Sunday Retail News Roundup
Green to pump millions Topshop pension, Green doubles pension payout, Aldi UK most British supermarket, Turnaround king in frame M&S chairman, Thomas Cook chief crackdown on cowboy claims firms, Morrisons profits jump, John Lewis staff bonus scheme, Market awaits Restaurant Group recipe.
Sir Philip Green is close to a second big deal on pensions with a payment plan to address Arcadia Group empire deficit. He is in the final stages of agreeing a recovery plan with the Pensions Regulator and trustees over the shortfall in schemes run by Arcadia, parent group of Topshop. Arcadia’s accounts for the year to August 2015 listed a pension deficit of £189.6m, although a triennial revaluation process that began in September is expected to put the shortfall at about £500m. Arcadia pays £24.3m a year into its pension funds and is believed to be close to signing off on a “material” increase in contributions. Annual payments would rise to up to £40m. A deal on the Arcadia pension would give Green breathing space from the regulator until the next triennial revaluation in 2019. Arcadia has deteriorating trading and big pension deficit. Like-for-like Topshop sales fell by almost 11% over Christmas, in-store sales declining by 14%. Arcadia sales fell 6.5% overall. The group is understood to be on course to make underlying earnings of about £140m this year, down from its original target of £175m, most of the drop attributable to Topshop. Arcadia has closed more than 600 stores since 2012, with its high street market share shrinking by 25%.
Mail on Sunday.
Sir Philip Green’s Arcadia Group has struck a deal to pay tens of millions of pounds into its pension fund to help plug a near £200 million deficit. The news may help fend off a fresh barrage of attacks on the billionaire over Arcadia, just days after he settled a long-running dispute over the BHS pensions black hole. MPs had been preparing a fresh broadside at Green. Arcadia, wholly owned by Green’s family, has doubled payment into the scheme from £25 million a year to £50 million. The group has been in the cross-hairs of MPs investigating BHS, and was cited as an example of an unaccountable private company in a recent report by the Work and Pensions Committee, chaired by Green’s chief tormentor Frank Field. Arcadia’s scheme has 11,000 members, including staff at TopShop, Dorothy Perkins and Miss Selfridge. Because Arcadia is still a trading company the deficit did not pose the immediate threat to pensioners that the deficit at BHS did. The BHS debacle focused public attention on the state of pensions across Green’s retail empire.
How does the boss of German grocery chain Aldi plan to cope with Brexit? Simple: buy British. Matthew Barnes, chief of Aldi UK, hopes to cast off the German tag altogether. Aldi UK, he claims, is the most British supermarket on the high street, seventy-seven per cent of sales through tills are British products, up from a quarter a decade ago. The Big Four, notably the traditionally low-priced Asda, continue to face the dizzying effects of Aldi’s relentless focus on quality and price. Aldi buyers focus their efforts and volumes on 2,500 product variants, including just 70 brands, within their 1,200 square metre stores. The product range could be 20 times as large in a hypermarket. Aldi chain rarely discounts, preferring everyday low prices, contracts with suppliers tend to be designed around long-term relationships even on products like fresh fruit where other retail corporations buy seasonally. Aldi’s sales rose 12.4 per cent in the 12 weeks to January 29. The latest surge saw Aldi finally seize the position as fifth largest food retailer in January, overtaking the Co-op. It is now behind only Tesco, the UK’s largest grocer, Sainsbury’s, Asda and Morrisons.
Former ITV chairman Archie Norman has been approached to be the next boss of Marks & Spencer in a move predicted to create ‘the perfect match’. M&S is understood to be aiming to replace retiring chairman Robert Swannell as early as the annual shareholder meeting in July. Norman is chairman of Lazard and is credited alongside Allan Leighton with turning around supermarket Asda from near bankruptcy in the 1990s. Other candidates for the role include outgoing BBC Trust chair Rona Fairhead.
Thomas Cook chief executive Peter Fankhauser, boss of one of Britain's biggest travel companies calls on the Government to clamp down on cowboy claims firms which coach tourists to lie about holiday illnesses to win compensation. Unscrupulous claims management companies moved into the holiday sickness market after Ministers acted to curb bogus whiplash cases. Tourists who have been on all-inclusive breaks are increasingly claiming they picked up food poisoning bugs while abroad, sometimes years after their visits. Thousands of these false claims, which can be worth up to £20,000 for a family of four, are costing the industry millions of pounds and operators warn they will force up the price of holidays. ABTA says some operators have reported 700 per cent increases in the number of fake illness claims in the past two years.
Morrisons' turnaround will gather pace this week as it posts the first jump in profits for six years and strengthens ties with Amazon. The City is hoping for a 54pc jump in underlying pre-tax profits to £335m as the supermarket chain plans to roll out Amazon lockers across its estate. Morrisons is expected to say the bright yellow lockers, for shoppers to pick up deliveries from the online giant, will now be installed in 400 Morrisons shops. David Potts, chief executive, has been steadily stabilising Morrisons since taking charge from Dalton Philips two years ago. Analyst consensus is for the supermarket to deliver like-for-like sales growth of around 2.9pc after Christmas trading smashed City expectations. Mr Potts won praise for agreeing a wholesale deal with Amazon, allowing it to negotiate a better contract with Ocado meaning Morrisons products will delivered around the country. The growth of internet shopping has forced retailers to ramp up investment in their online and delivery operations.
It is expected that John Lewis Partnership could cut its highly celebrated staff bonus scheme almost in half next week in order to fund its internet operations. In January, chairman Sir Charlie Mayfield said the employee bonus would be “significantly lower”.
Andy McCue the new boss of former stock market darling the Restaurant Group will this week be pushed to outline plans to restore the company to previous levels of profitability. He took the helm in September. Investors and analysts are keen to hear a clear-cut strategy to reinvigorate profits at the owner of Frankie & Benny’s. The company has been hit by three profit warnings since November 2015 and the shares have more than halved from their all-time high of 736p in January that year to 328p on Friday. The market will also be watching out for Just Eat’s full-year numbers as the stock has dropped 9.5pc to 500p since it was announced on February 10 that chief executive David Butteress would step down to become a non-executive director. In January it reported a 36pc like-for-like rise in orders.
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