Retail round up the Sunday Papers
Discount retailer B&M in line for sale, New Look profits grow despite gloom, US equity backs Findus refinancing, Japan Tobacco to demand OFT refund, Tesco stacks up another loss at Fresh & Easy, Mary Portas turns on Cameron for stalled High Street rescue plan, Kate helps sales at fashion label McQueen as they hit £41m, Shock as Tesco's profits to fall for the first time in 20 years, UK mobile phone users will get superfast internet connection 4G 'in three weeks', William Hill falls at first hurdle with £350m offer, Hunter sales step up, Primark tunes in to CDs
Britain's fastest growing retailer – B&M – has been put up for sale for £850m in a move that could catapult the three brothers behind the company to become one of the richest families in the UK. Simon, Bobby and Robin Arora bought B&M, a discount retailer, in 2005 when it was still a loss making business with less than 20 struggling stores. Seven years on, the company has £1bn of sales, 290 stores and 2m customers a week. The brothers, led by ex-Barclays and 3i executive, Simon, have hired Rothschild to look at selling a significant stake in the company, which has grown both sales and profits at around 25pc a year, for the last four years.
New Look has shrugged off the economic gloom to push profits up 30pc. In a marked shift from difficulties in the previous year, it has pressed forward with new store openings, cut its cost base, and changed its merchandising strategy. In a marked shift from difficulties in the previous year, it has pressed forward with new store openings, cut its cost base, and changed its merchandising strategy. In the year to August 2012, New Look’s like-for like earnings before interest, tax, depreciation, and amortisation rose to £61.1m from just £47m over the same period last year.
A pair of American private equity houses have backed the £220m refinancing of Findus, helping to secure the future of the frozen food manufacturer by cutting its debt in half. The Telegraph has learnt that Northwestern Mutual Capital, part of the US insurer of the same name, has joined the investor group led by Lion Capital which this weekend completed the debt restructuring of the company. The £220m restructuring brings an end to nine months of uncertainty for the company and its 6,000 employees.
Cigarettes giant Japan Tobacco International is to pursue the Office of Fair Trading for a £50m refund relating to allegations that it was involved in a price-fixing cartel. In 2010 the OFT fined a dozen tobacco companies and retailers a total of £225m for “unlawful practices” and inflating the price of cigarettes. Gallaher, which was bought by JTI for £9.4bn in 2007, was among several of the accused companies which chose to pay the fine (in their case £50.3m) to avoid a costly and lengthy legal process. But six of the companies, including Imperial Tobacco, Asda, and the Co-operative Group, chose to appeal against the penalty, which was a record for the OFT at the time. Imperial Tobacco had received the largest individual fine, of £112.3m.
Independent on Sunday
Tesco's chief executive is likely to come under renewed pressure from investors this week over its US business, Fresh & Easy, which is set to post another painful half-year loss. Alongside the group's first profit fall in nearly 20 years, Philip Clarke – who took the helm in March 2011 – will on Wednesday have to defend tumbling sales in South Korea, which is its biggest market outside the UK. However, Mr Clarke will be able to point to improved UK trading in Tesco's second quarter, which accounts for more than 60 per cent of group sales and profits. This follows Tesco's unveiling, in April, of a £1bn investment to turn around its stuttering British business by recruiting 8,000 staff, introducing 1,800 new products and sprucing up its stores to give them a "warmer feel".
Mail on Sunday
Mary Portas is pressing David Cameron to pursue her vision for reviving town centres ‘as a matter of urgency’ amid fears that Government support has evaporated. She will write to the Prime Minister this week asking him to speed up the implementation of her progamme to revive the High Street as it has emerged that she told a closed industry conference she fears her review may have been a Government ‘PR stunt’. It also coincides with a book published today by veteran retailer Bill Grimsey, former boss at food store Iceland, which issues a stark warning that it may be a waste of time trying to save shopping in its traditional form.
Sales at luxury fashion label Alexander McQueen have soared 27 per cent to £41million following a boost from its work for the Duchess of Cambridge. The brand’s creative director, Sarah Burton, designed the dresses of the bride and her sister for last year’s Royal Wedding, which has helped it stretch its lead over fellow British fashion label Stella McCartney, its stablemate at global luxury goods group PPR. The figures for 2011, published yesterday at Companies House and which do not include some directly owned stores in Britain, the US and Japan, also show profit jumped 37 per cent to £5million.
The scale of the challenge facing Tesco boss Phil Clarke will be laid bare on Wednesday when he will be forced to announce the first profits drop for almost two decades. He is expected to report first-half profits down by 12 per cent to £1.6billion after piling money into discounts and investing in stores. The City hopes the slump will be the low point for the firm. But analyst Richard Cathcart at stockbroker Espirito Santo said promises from management can only be validated by a turnround in UK performance. However, discounting from rivals shows no sign of relaxing. Last year became one of the harshest winters yet for Britain’s grocers as price wars reached unprecedented levels. This is likely to continue, making Clarke’s job even harder.
Superfast mobile internet connection – or 4G – suitable for Apple’s latest iPhone 5 is set to be available next month from Everything Everywhere (EE), owner of T-Mobile and Orange. It is also expected that the auction of 4G spectrum – radio frequencies that allow superfast connection to the internet – will be brought forward, allowing rival firms to offer 4G sooner.
The Sunday Times
Sportingbet, the online gambling group, has rejected a £350m bid from William Hill. In the past few days, the board has unanimously turned down a 52½p per share offer from Britain’s biggest bookmaker, which is bidding in partnership with Gaming VC, an AIM-listed online gambling company. The offer, submitted by letter, comprised 45p in cash from William Hill and 7½p in shares in Gaming VC.
The maker of the Queen’s favourite wellies enjoyed soaring sales last year. Hunter, which also counts supermodel Kate Moss among its celebrity fans, saw turnover rise 38% to £78m for the year to December.The company has not yet disclosed how its earnings fared, but it is estimated that operating profits topped £20m, compared with £16m in 2010.
Primark is moving into the music business. The discount clothing chain is experimenting with selling CDs in a small number of its stores. It is initially selling albums produced by artists signed to Universal, such as Rihanna. Record labels have been trying to boost their presence on the high street to capture sales to casual music buyers, following the collapse of Woolworths and the travails of HMV. Primark said it believed “fashion and music have always been synonymous”.
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