Sunday Retail News Roundup
BHS owner eyes flagship sell-off, Bolland boost as M&S ekes profits from shrinking sales, Knickers queen slips on jeans, I like Britain so much that I cant wait to buy more of it, Marks & Spencers struggling international business, Morrisons to post another drop in sales despite price cuts, Clothing sales fall leaves M&S revival looking a little ragged.
BHS is weighing up plans to raise as much as £89m by sub-letting and then selling its flagship store. The struggling department store group, which was sold for £1 by Sir Philip Green in March, has hired property agency Cushman & Wakefield to explore options for the prime site on Oxford Street, central London. According to a brochure circulated to potential buyers, the leasehold would be worth between £81.3m and £88.8m if the store was split into separate units and sub-let to other retailers. However, property sources said the most likely buyer was Abu Dhabi’s royal family, which already owns the freehold and is unlikely to pay that much. It is thought to have offered Green £25m for the site before he sold BHS.
Marks & Spencer is set to woo the City with another boost to profitability this week, even as clothing and homeware sales continue to slide. The high street bellwether is expected to reveal an improvement of more than two percentage points in profit margins on general merchandise — the fruits of a drive to streamline its sourcing in Asia overseen by Mark and Neal Lindsey, two brothers based in Hong Kong. The Lindseys, who had previously helped Next make its supply chain more efficient, are rewarded for the increased profitability they deliver. They are now said to be the highest-paid workers at M&S — making even more than Marc Bolland, the chief executive, who earned £2.1m last year.
THE “knickers queen” who quit Marks & Spencer after just three months has bought Fiorucci, the famous Italian fashion label credited with inventing skinny jeans. Janie Schaffer and her business partner, former husband Stephen, took control of the brand in June after striking a deal with its owner, the Japanese trading house Itochu. They plan to revive it in the new year, reinterpreting the colourful stretch jeans and cherub T-shirts that made it successful in the 1970s and 1980s for the modern era.
First House of Fraser, now Hamleys — does the cigar-loving tycoon from Nanjing, Yuan Yafei, have a longer British shopping list? And sufficient funds?. Yuan Yafei House of Fraser’s Chinese owner is surrounded by his personal assistant, a translator and Frank Slevin, a former senior banker at HSBC who is now House of Fraser’s chairman. The tycoon’s love of tobacco is legendary. His £480m takeover of the department store last year was clinched during a series of pungent late-night negotiations with its bosses and shareholders in a smoking suite at Claridge’s. through Sanpower, a private Chinese conglomerate, he oversees a sprawling empire ranging from high-end department stores to healthcare services, magazines and property. He is about to add another British trophy. During Xi’s visit, C.banner, a Hong Kong-listed shoe retailer run by one of Yuan’s relatives, announced it was in advanced talks to buy the historic toy shop Hamleys from its French owner.
Mail on Sunday.
Marks & Spencer is expected this week to say international profit fell by a third in the first half of its financial year, as it cut back on overseas expansion plans and closed stores in Eastern Europe. Strategy has been pinned on overseas growth, food expansion, online sales and improving clothing gross margins. Marks & Spencer’s broker Citigroup said it expected the company to announce flat first-half profit at £270 million on Wednesday. Clothing industry market share figures published by Kantar also show that the company lost ground to rivals such as Next, Debenhams and Primark in the three months to the end of September. Improvements at the clothing business are on track and profits at the UK division are expected to rise.
Morrisons has endured another quarter of falling sales, highlighting the scale of the task facing the new management heading into the crucial Christmas months. Analysts have forecast a fall of more than 2pc in Morrisons’ third quarter like-for-like revenues, following a 2.7pc drop in the first half of the year, in a sign that the supermarket is yet to halt the deterioration. Shore Capital, the firm’s house broker, has forecast a 2.25pc drop in same-store sales ahead of Morrisons’ update on Thursday, while Jefferies has forecast a 2.1pc fall, “impacted by a sharp reduction in vouchering and high levels of deflation”, despite gaining some traction online.
Marks and Spencer is due to report another slump in clothing sales, heaping renewed pressure on chief executive Marc Bolland. The high street chain is expected to announce a 1.2pc fall in sales of general merchandise – the bulk of which is clothing – at its half-year results this week in the latest sign that Mr Bolland’s attempted restoration of its troubled womenswear arm is far from certain. Analysts at Nomura are even more bearish, predicting a 2pc decline in general merchandise sales after analysing market share figures from Kantar that showed a back-to-school rush has not compensated for a £27m decline in sales during August.
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