Sunday Retail News Roundup
Guinness owner jobs slash, High street retailers business rates, Kingfisher turnaround plan, Made.com UK business profitable, BA faces backlash M&S food, French Connection pressure builds, JD Sports shows clean pair of heels to stumbling Sports Direct.
Drinks giant Diageo is preparing to wield the jobs axe at its London head office in an attempt to boost profits. The Guinness and Smirnoff owner is in the midst of a three-year drive to cut overheads by £200m. A hiring freeze had been put in place, with a review of staffing at its headquarters in Park Royal, northwest London, to be ready within weeks. Some workers fear that as many as 400 of the 1,500 staff at its main office could be cut. The jobs axe is expected to fall across Diageo’s global empire. The FTSE 100 giant employs about 4,500 in the UK and 33,000 worldwide.
Mail on Sunday.
High street retailers outside London hoping for business rates cuts of as much as 44 per cent could wait for years before they feel the full benefit, say experts. The Government will release its initial view of revised charges at the end of the month and bills are expected to be sent out in March. But transitional rate relief designed to protect those facing hikes, and which could be tapered over several years, could also mean those expecting cuts will foot the bill.
B&Q owner Kingfisher is poised to say this week that its turnaround plan is bearing fruit. It is expected to post interim profits 3 per cent higher at £399 million. That compares with a drop of more than a fifth last year. The firm said in January that it had begun a strategy to boost annual profits by £500 million by 2021 by selling the same products in all the countries in which it operates, reducing costs and growing online sales more rapidly. Kingfisher has stores in France, Spain, Poland and Russia. Chief executive Véronique Laury, who was promoted last year, is expected to say the strategy is going according to plan following a rise in sales in the UK and Poland. The company is spending about £70 million this year and £100 million next year to harmonise products. It also plans to return £600 million to shareholders over the next three years through share buybacks. It has so far returned £150 million.
Online furniture store Made.com, backed by dotcom entrepreneur Brent Hoberman, said its UK business has become profitable for the first time after a surge in orders last year. The six-year-old company announced that group sales soared by 44 per cent to £62 million in the year to December as the online generation started to furnish their own homes. The company, which employs 250 people and sells about 3,000 products, raised $60 million (£38 million) from investors last year to help accelerate growth.
British Airways is facing a backlash from passengers after teaming up with Marks & Spencer to charge passengers for food on short-haul flights for the first time. BA has always distinguished itself from its budget rivals by including meals in ticket prices. The country’s flag carrier has struck a deal with the supermarket giant loved by Middle England to provide travellers with an upmarket range of sandwiches and snacks. The deal would allow it to cut fares, making it look better value in comparison to Ryanair and easyJet, which have been taking a growing share of the market
French Connection is this week braced for a fresh broadside from one of its biggest shareholders, who will argue that another slide in sales would be further evidence that founder Stephen Marks should step down. Activist investor Gatemore Capital has taken an 8pc stake in the struggling fashion retailer and published an open letter last month accusing Mr Marks of failing to run the company in the interests of wider shareholders. Marks holds both the chief executive and chairman posts. This Tuesday, the retail chain is expected to report that it has narrowed losses from £7.9m after shutting a number of stores and curbing discounting. However, like-for-like sales are forecast still to be negative
Sports Direct boss Mike Ashley once promised to finish off JD Sports, but now finds himself being trounced by his rival. JD Sports, the self-styled King of Trainers, is not only valued at a cool £1.1bn more than the Newcastle United owner’s chain, but last week revealed its sales and profits growth were a well-shod leap ahead of the rest of the UK fashion market. While other clothing retailers have spent the last two years moaning about unsuitable weather and claiming that shoppers are more interested in holidays and gadgets than the latest fashion, JD has powered on. Sales at stores open more than a year rose 10% in the six months to the end of July. Even executive chairman Peter Cowgill sounded surprised by the group’s 66% rise in underlying profits, revealed on Tuesday, saying they “exceeded reasonable expectations.”
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