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Sunday Retail News Roundup

Hamleys handover, Welcome Break in £700m sale, Reiss on a roll, Not much fun at fair as Chinese traders battle the odds, Bruiser Ashley needs to prove he’s not on the ropes, Ovo boss hits gas, Harrods on a £146m high as it increases space devoted to 'luxury boutiques', Losses widen at James Bond luxury yacht firm Sunseeker as sales sink, CBI urges firms to be upfront with public on their tax affairs as survey shows consumers avoid businesses which don't, Nectar profits fall £60m despite rising sales as canny shoppers cash in points, 'VW's response is not good enough', says lawyer taking on the car giant in UK, Nectar revenues rise despite supermarket price war, Adam Goodes reconciliation adviser at David Jones.


Sunday Retail News Roundup

Sunday Times.

Chinese set to buy toy store chain for £100m. Hamleys could fall into Chinese hands in the next few weeks. Groupe Ludendo, the French company that has owned the British toy chain for the past three years, is understood to be finalising a £100m sale after months of talks. The buyer is believed to be a Hong Kong company run by a relative of Yuan Yafei, billionaire owner of the House of Fraser department store chain. Yuan, chairman of the Sanpower conglomerate, originally planned to do the deal himself and is said to have been closely involved in his relative’s talks.They had hoped to announce the takeover this week to coincide with Chinese president Xi Jinping’s state visit to Britain, but sources said regulatory hurdles could disrupt the timing. Yuan, 50, was unknown in Britain until he clinched the £480m purchase of House of Fraser last year from its management team and the remnants of several Icelandic banks.

Welcome Break is set to go up for auction after its owner received takeover inquiries for the chain of motorway service stations. The company, owned by the Appia Investments consortium, is expected to fetch about £700m, sources said.
It is understood a host of investment firms, including Carlyle Group and 3i Infrastructure, have run the rule over Welcome Break in recent months. The operator runs 27 sites across Britain, serving more than 80m customers a year. It declined to comment.

Reiss is to open two flagship stores in New York after a year of record sales and profits. The upmarket high street brand, whose clothes are favoured by the Duchess of Cambridge, is due to open on Madison Avenue and at the World Trade Center next spring, adding to the five outlets it already has in New York. It is also planning to enter Australia with the launch of two stores in Melbourne. The international push comes after a 10% rise in sales to £128m in the year to last January. Operating profits almost quadrupled to £13.7m. Reiss’s strong performance will strengthen the hand of its founder, David Reiss, as he considers the sale of a minority stake. Reiss, 72, has hired the American investment bank Morgan Stanley to solicit offers from investors that could value the business at more than £300m.

Outside the cavernous trade exhibition halls on the outskirts of Guangzhou, south China, hundreds of eager young locals touted their services as translators. Inside, thousands of determined managers pushed their products. In the whirlwind of the Canton Fair, it looked like business as usual. Wan Yianhong, the tough-talking manager of Nanchang Zerowatt Electric, a maker of fridges and freezers, saw it differently. She said evidence of faltering demand was everywhere. “Three years ago we exported more than 100 containers a year to Britain,” she said. “Our biggest customer was Argos. But now we are doing only five.”

Sports Direct’s boss has taken some heavy public blows to his reputation. The next arena is a courtroom. Stacking shelves on a Saturday is rarely a route to riches, but it worked for Dave Forsey. Forsey was a part-time assistant in the first shop opened by Mike Ashley, the billionaire founder of Sports Direct, in Maidenhead, Berkshire, in the early 1980s. He left school with one A-level — maths — and allowed his boss to talk him into joining full-time. Forsey stuck close by Ashley’s side as the maverick former squash coach turned his small chain of sports stores into a multibillion-pound discount empire, buying venerable properties such as Lillywhites in central London and banking almost £1bn from a stock market listing in 2007. As chief executive of Sports Direct, overseeing thousands of staff and more than 660 stores, Forsey is handsomely rewarded: this year, as well as his £150,000 salary, he was paid £6.6m in bonus shares, due to vest in 2017. He has also taken the flak. Last week, the 49-year-old pleaded not guilty to a criminal charge relating to the collapse of Sports Direct’s street fashion subsidiary USC in January.

The founder of the upstart power supplier Ovo Energy has handed a £10m, no-interest loan to Manor Racing, the struggling Formula One team he bought out of administration this year. The lifeline from Stephen Fitzpatrick for the former Marussia team, which has yet to earn a point in this season’s F1 championship, was revealed in the annual accounts of Imagination Industries. Imagination is Fitzpatrick’s personal investment vehicle and ultimate parent of Ovo, which the 37-year-old former trader started six years ago. Last year Ovo tripled its customer base to more than 400,000. The growth, however, pushed it into a £37m loss.

Mail on Sunday.

Iconic London department store Harrods made record sales and profit as it brushed aside a faltering global economy and secured closer ties with luxury brands. The strategy attracted more spending from wealthy European and Middle Eastern visitors, boosting profit by 4.2 per cent to £146.3million in the year to January 31. The company has increased the space devoted to ‘luxury boutiques’ – branded areas operated by labels including Chanel, Dior, Dolce & Gabbana, Fendi, Gucci, Louis Vuitton and Prada.

Its luxury yachts have featured in four James Bond films and it has celebrity fans including Sir Roger Moore and Formula 1 boss Eddie Jordan, but Sunseeker is still making a loss. The Dorset-based boat maker, which was bought two years ago by Chinese property developer Dalian Wanda Group, recorded sales of just £196 million in the year to December 2014, compared with £341 million for the previous 17 months. However pre-tax losses widened from £26million for the 17-month accounting period to £39.1 million for 2014, meaning the company has not made a profit since the year ending July 31, 2012.

The head of employers body the Confederation of British Industry has called on UK firms to show the public that not only are their tax affairs legal, but also that they are ‘responsible taxpayers’. CBI director-general John Cridland made the call for companies to be upfront about tax as an Ipsos Mori survey it commissioned revealed that 23 per cent of consumers have avoided a firm within the past year because of its tax affairs. In 2014, business paid nearly £175billion in tax – 29 per cent of the total take, which was enough to pay for all spending on schools and the NHS, Cridland said, adding: ‘Business has a great story to tell.’

Profits plunged at Nectar – Britain’s biggest loyalty card scheme – as more customers cashed in their points in an attempt to wring every ounce of value from their shopping. Accounts just filed at Nectar’s parent company, Aimia Coalition Loyalty UK, show that sales increased £12million from £298million to £310million in the year to December 31, 2014 as shoppers redeemed more points. Pre-tax profits plunged from £74.4million to £14.1million. The firm warned that if more people than expected keep redeeming points then profits could be hit again.

The boss of Volkswagen in the UK appeared before MPs last week and implied that owners of vehicles blighted by the emissions scandal may not be due any compensation. Paul Willis’s words did not impress Bozena Michalowska, the partner at law firm Leigh Day who is hoping to act for thousands of drivers whose vehicles are set to be recalled. ‘It’s a completely inadequate response,’ she declares. ‘It’s just not good enough.’ More than 4,500 VW owners have already contacted Leigh Day. It is not the only law firm chasing VW, but so far it has made most of the running, firing off letters to VW. And Michalowska has been speaking out on their behalf to anyone who will listen.


Loyalty card company says savvy customers used up more of their points, although fewer points were handed out last year. Nectar has more than 19m active customers in the UK. The company behind Nectar cards has managed to increase revenues during the supermarket and energy price wars, with British shoppers earning fewer points but cashing in more of their rewards. Aimia Coalition has said revenues rose 4pc to more than £300m last year, as customers redeemed more of their accumulated points, triggering payments from Nectar’s retail partners including Sainsbury’s, Ebay and DHL. A portion of revenues are also booked for “breakage”, or the points that are earned but never spent. However, shoppers earned 1pc fewer Nectar points during 2014, which the scheme’s Canadian parent company Aimia Inc has blamed on fierce competition in the grocery and energy markets. Sainsbury’s posted a £500m fall in sales last year as it came under pressure from rivals’ price cuts and the discount stores Aldi and Lidl. In April the retailer also slashed the number of points its shoppers can earn, from two points per £1 to just one. Britain’s largest supermarkets are trying to employ the wealth of customer data found in loyalty cards to revive their dwindling sales. Tesco has recently scrapped plans to sell off its Dunnhumby business, which uses data from Clubcards.


The former AFL and Sydney Swans player signs up as a brand ambassador for David Jones and will advise the retailer on Indigenous reconciliation. Adam Goodes has revealed his first professional role since retiring from the AFL in September: adviser to department store chain David Jones on Indigenous reconciliation. David Jones has signed the former Australian of the year as a brand ambassador and Goodes stars in its new campaign alongside fellow ambassadors Jessica Gomes and You Am I frontman Tim Rogers.

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