Sunday Retail News Roundup
A few years ago, Nicholas Marshall popped into his local Homebase to buy some paint for his tennis court. “I thought I’d have to order it,” he said. “But not only did they have something, they had it in three different colours. It was a terrific selection. However, from their point of view, it was too much stock to carry. That’s the thing about Homebase: at the bottom end you can’t fault the staff and customer service, but at the top they don’t know what to do with it.” Marshall, 65, former boss of Garden Centre Group, is now considering taking matters into his own hands. He is sounding out private equity firms about mounting a bid for the DIY chain, which is owned by Home Retail Group, better known for also running Argos, the high street catalogue business. Marshall said he would bring in concessions based on pets and gardening and open up Homebase’s click and collect services to other retailers. Although Homebase had a difficult recession — sales tanked as the housing market slowed — it has started to recover. Like-for-like sales rose 5.6% in the six months to August 29 and operating profits grew by almost a quarter to £34.3m. Under Echo Lu, a former Tesco executive, Homebase has sold its Battersea shop to a property developer for £57m and kicked off a store closure programme that could see 80 — a quarter of the total — shuttered over three years. “After that they will probably close another 25%,” said Marshall. “That’s not really a strategy. There needs to be some new thinking.” His interest in resurgent Homebase comes as Argos, for years seen as the stronger of the two, falters amid rabid competition from online rivals such as Amazon and difficulties overhauling its huge number of stores.
Lord (Alan) Sugar has paid himself a £9m dividend after a boom in the value of his property empire. Accounts due to be filed for Amshold, whose main activities are property development and trading, show a 25% increase in pre-tax profits to £134m for the year to last June. Amshold’s net assets rose from £527.9m to £627.2m. The results illustrate the strong state of the London property market and underline how much of the irrascible 68-year-old Apprentice star’s wealth is tied up in bricks and mortar, though he is better known for having founded Amstrad computers. Sugar’s family company this year sold Burberry’s old flagship store on London’s Haymarket to a Qatari investor, more than doubling its money. Amsprop bought it empty from an unknown Russian for £31.5m two years earlier, hoping to ride on the coat-tails of the Crown Estate’s regeneration of nearby St James’s, and later leased it to fashionable Dover Street Market. It bought three buildings around “Silicon Roundabout” in east London and refurbished the Sugar Building next to St Paul’s cathedral — formerly dubbed the Threepenny Bit for its distinctive octagonal shape. After the end of Amshold’s financial year it sold the trophy City property to a conglomerate run by the Dubai-based tycoon Easa Saleh Al Gurg. More recently, Sugar’s company sold Fitzroy House office block in Euston for £43m. The buyer is rumoured to have been a company linked to Guler Sabanci, the Turkish billionaire who is ranked as one of the world’s most powerful women.
A company that delivers recipes complete with all the fresh ingredients has won £9m backing from investors including consumer-goods giant Unilever. Gousto offers a choice of meals for two or four people and delivers a box containing the ingredients, which it buys directly from producers. The three-year-old company, which has 140 staff, has taken cash from BGF Ventures, the Business Growth Fund’s new cash-pot for technology firms, as well existing investors Unilever Ventures, the Angel CoFund and MMC Ventures. Gousto delivered more than 300,000 meals last month. “People have turned to online takeaway meals. The next step is what we are doing, which will be much bigger given that 25bn meals are cooked each year,” said Timo Schmidt, 31, the co-founder and chief executive.
A rag trader who grew his market stall into a chain of boutiques for plus-size women is lining up a £50m payday. Andrew Killingsworth is considering selling a stake in Yours Clothing, which is based in Peterborough and has more than 80 stores. The company has hired Grant Thornton to assess its options, sources said. The 53-year-old started out with a market stall in Leighton Buzzard, Bedfordshire, in 1994. The retailer made profits of £1.9m in the year to February, opening seven outlets in the Middle East during the period. It received nearly £2m from Barclays to back its expansion plans last year. Industry sources said it could be worth more than £50m. Another retailer for larger women could also change hands in the new year. Long Tall Sally, aimed at women taller than 5ft 8in, is working with advisers at Financo to weigh up its future. The company is owned by Amery Capital,which is run by former Marks & Spencer director Maurice Helfgott and backed by retail entrepreneurs Michael and Maurice Bennett, the brothers behind brands such as Phase Eight, Oasis and Warehouse. Helfgott said Long Tall Sally was in the early stages of considering its “strategic” options. The retailer, which opened its first store in London in 1976, now sells two-thirds of its clothes online, and has operations in America and Germany. Sources said Long Tall Sally would be worth about £30m and could attract the interest of British buyout firms.
Mail on Sunday.
Sir Terry Leahy, the former chief of Tesco, has rounded on the Government for failing to honour pledges to reform business rates. He warned that stores, already under financial pressure, risked being weighed down with new costs. The retail veteran said the rising minimum wage and a levy to fund apprenticeships were 'understandable’ burdens, but should have been offset by action to cut the rates. ‘There needs to be a root and branch reform of the whole system,’ he urged. ‘We need a modern tax for a modern economy and it’s probably more than a decade overdue. ‘The digital economy is transforming how we all live and work and the tax system has to keep up with that.’ In his summer Budget, the Chancellor announced an increase in the minimum wage that will take pay for the over-25s to £9 an hour by 2020. He has also announced plans for a new system of apprenticeships that are expected to cost an estimated £2 billion. Retailers have been pressing the Government on its promise to reform business rates by the end of the year. But in his Autumn Statement last month, Chancellor George Osborne said it would not now happen until next year. ‘They’ll have to get a move on,’ added Leahy, who is now chairman of the fast-growing discount store B&M. He has also invested in a number of online businesses, including home furnisher Houseology.com. ‘You’ve just got to make sure that retailers, which are huge employers and make a huge contribution to the economy, get more out than they put in. Retail gives many young people a start but there is a real risk of taking retail employment for granted,’ he said.
Asda chief Andy Clarke believes many of his rivals won’t be able to make their sums add up by Christmas. The retail bloodbath of Black Friday has left them with unwanted stock and pressure to keep on discounting. Now, he argues, is the time for him to strike. The supermarket group, owned by US giant Wal-Mart, was one of the first retailers in Britain to introduce the idea of Black Friday discounts, but this year the group decided the madness had gone too far and left the price cutting to others. ‘It was one of the best decisions we’ve made this year,’ he says. ‘There is still a lot of stock around at other retailers – TVs, DVD players, Xboxes and PlayStations. ‘That suggests a lot of demand shifted online and I wouldn’t like to be holding on to that unsold, marked-down stock at this point,’ he says. Having kept his powder dry during last week’s discounts, Clarke says he is ready to open fire on rivals in the crucial Christmas season. ‘What we saved we’re now putting into deals right through to Christmas,’ he says, reeling off a series of cheap offers Asda will be making, including £10 bottles of champagne. ‘And last weekend we dropped the price of petrol to below £1 a litre,’ he says. ‘We’re spreading the benefit.’ The decision not to cut prices was part of a wider strategic view with the focus on boosting profits even if that means sales are lower. ‘We’re making some very deliberate choices about the stability of our commercial position and that’s allowing us to make choices for the long term,’ he says. All of Britain’s ‘big four’ supermarkets – Tesco, Sainsbury’s, Asda and Morrisons – are making some painful decisions as price competition intensifies. Worse, many shoppers are now regularly visiting German discounters Aldi and Lidl, which have doubled their market share to 10 per cent in just three years. ‘If the discounters reach the European market share average of 15 per cent – and it could be more than that – that would mean a 5 per cent share from somewhere and that’s more than likely to come from the big four grocers,’ he says. ‘You can try to defend that share in the short term or else take a long-term view that buying sales and market share isn’t going to be long-term sustainable,’ he says. ‘It’s happening already – one of the big four has just dropped from the FTSE 100 to the FTSE 250,’ he says, referring to Morrisons, which was dropped from the blue-chip index last week after a disastrous year. ‘Protecting short-term market share wouldn’t appear to be a measure for success on that basis,’ he says. In 2010 Asda bought 193 smaller Netto stores. Clarke, who was chief operating officer at the time and poised to become chief executive, describes the decision as ‘inspired’ – providing Asda with 193 smaller stores averaging 7,500 sq ft and taking store territory that might have gone to those discount invaders. He suggests that a stronger financial position could pave the way for more acquisitions. ‘We have no plans to acquire at the moment – we’re focused on the core business and particularly our large stores. But if opportunities come our way, of course I’ll consider them,’ he said.
Use of plastic carrier bags fell by almost 80 per cent at Tesco since the introduction of a 5p charge, the supermarket said today. New rules that demand supermarkets and big shops with more than 250 employees across England start charging shoppers at least 5p for a plastic bag were introduced on 5 October. Tesco said that since then it saw a 78 per cent fall in the amount of single-use bags handed out at its supermarkets, exceeding its own expectations by 10 per cent. It said that many online shoppers were also opting for ‘bagless’ deliveries, which have increased by half since the beginning of October. Rebecca Shelley, Tesco group communications director, said: ‘We knew the Government's bag charge would encourage our customers to use fewer plastic bags and it's clearly had a huge impact. ‘We wanted to do as much as we could to help our customers avoid paying the charge - the week before the charge was introduced we gave out free bags for life, and we've been sharing helpful hints and tips on how customers can cut down the number of bags they use.’
Kirsty Henshaw started out making dairy-free ice cream for her son. She launched her nutritious chilled ready meal business in 2012 after discovering a gap in the market for those, like her son, who suffer from food intolerances. After appearing on TV show Dragons' Den, the young entrepreneur so impressed two of the Dragons that she received £65,000 investment. Since then, the range, named Kirsty's, has graced the shelves of the UK’s most popular supermarkets and received recognition as one of the healthiest ready meal ranges
Mike Ashley, the billionaire owner of Newcastle United, has made his daughter’s 26-year-old boyfriend a key player in his sprawling retail and property empire, it can be revealed. Michael Murray, who is registered as occupying a £5m residence in Chelsea with Mr Ashley’s 24-year-old daughter, Anna, has been made a director at four companies linked to the tycoon. Since April, Mr Murray has been given senior roles at MGM Grand Newcastle Limited, which is linked to the football team; Mash Services, which shares the same address as Mash Beta, the tycoon’s personal financial holding company; T&M Leisure Reading, which is believed to be focused on Mr Ashley’s gym ventures; and McGrove Developments, the entrepreneur’s property investment firm. Mr Murray has also been given a new property director role at Sports Direct to oversee a £250m project to roll out Sports Direct’s fitness superstore brand across the UK, though he hasn’t been appointed to its board. Mr Murray’s previous real estate career was at Central London Projects, where Companies House listed him as the only director. In April, Mr Ashley’s McGrove Developments provided £200m to buy a site in Chelsea from John Lewis close to the Chelsea Barracks development, which could provide luxury homes worth up to £900m.
Reaching the office of Michael Ward, the managing director of Harrods, is akin to running the retail gauntlet in Indiana Jones fashion. First, one must navigate which of the many entrances to approach the one million square foot shop, then dodge the clouds of perfume that are liberally sprayed by assistants in its beauty hall; side-step the children rushing to reach a wall of teddy bears and carefully edge past gaggles of Middle Eastern shoppers. Finally, there is the climb up the famed Egyptian escalator, which was recently restored to its full Tutankhamen garish glory as part of a £200m store refit, all the way to the fifth floor. “We often lose people for hours on end,” Ward confesses about the maze-like Knightsbridge store. Amid all the razzmatazz, a small, subtle sign points the way to Harrods’ management offices, and there, in a rather disappointingly bog-standard beige office, is where Ward and his team conduct their army of 5,000 store staff who are charged with “delighting” even most demanding customers. Harrods is gearing up for Christmas and is promising shoppers live reindeers, a traditional Christmas grotto, striking colourful windows inspired by Venetian puppet shows and all the festive necessities such as a box of luxury crackers for £500. While Christmas might be this month’s main event, a stroll through the labyrinthine store can take you from the baubles and gingerbread houses associated with Christmas to the exclusive goods that can only be found in the most famous store in the world.
Above the gilded entrance of New York’s hallowed Waldorf Astoria hotel has risen the flag of the biggest trend in retail: short-lived pop-up shops. On Friday, CEO Stefan Siegel hoisted a white cloth to signal the opening of fashion e-commerce site Not Just a Label’s first pop-up in New York City. In opening its doors for two weeks, Siegel’s company joins an industry now responsible for about $50bn (£33bn) in US sales. The trend, Siegel says, is a reaction to the past decade’s disposable, fast fashion craze. He considers it as driven by consumer desire to reconnect with designers, with the potential to educate buyers about where their clothes come from and reduce consumption. Launched online in 2009, this location is the first US bricks-and-mortar store for the popular website, which has about £2m of online sales each year. The Etsy of couture, Not Just a Label (NJAL) has gathered 20,000 new and established designers into one online marketplace, where users can find their favourite labels. The site recently hosted two other analogue events, in Berlin and Dubai. The stores showcase a mix of everything from shoes and clutches to lingerie and wool coats. The company’s stated goal is to eliminate fashion’s historically numerous middle men, reduce the considerable environmental impacts of industrial clothing manufacture and enable designers to create sustainably from all over the world. Siegel also hopes to lower the barriers that new creatives face on entering the industry, allowing for a “more ethical and unpolitical system of supporting designers in fashion”. Designers do not worry about overheads, and while labels at a typical store see only 20% of profits, says Siegel, NJAL designers keep 70% of each sale.
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