Sunday Retail News Roundup
Sick Amazon elves face sack, Classless, cheap and backing Britain McDonald’s, BHS fraudster middleman, Pensions BHS, Hotel Chocolat sweet success rich rewards, Britain's luxury goods retailers booming, Bentley secret talks Brexit Minister, Christo Wiese fortune shrink, SilkFred fashions stock market listing, Specsavers founders pay cut, The future of shopping.
Workers for online retail giant Amazon are being threatened with the sack if they take four days off sick, even if they have a doctor’s note. The retailer, which last year made more than £6bn of revenues in Britain, has a disciplinary system under which points are accrued for illness. Workers are issued a penalty point for each episode of sickness. Workers are told more than one point will result in a “series of counselling and disciplinary meetings” and between four and six points can result in dismissal. It emerged this weekend that some low-paid workers are camping out in woodland near the sorting depot to avoid paying the bus costs and ensure they are left with more than the minimum wage.
The shiny US drive-thrus with golden arches boasting “over 1 billion hamburgers sold” represented ultimate modernity whereas Wimpy bars on British high streets were sad and soggy as their name. Today McDonald’s flogs more than 100m burgers a year in Britain and Ireland alone and it’s moving its international headquarters to the UK after deciding it might as well make the best of Brexit (no “remoaning” from it, despite its avowed preference). It helps that its sweetheart tax deal with Luxembourg is under scrutiny and we’re offering a competitive rate of corporation tax, but there’s no harm in that. We’ll all benefit from the millions of pounds a year in taxes and the 5,000 new jobs that the company has promised to generate.
A convicted fraudster received several payments from BHS after Sir Philip Green sold the department store chain. Paul Sutton, a middleman who paved the way for former bankrupt Dominic Chappell to buy the struggling business from the Topshop billionaire, is understood to have received three payments from a company called Capital Management between October last year and February this year. Capital Management was set up in February last year, a month before Chappell’s Retail Acquisitions consortium took over BHS. Its signatory is Chappell’s father and its only director is a Chappell family friend. Sutton has a chequered past, was made bankrupt for 15 years by a French court in 2000 and in 2002 and was found guilty of fraud and given a three-year prison sentence that he never served. Sutton introduced Chappell to the BHS deal. His reputation was bad enough for Green’s Arcadia Group to demand a written assurance that he would have no further involvement in Chappell’s purchase and would “have no entitlement to any commission or any kind of reward”. In April last year, after he bought BHS, Chappell said he had cut ties with Sutton. A month later he joined a fund set up by Sutton in the tax haven of Panama. There have been suspicions that Chappell and Sutton were in contact throughout Chappell’s time running BHS. Sutton is believed to have received thousands of pounds from Capital Management, which in turn received about £730,000 from Retail Acquisitions. BHS was Retail Acquisitions’ only source of funds. Chappell said Sutton owed £623,000 to the Chappell family and that the payments from Capital Management had been “my father basically trying to prop Sutton up to get him through a deal, which didn’t work, to get our money back”.
Mail on Sunday.
Pensions shouldn’t be this exciting. The tedious but essential task of ensuring an income for retirement has become an explosive subject thanks to cases such as BHS. Something that should be boring and staid has become at times a corporate scandal, and at others a major problem for British industry. In the case of BHS, a failed company has left behind a scheme that cannot now meet the pensions expected by its workers. The pension issue is set to be borne by the employees. Many BHS workers are facing reduced pensions and no job.
Just a fortnight until Christmas, thoughts are inevitably turning to food, drink, treats and gifts. Hotel Chocolat covers all four categories. Listed on AIM in May, shares are 264¼p and should increase in price as the business expands both in the UK and overseas. The company has 91 stores, a thriving online division and continues to provide gift products to businesses. It sells through John Lewis and supplies chocolate nibbles to BA. In the year to June, sales rose 12 per cent to £91million and underlying pre-tax profits soared by 181 per cent to £8.2million. This year, analysts predict further strong growth with sales expected to rise to £112 million and profits to £11.1million. The group is investing most of its cash in growth but is likely to pay a dividend from 2018. Hotel Chocolat has performed well since flotation at 148p. It is a well-run company, whose founders are committed to success. At 264¼p, the shares are a long-term buy.
Britain's luxury goods retailers are booming on the back of the weaker pound, with sales to US and Chinese shoppers soaring in past months. There has been a 44 per cent rise in retail sales to non-EU visitors since August. In the luxury goods sector as a whole, Americans are still the biggest spenders in the UK, with year-on-year sales up 74 per cent, with Chinese sales up 65 per cent.
Bentley held secret talks with Brexit Minister David Jones on Thursday, calling for the Government to ‘clarify’ plans to leave the European Union. The summit with Bentley chief executive Wolfgang Dürheimer and other senior executives at the firm follows unease within the motor industry over suspected Government guarantees to Japanese manufacturer Nissan aimed at protecting it from the side effects of Brexit. A spokesman for Crewe-based Bentley, which sells more than 10,000 cars a year worldwide and has an annual turnover of £1.4billion said talks with Jones had been ‘private’. Failure of Brexit Secretary David Davis and International Trade Minister Liam Fox to conclude a free trade deal with the EU would mean falling back on basic World Trade Organisation rules. That could mean car exporters facing tariffs of up to 10 per cent. The Society of Motor Manufacturers and Traders said that would leave the industry facing an annual £4.5billion tariff, comprising £2.7billion on imports and £1.8billion on exports.
South African billionaire Christo Wiese, who has been busy snapping up a raft of high street groups in Britain, has seen his estimated £4.8billion fortune, shrink by £400million due to the slump in the pound. Wiese stormed on to the retail scene in the UK spending £1.6billion on a series of acquisitions over the last two years including New Look, Poundland and Virgin Active. But the fall in the value of the pound has put a huge dent in Wiese’s investments. The tycoon owns 35 per cent of investment vehicle Brait, which he used for the acquisitions, but its value has plunged as the markets reassessed his UK acquisitions. Shares in Brait, listed on Johannesburg and Luxembourg stock exchanges, have dived by almost 40 per cent since Britain's vote to leave the EU on June 23, wiping £400million off the sterling value of Wiese’s stake.
SilkFred, online retail start-up, that relies on a network of British fashion brands to turn around dresses quickly for impatient shoppers, is gearing up for a £100m stock market listing next year. The company raised £145,610 this year on CrowdCube, is hoping to raise fresh funds in the listing to finance international expansion, is on track to make £11m in sales this year and is expecting to double turnover next year. SilkFred works with 400 brands and generates 90pc of its sales through social media.
The billionaire couple behind the Specsavers optical chain had their payout cut in half last year, despite the company recording a lift in profits. Dame Mary Perkins and her husband Doug’s dividend was slashed to £17.4m last year compared to a £36.8m windfall in 2015, according to recently filed accounts. The company, which sells more than 12m spectacles a year, posted a 1.2pc lift in sales to £673.7m during the year to the end of February. Pre-tax profits also inched up from £38.6 to £28.8m.
Amazon may be set to bring its hi-tech till-free stores to the UK after registering the Amazon Go brand name in the UK last week. At the test store near Amazon’s HQ an app tracks customers as they walk about, recording items they pick up and take away. The store is currently only available to company staff, but will open to shoppers signed up to the Amazon Prime service from next year. The cost of purchases will be automatically billed to their account. Amazon Go trademark has been UK registered for an extensive list of potential uses, from technology, telecommunications and retail services to food and drink services and even pet food. The Amazon Go store is “the world’s most advanced shopping technology” but other businesses are also trialling shop-assistant-free concepts.
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