Sunday Retail News Roundup
Twitter chiefs set to cash in after takeover, Co-op chief EU immigrants working in UK, Mr Co-operative wanted pay cut, Sports Direct growing void, Sorry Icelanders name is ours, BT rivals broadband battle, BHS reborn, Tesco pension black hole balloons, Polish up CV Sports Direct hiring, BHS relaunch as online brand.
The mooted takeover of Twitter would deliver a mammoth $2bn payday for the top 12 executives and directors at the struggling social media giant. Google and salesforce.com, a maker of business software, have held early-stage takeover negotiations with the $16bn (£12bn) company, it emerged this weekend. The top dozen directors and executives share a pot of 76m shares. After news broke of the takeover talks, Twitter’s stock price surged by a fifth to close at $22.62, valuing the share pool at $1.7bn. Any takeover would probably be at a substantial premium to Friday’s closing price, which could push the value of the executives’ shares past $2bn.Twitter’s user base has stagnated at 313m people, just a fifth of Facebook’s 1.7bn. Meanwhile newcomers such as Snapchat have grown rapidly.
Mail on Sunday.
Co-op boss Richard Pennycook has issued a plea to Theresa May’s Government to make a humane decision over the future of European workers in the UK. Pennycook, whose business employs 70,000 people, said 3,000 staff at the group had been plunged into uncertainty after the Brexit vote. This affects about 10,000 people at Co-op when add colleagues and their families.
Head of Co-op boss Richard Pennycook is that rarest of beasts, a company chief executive who asked for a pay cut. The accountant-turned-retailer declared in April that he should have his salary chopped and promptly gave up half a million pounds a year. Governance reforms meant the turnaround has been marked. Co-op Group’s supermarket operation is now the fastest growing major supermarket in the UK barring German invaders Aldi and Lidl. Figures out on Friday showed sales rising at more than 3 per cent a year, a stellar performance in comparison with Tesco or Sainsbury’s. Pennycook’s pay will be reduced next year from a base salary of £1.2million to £760,000. Pennycook earned a total of £3.6million last year including his bonus and could earn a similar sum for 2016.
Shares in Sports Direct soared after chief executive Dave Forsey quit the firm, but City sources warn the group is facing a growing void among senior directors. The controversial retailer is already without a permanent finance director. The shares rose 5.4 per cent after Forsey’s departure on Friday, adding £85million to the firm’s value. Ashley said losing Forsey after three decades was like I have lost my right arm. Forsey is facing a criminal charge for his role in the collapse of Sports Direct subsidiary USC.
Malcolm Walker, the boss of the Iceland stores group, has escalated his company’s row with the nation of Iceland over the use of the name suggesting We’ve got more of a claim than they have. It emerged last week that the Icelandic Government was considering a legal claim over the name used by Walker’s stores group. Speaking out last night for the first time since the spat erupted Walker said: We’ve been trading the name for 45 years. What possible hope have they got. We’ve got five million customers every week they’ve got 300,000 people living there. So we’ve got more of a claim on the name than they have. The name is ours really. The row has a further irony because the Icelandic Government actually owned the food stores group four years ago. The stores chain ended up in the hands of Iceland’s nationalised banks after a financial collapse at previous owner, Icelandic investor Baugur.
BT's rivals have seen thousands of people join their campaign to force a break-up of the group and its broadband arm. By this weekend more than 75,000 consumers had contacted the media regulator to support Fix Britain’s Internet, a campaign orchestrated by BT’s main competitors to split BT from its Openreach division, which owns the cables connecting homes and firms to the internet, regardless of their supplier. BT insists that its rivals, which include Sky, Vodafone and TalkTalk, are looking to promote their own businesses. It says that forcing it to split off Openreach will undermine investment in Britain’s broadband services. Earlier this year BT announced a £6billion investment in broadband and an extra 1,000 engineers for its Openreach arm.
BHS is to relaunch in the UK on Thursday as an online retailer just five months after the original company collapsed. The online shop is being launched by the brand’s new owner, the Qatar-based Al Mana Group, with a plan to offer a full range of home furnishing and fashions in time for the Christmas season. The new operation, which is unconnected to any of the previous owners of BHS, has invested in a new website, and has agreed deals with many of the suppliers who previously sold through BHS. The former BHS online business had 1.2 million customers, who will now automatically be registered with the new service.The Al Mana Group bought up BHS international business and the rights to the BHS name in June, after the original firm collapsed in April. The Qatari conglomerate runs a raft of businesses from cars to technology as well as acting as a franchisee of international retail brands including Zara, Mango and Benetton. It also operates 70 BHS stores outside the UK which remained open after the collapse of the UK group.
Tesco’s pension deficit has doubled in the past year to more than £5bn, threatening to delay the resurrection of dividend payments by Britain’s biggest retailer. Retail sources, pension experts and City analysts estimate the deficit has increased by at least £3bn, around the value for which the company sold its South Korean business, the crown jewels of its international operations. Tesco’s pension scheme is one of the largest in the country, with 350,000 members, including 203,000 active members of staff. Tesco reported earlier this year that it had shrunk its pension deficit, to £2.6bn after tax, from £3.9bn last year. Tesco generates £2.5bn of cash from £48.4bn of sales. However, the grocer is battling a bitter price war with rivals, rising staff wages and investment demands to keep pace with changes in online shopping.
The big split that’s hit the headlines. Sports Direct and Dave Forsey, who quit as chief executive of Mike Ashley’s retail group after unrelenting criticism of the working conditions for its staff. Unpopular chairman Keith Hellawell remains in place. Meanwhile, Forsey is replaced by Mike Ashley (who most people assumed ran the business anyway). This at least might help appease shareholders who wanted Ashley to become more accountable. But the company still needs to find a permanent finance director, as well as more external directors to challenge the existing team, so the search to beef up the board should continue this week.
Bhs.com goes live on Thursday, selling lighting and home furnishings, which accounted for around three-quarters of the most popular online products sold before the retailer went into administration. Its kitchen, dining and clothing ranges are set to go on sale next month. The site will not have as wide a range of products, but will focus on best-sellers, BHS International said.
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