Sunday Retail News Roundup
How Richard Caring helped Green find riches at BHS, ChappellÂ’s bankruptcy hat-trick, Over Â£100m BHS cash burnt 13 months by Dominic Chappell, Philip Green still deserves fair hearing, EasyJet poised for losses, Notonthehighstreet shops taste of future, New pubs code delay, Amazon flexible Prime membership, UK businesses EU referendum, Calm down Sir Philip Green says Lord Myners, TalkTalk dial up sales despite cyber attack.
Green was hailed for making “the fastest billion pounds in British history”. He set up a round of newspaper interviews, generating glowing verdicts on his retailing acumen and suggestions of red faces at Storehouse, the conglomerate that seemed to have sold him the department store for a song. Whatever he said in public, the £1bn valuation was crucial to Green. It allowed him to load BHS with bank debt, funding some of the £400m-plus in dividends he and his partners sent offshore, and gave him the clout to mount a takeover bid for Arcadia, Topshop’s parent company. The apparent turnaround of BHS was the phenomenon that transformed him from unsavoury corporate raider to billionaire king of the high street.
Three is an unlucky number for Dominic Chappell. The disgraced former owner of BHS has a trio of bankruptcies to his name, not the two to which he has previously admitted. Chappell’s status as a serial bankrupt raises further questions over Sir Philip Green’s decision to sell the loss-making department store to him for £1 last year. Chappell’s consortium, Retail Acquisitions, took at least £8m in salaries and charges from BHS during its 13-month ownership. It has already been reported that Chappell was made bankrupt by the estate agent Foxtons in 2005 after a fee dispute, and by a contractor over a failed property development in 2009 but it is now established that he was also made bankrupt in 1992, at the age of 25.
Mail on Sunday.
BHS’s former owner Retail Acquisitions, run by twice-bankrupt ex-racing driver Dominic Chappell, burnt through more than £100million in 13 months. The firm’s management battled to block ‘inappropriate’ spending, is now in administration and went though around £70million of cash, that was left with the business when it was sold by Green’s Arcadia, £10million raised from a sale-and-leaseback deal and a large chunk of £65million from a refinancing deal with investment firm Grovepoint. Overspending meant that when the board decided to call in administrators last month there was only about £30million left from a pot of more than £140million which was insufficient to pay suppliers and landlords. It included £17million set aside for letters of credit to cover the lack of credit insurance and ensure the loyalty of a small number of big suppliers, £10million in the bank and £5million cash in the tills.
Sir Philip Green said he is ‘horrified’ that Labour MP Frank Field, chairman of the Work and Pensions Committee, has said he would recommend stripping him of his knighthood if the retail tycoon did not stump up £571million to close the deficit on the BHS pension scheme. Green calls Field ‘clearly prejudiced’, accuses him of prejudging the issue, and said he should step down from the committee at once. Field said he won’t be bullied.
Recent terror attacks in Brussels, Paris, Egypt and Turkey will have hit travel companies such as budget airline EasyJet and tour operator TUI, which both report half-year results this week, say analysts. Broker Numis estimates that the terror attacks in Paris and Egypt will have cost EasyJet £45million in the first quarter of the year due to a fall in revenues, and that the Brussels attacks in March will cost it a further £35million.
Simon Belsham, chief executive of online retailer Notonthehighstreet, said the first pop-up shop is ‘an indication of where we are going’, and argued that the future of retail is a mixture of online and offline. The former online managing director of supermarket giant Tesco, who was also instrumental in the development of grocery retailer Ocado’s website, is holding an ‘interactive shopping experience’ called Open Door this weekend at Old Spitalfields Market, East London.
Business Minister Anna Soubry called a meeting of pub companies and tenancy groups last week to report that a loophole had been spotted in the legislation which would apparently have made many licensees ineligible to buy beer from sources other than their landlords. A new code to regulate the pubs industry has been delayed for a month.
Amazon shoppers considering the Prime service will soon have an alternative way to pay as the online retail giant is introducing a monthly fee of £7.99. The monthly option can be cancelled at any time and offers the same benefits as paying annually for a one-off sum of £79. Amazon wants to encourage people to sign up to Prime who have been put off by the annual fee and want the flexibility of being able to cancel. It might allow people to try the service at a lower cost but those who don't cancel the monthly subscription for 12 months will end up paying nearly £17 more. The total yearly cost of paying monthly is £95.88 compared to the £79 annual fee.
As the EU referendum nears, businesses are clamouring for a clearer picture of the benefits of leaving and staying. Many have come to their own conclusions, based on the effect they think its outcome will have on their business, and its impact on the wider economy. REMAIN Tim Steiner, chief executive of online supermarket Ocado. LEAVE John Mills, chief executive of consumer goods distributor JML.
Lord Myners has told Sir Philip Green to “calm down” after tempers threatened to boil over on the eve of a cross-party inquiry into the collapse of BHS. Sir Philip Green last week launched a fiery response to claims by Frank Field, chair of the work and pensions select committee, that he should pay £571m or “be stripped of his knighthood”. The former BHS owner said that he was “horrified” by the comments and called for Frank Field to step down from the joint select committee inquiry as he was “clearly prejudiced”. Mr Field responded by recruiting the retail tycoon’s old arch enemy Lord Myners to the Committee’s panel of financial assessors. Myners, who fought off Sir Philip’s attempted takeover of Marks & Spencer in 2004, has already raised questions in the House of Lords about the tycoon’s role in BHS’s demise.
Budget broadband provider TalkTalk is hoping to hang up on the effects of last year’s cyber-attack when unveils its annual results this week. The FTSE 250 phone company is expected to lift sales by 3pc to £1.89bn in the year to March 31, after the company made sweeping changes to its security system and reaps the reward of a cost-cutting programme.
Email this article to a friend
You need to be logged in to use this feature.
Please log in here