Sunday Retail News Roundup
Ailing Debenhams woos ex-Kingfisher chief for chairman, M&S loyalty card chief fired over racism claim, Shoe queen flees Manhattan HQ, Jobs under threat Brantano shoes, Store wars hot up Aldi to open 80 new supermarkets to fight Big Four, Duchy Original deal boosts Prince of Wales' charities by £3m, Next and M&S first victims of retails toughest year, Holland & Barrett gears up £1bn sale, Jaeger sell-off pulled bids fail to match asking price, Sports Direct property boss is ex-nightclub promoter.
Debenhams is braced for another boardroom shake-up that could see its chairman replaced with the former boss of Kingfisher. Sir Ian Cheshire, who stepped down a year ago as chief executive of the DIY conglomerate behind B&Q and Screwfix, is in talks to succeed Nigel Northridge at the helm of the struggling department store chain. Debenhams has been under pressure from some of its biggest shareholders over its lacklustre performance. Michael Sharp, the chief executive, has already announced his intention to leave. Debenhams could use its annual meeting on January 14 to confirm the departure of Northridge, who made his name selling the cigarette and cigar maker Gallaher Group to Japan Tobacco in 2007. Sources stressed that nothing had yet been agreed with Cheshire. Since leaving Kingfisher, the 56-year-old has repeatedly said he would prefer to take another executive role rather than a chairmanship. Whether he becomes executive or non-executive chairman of Debenhams could prove a sticking point.
Marks & Spencer has fired the head of its new loyalty scheme for allegedly using racist language. Suzanna Broer, a rising star who joined M&S from the Dutch retailer Albert Heijn in 2014, was sacked on the grounds of gross misconduct in mid-November less than a month after the Sparks reward card was launched with great fanfare. Although she was tipped for the top, M&S boasted of her inclusion in the list of the top female bosses under 35, her departure was not announced because she did not sit on the board. She has been replaced by Nathan Ansell, previously head of marketing for M&S food. The incident is another blow to Marc Bolland, M&S’s boss, as the retailer prepares to reveal on Thursday a drop of up to 5% in clothing sales over the Christmas period — although an insider emphasised that Broer’s ousting was not related to the weak trading.
Tamara Mellon’s fashion company is to quit its chic Madison Avenue headquarters as part of a plan to emerge from bankruptcy in America. Mellon rose to fame at Jimmy Choo, which she helped to build into a global fashion brand before selling out four years ago. She set up a new company, named after her, two years ago after securing backing from a stable of wealthy individuals. It set up shop in Manhattan, above the famous Barneys luxury fashion store. But sales did not meet the original projections and the company filed for Chapter 11 bankruptcy in Delaware on December 2, providing protection from its creditors while it prepares a new financial plan. The original backers are likely to lose their whole investment. The company plans to come out of Chapter 11 with new funds from NEA, a private equity firm, and Mellon herself. Last week it told the Delaware court handling the bankruptcy that it would “reject” the lease on the Madison Avenue offices. Chapter 11 gives businesses the power to get out of contracts with the court’s approval. The company said the offices were too big and the landlord had the right to change them to residential use in a few years, making it hard for Tamara Mellon to find a replacement tenant. The deadline for objections to the plan to come out of Chapter 11 is next week.
Nearly 800 jobs are at risk as the new owner of Brantano reviews the future of the out-of-town shoe retailer. Alteri, a turnaround fund backed by the American private equity firm Apollo Global Management, bought Brantano and Jones Bootmaker from the Dutch company Macintosh Retail Group for £12m last October. Brantano has 140 stores and 60 concessions in Britain. It lost £4.6m before tax last year, according to the latest accounts filed at Companies House, although sales increased by 6% to £100m and there was strong growth in online orders. Alteri, run by former EY partner Gavin George, is understood to be working with accountants PwC to explore whether Brantano needs to be restructured. PwC advised Alteri on the original deal last year. A source said that no decisions had yet been taken. While administration is an option, it would allow Brantano to shed some liabilities, it is far from certain that Alteri will choose that route. Jones Bootmaker is not thought to be affected. Since it was set up in 2014, Alteri has struck a number of deals, including providing a three-year loan to the struggling suits chain Austin Reed. It made a bid for BHS in late 2014, but was rebuffed by Sir Philip Green, who later sold the department store to a little-known consortium called Retail Acquisitions. Alteri declined to comment.
Mail on Sunday.
Britain's biggest supermarket chains are facing another dire year at the hands of the German retail invaders after Aldi unveiled plans to open a record number of new stores. Aldi will open 80 branches this year, 23 per cent more than last year and its fastest ever rate of growth in the UK. The plan will take the £6billion UK chain to more than 700 stores and debunks any suggestion that the pace of Aldi’s growth here may slow. Jonathan Neale, joint managing director of buying at Aldi UK, said: ‘This has been another excellent year for Aldi. ‘We’re seeing a permanent, structural change in the shopping habits of UK consumers. They now know they can get all the products they want at significantly cheaper prices than at other supermarkets.’ Two months ago its German rival Lidl revealed plans to accelerate growth this year with the introduction of up to 50 new stores a year. Previously it had hoped to open up to 40 branches.Shore Capital analyst Clive Black said the German duo were experiencing ‘a second wind’ in their growth in Britain as they make inroads against the Big Four – Tesco, Sainsbury’s, Asda and Morrisons.
Charities supported by the Prince of Wales were boosted by £3million last year thanks to sales of Duchy Originals products. More than 300 organic products are sold under the branding, which was launched by Prince Charles in 1992, so that every product ‘is good, does good and tastes good’. For the past five years Duchy Originals has partnered with Waitrose, giving the supermarket the exclusive licence to make, promote and sell its products in its UK stores as well as via third parties and online. Company accounts for Duchy Originals for the year ending March 31, 2015, show that Waitrose paid it £3.2million for the privilege. After administrative expenses were taken out, this meant the supermarket contributed £3million to the Prince of Wales’s Charitable Foundation, which backs initiatives supporting young people, the environment, the arts and rural affairs, such as The Prince’s Trust and the Soil Association.
The fallout from a punishing winter for Britain’s high street will be laid bare this week when retail stalwarts Marks & Spencer and Next are expected to report tough festive trading. Retailers have had to battle with a potent mix of unseasonably mild temperatures; heavy rainstorms; Black Friday discounting; and the terrorist attacks in Paris. All have been blamed for dampening shoppers’ enthusiasm. Britons left their Christmas shopping until the latest point since records began in 1998, according to Ipsos Retail, with footfall only peaking in the three days leading up to Christmas. Despite the late burst of activity, high street visitors were still 1.8pc lower than the same week last year. In what has already been called the toughest year ever for retail, because of an intensely competitive landscape, this Christmas is expected to put a wide gulf between the winners and losers. The City expects Marks & Spencer, which was running heavy promotions in the days leading up to 25 December, to be the usual tale of two halves.
Holland & Barrett, one of the UK’s biggest retailers, is gearing up for a £1bn sale this year on the back of a surge in sales and profits. Private equity firm Carlyle is planning to sell the health food and vitamins chain, which now has over 1,071 stores across the world, as the sixth anniversary of its ownership approaches. A sale likely in the near term and bankers are expected to be invited to pitch to oversee an aauction shortly. A decision on whether to offload Holland & Barrett expected before the summer, although Carlyle may instead be tempted to hold on to the business as its growth plans began to pay off. This year, profits jumped 12pc to £146m while sales spiked by the same number to £573.5m amid rocketing global demand for healthy food and increasing awareness around allergies. The strong numbers have come on the back of impressive domestic and overseas expansion. Holland & Barrett has shops in 11 different countries including Kuwait, Malta, Singapore and China, where it has 34 franchise stores. The health food chain also has two shops on Tmall, the online shopping channel owned by Chinese internet giant Alibaba. Holland & Barrett is also in talks with a partner in India ahead of plans to open its first franchise store in the region next year. Peter Aldis, Holland & Barrett’s chief executive, has also set his sights on Scandinavia after opening one shop in Sweden last year. Mr Aldis said the retailer has the potential to reach 500 to 600 stores across Scandinavia and would likely pursue acquisitions to boost numbers. Performance at the chain’s UK business has been particularly strong with sales growing 10.1pc on a like-for-like basis against a wider sector growth of 0.8pc, according to the British Retail Consortium. City sources said the retailer’s international plans would make it alluring to both rivals and other investors. While private equity interest is expected, Holland & Barrett could also provide growth opportunities to a larger retailer struggling with growth. It is understood that Tesco once looked at the business, but chief executive Dave Lewis is now focused reviving its core operations rather than following the ill-fated path of predecessor Philip Clarke who tried to boost its the supermarket’s prospects by expanding into restaurants, coffee chains, and other markets. Mr Aldis, who has run Holland & Barrett for eight years, told the Sunday Telegraph that there is no sale process currently but believed Carlyle was “exploring all options”.
Offers for Jaeger were less than owner Better Capital was prepared to acccept, and the fashion firm will stay under Better’s control. The owner of the fashion label Jaeger has shelved attempts to sell the struggling chain after bids fell short of the asking price. Despite receiving several offers for a business that has nearly halved in value, Better Capital has unexpectedly decided to hold onto Jaeger and pump more money into it. The move may surprise the fund’s investors, who were recently told Jaeger was now worth just £37m, despite Better ploughing £63m into the chain since rescuing it in April 2012. Founded in 1884, and for much of its life at the forefront of high street fashion, Jaeger has been beset by a spell of poor trading stretching back several years. Figures released at Companies House last month show that although sales rose 6pc last year, pre-tax losses came in at £15.4m, only a slight improvement on the previous year. Better, run by Jon Moulton, one of Britain’s best known venture capitalists, put the retailer on the block last year, reportedly after several unsolicited takeover approaches. It is understood a mini-auction was held in the run up to Christmas, which led to a small handful of bids around the £35m mark, but with Better holding out for more than £40m, it has decided to stand by the business and provide further funds. City sources said Better had indicated it was prepared to hold on to Jaeger for at least another two years. Chief executive Colin Henry stepped down in September after failing to revive Jaeger’s fortunes. He departed less than a year after chairman Peter Williams, a former boss of Selfridges, left only six months after being appointed. Next week Jaeger will vacate its flagship Regent Street store in Central London and move to a smaller store on the King’s Road in Chelsea.
Michael Murray, the boyfriend of Mike Ashley's daugher Anna, also owns a £10.7m property in Belgravia, of which Mr Ashley is the lender. The 26-year-old boyfriend of Mike Ashley’s daughter, selected by the founder of Sports Direct to run the property arm of his empire, was promoting student nights and running festivals until recently. Michael Murray, who shares a home in Chelsea with one of Mr Ashley’s daughters, Anna, has been made a property director at Sports Direct. He has also been appointed as the director responsible for Mr Ashley’s interests in Newcastle United’s stadium and its property development opportunities, as well as Mash Services, which has links to the tycoon’s holding company, Mash Beta. However, Mr Murray, who has been put in charge of a £250m investment fund and the roll-out of Sports Direct’s new fitness superstore brand, has not been involved in commercial property development before. When his appointment at Sports Direct was first listed, he was cited as being a former director of Central London Properties, a company set up in 2014 with only two shares and Mr Murray listed as the sole director. It has since emerged that until last summer, Mr Murray was organising and promoting student events through a company called Entourage Projects, which he set up with Toby Mullins, a friend from Reading University. As well as handing Mr Murray a top role at the £3.5bn FTSE 100 company, Mr Ashley has also provided a loan for a £10.7m property in Belgravia, London which Mr Murray now owns, according to Land Registry documents. Mr Ashley’s network has previously relied on long-standing relationships. Dave Forsey, Sports Direct’s chief executive, is a company veteran of three decades’ standing, having joined the business two years after it was founded. Mr Ashley has also worked with his brother, John Ashley, a former computer science graduate, who is Sports Direct’s IT director. Mike Ashley has a 26-year-old son, Oliver, who appears to have no interest in entering the family business as yet and runs an online music station, Radar Radio, based in Clerkenwell, North London.
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