Sunday Retail News Roundup
Hunt for BHS millions, William Hill boss pays price for blunders, Stormy weather awaits nation of shoppers, Online retailers massive serial returner losses, French Connection foreign buyers circle, Fenwick familys dividend, MPs on Philip Green.
BHS administrators are trying to take control of the company used by its disgraced former owner, Dominic Chappell, to extract millions of pounds from the dying store chain. Duff & Phelps, one of the firms picking through BHS’s ruins, has filed a High Court petition to wind up Retail Acquisitions. Chappell, serial bankrupt and former racing driver, used Retail Acquisitions to buy BHS for £1 from the Topshop billionaire Sir Philip Green in March last year. If the administrators gain control of Retail Acquisitions, they will be able to analyse the flow of cash from BHS to Chappell and his associates. Green was found to have sold BHS with a huge hole in its pension fund, while Chappell was shown to have taken out millions of pounds and bought a Bentley, several Range Rovers and two yachts. Duff & Phelps is understood to be looking into a sum of £1.5m used by Retail Acquisitions to pay off the mortgage on the Surrey home owned by Chappell’s parents. Retail Acquisitions took a charge over the house in Sunbury-on-Thames as security for the loan. However, Chappell has since switched the charge to a property in Portugal, potentially putting the Surrey home beyond the reach of the administrators. Chappell’s consortium borrowed £8.4m from BHS. Some £6m is outstanding, although the £2.4m repaid so far consisted of deductions for management services, rather than cash repayments. Chappell has missed the most recent quarterly repayment on this loan, allowing Duff & Phelps to argue that the loan is in default. The administrator, working with lawyers at DLA Piper, is due to make its case in court on October 31.
William Hill will begin searching for a new chairman next year after a series of blunders by Gareth Davis, who is under attack from some of the FTSE 250 bookmaker’s biggest shareholders. Davis has come under fire for attempting a £6bn merger with Canada’s Amaya, the owner of the PokerStars website, which collapsed last week. Shareholders have also raised concerns that he chairs two other listed companies and is unable to devote enough time to the troubled bookie. His lack of judgment has clearly impaired his chairmanship, said one big shareholder. The recent ructions at William Hill suggest that Davis is struggling to keep on top of his broad portfolio of directorships. In addition to leading the bookmaker’s board, he is also the £360,000-a-year chairman of the FTSE 100 building materials firm Wolseley and receives £263,000 from the FTSE 250 cardboard maker DS Smith as chairman. He was paid £319,221 last year by William Hill.
For Britain’s retailers, at least those who are not threatened with having their knighthood taken away, this should be a time of celebration. The latest official figures show the volume of retail sales in the three months to September was 5.4% up on a year earlier. That was mighty strong. You have to go back to early last year for anything better. A jump in retail sales in July, the month after the referendum, was followed by a flat August and September. Even so, it is hard to see anything resembling consumer retrenchment in these figures. So why the long faces? Some of the strength in sales was because we bought more petrol and diesel, perhaps as a result of all the staycations sparked by the EU vote. Even excluding that, however, retail sales were up 5.1%.
Mail on Sunday.
Online stores are making it more difficult to send back items as they face massive losses due to serial returners. Four in ten admit they do not offer free returns as a way to discourage shoppers from returning non-faulty items. And a further 12 per cent have stopped offering the service because it became too expensive, according to a study. The shift comes in response to the increasing trend of shoppers regularly abusing the returns system. Consumers have the right to return items that are faulty or don’t fit, including clothes and shoes. Many online stores make it easy for customers to do this by offering free returns on unwanted items. But estimates show that a quarter of returned items are unfit for resale, often because they have been used, are marked or have parts missing, according to research by Barclaycard.
French Connection is being circled by overseas retail investors and private equity firms amid growing speculation that its septuagenarian founder may be willing to consider a sale. The company, which has been struggling to compete with rivals such as Zara and Ted Baker, has been seeking advice from investment boutique Moelis. It is understood the fashion chain has had recent approaches following the retailer’s fifth consecutive year of losses and a subsequent fall in the share price. Among the interested buyers is thought to be US firm Neuberger Berman, which bought Marquee Brands, the owner of British shirt maker Ben Sherman and Italian shoe brand Bruno Magli, in February. Stephen Marks, who founded the business 44 years ago and owns a 41pc stake, had lofty price expectations that would be difficult for a bidder to meet, suggesting he would want almost three times its current £32m market value. Last month, French Connection posted a 8.7pc drop in sales to £69.2m in the six months to 31 July and failed to improve its balance sheet by recording another £7.9m loss.
Fenwick, the 134-year-old upmarket department store chain, handed its family owners another £4.8m dividend last year despite the company warning about the health of the British retail market. The business, which is chaired by Mark Fenwick, former manager of pop bands Roxy Music and T. Rex, reported a 1.2pc lift in sales to £431.7m. Pre-tax profits grew by around a quarter to £44.2m in the year to January 29, according to accounts filed with Companies House.
In the Commons on Thursday, another mob gathered and assembled stocks, in which they placed the virtual character of Sir Philip Green before spending three hours lobbing rotten food at him. Green was like the former boss of the Mirror group of newspapers, Robert Maxwell; he was an asset-stripper. He was a billionaire spiv who ought never to have received his knighthood. In fact, to many who sat on the green benches, he was worse than all these things: he had shamed British capitalism. The right honourable ladies and gentlemen were beside themselves with glee at being handed this rare opportunity to show the country that, whatever we might think of them, they are essentially decent coves. None of them would ever stoop to the levels of avarice that Greenp did, as he enriched himself at the expense of BHS and its 11,000 employees and their hard-earned pension funds.
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