lawyers hand over a list of all his assets and details of his financial transactions by January 16. The investigators are acting under the Proceeds of Crime Act, which gives them extra powers in cases like his.
Stuart Rose, the former Marks & Spencer boss, and other directors at Fat Face have seen the value of their shares in the retailer rocket after a surge in profits last year. The shares held by directors rose by £5.1 million in the year to May 31, 2014, more than three times the increase of the year before. The details of the directors’ shareholdings were filed at Companies House and include other board members, such as Fat Face’s chief executive Anthony Thompson, another former M&S director.
Rag trade veteran Harold Tillman has made an approach to buy back the Jaeger store chain and fashion label as its private equity owner Better Capital reels from the collapse of one of its other investments. Tillman contacted Better Capital founder Jon Moulton two weeks ago. His corporate adviser Castle Harbour has since written with a formal request for a meeting. The former chairman of the British Fashion Council ran the Jaeger business, which comprises about 50 stores, for a decade until a takeover by Better Capital in 2012.
One of the world’s largest trade credit insurers has warned of a “perfect storm” for supermarket suppliers that could trigger widespread failures among small and medium-sized firms. Atradius claims suppliers to the “Big Four” risk being delisted and having their payment terms extended as the supermarkets shrink the number of products they sell and try to ease the pressure on their cash flow. Marc Henstridge, the director of risk services at Atradius, told The Sunday Telegraph: “Many of these suppliers are in difficulties to begin with. Unless banks suddenly have an appetite to support struggling businesses in the food sector then, yes, there will be fallout. There will be failures.”
J Sainsbury has been besieged by short-sellers this year as hedge funds bet the supermarket group will be hit by the escalating price war in the grocery industry. Shares in the company have seen the most sustained shorting activity in 2014 of any business listed in the FTSE 100 and FTSE 250, according to data compiled by Markit. There were 22 weeks this year in which the short interest in Sainsbury’s stock hit a fresh annual high as funds steadily increased their positions against the grocer, Markit said. The proportion of shares out on loan peaked at a record 18.4pc at the end of October.
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