As the a sunny weekend arrives these are the retail headlines that sparked my interest this week
Hobbycraft online sales rise 200% since lockdown
Hobbycraft has recorded a 200 per cent surge in online sales since the Covid-19 pandemic struck the UK. The arts and crafts retailer also saw its adjusted EBITDA rise 21.9 per cent from £12.2 million to £14.8 million in the full year to February 16. Total revenue for the period was up 8.9 per cent to £193.6 million. In-store like-for-like sales rose 4.7 per cent year on year while ecommerce sales grew by 19 per cent during the period thanks to investment and its click-and-collect service. Hobbycraft opened five new stores over the year bringing its total estate to 99. The retailer has been focusing on its online service since stores were forced to close in late March due to the coronavirus lockdown. It has been offering daily ‘Kids’ Craft Club’ classes on its social media channels. It plans to continue offering its demos and workshops via Zoom in order to reach a wider audience as some consumers choose to stay home. During the period, Hobbycraft saw online like-for-like sales rise 200 per cent while its digital classes reached more than 15 million customers.
“We are pleased with our performance and how our offer improved again over the past year. We continue to execute our strategy with improvements in product ranges supporting multichannel growth,” Hobbycraft chief executive Dominic Jordan said. “Our broad range of products continues to evolve with more specialist materials and newness, ensuring that we satisfy the needs of craft enthusiasts and stay ahead of the competition,” he said. “New ranges delivered growth across a number of areas, including art, which saw growth of 20 per cent, kids’ painting at 17 per cent and digital cutting with growth of over 100 per cent". “Our resolute focus on the strategy will see us bring further product innovation and inspiration, a new approach to online demonstrations and workshops, new stores and further investment in our ecommerce platform to support future growth". “As ever, these plans are underpinned by a focus on great customer service and colleague engagement. We seek to provide inspiration to customers in the local communities we serve and allow our colleagues to demonstrate their incredible knowledge and passion for crafting.”
Apple demands 50% rent cuts despite phenomenal sales during lockdown
Apple is reportedly demanding rent reductions across its UK estate despite a sales surge during the coronavirus lockdown. The tech giant and retailer has asked landlords of its 38-store estate in the UK that it wants rents reduced by up to 50 per cent. In return, it has offered to extend leases by a few years, The Sunday Times reported. Apple saw its second-quarter sales rise by 11 per cent to $59.7 billion (£45.6 billion), after making a profit of $55.3 billion last year. Last year, Apple posted sales of nearly £1.4 billion and profits of £32.8 million for its UK division. Apple said online demand for iPhones and iPads was “phenomenal” during lockdown when its stores were forced to temporarily close in early March. Chief executive Tim Cook wrote in a letter at the time to inform customers that this is “the most effective way to minimise risk of the virus’s transmission”. Apple also said at the time that its employees affected by the store closures would still be paid. Its online store and app remained operational during the downtime for physical retail locations.
1700 jobs at risk as DW Sports lurches towards admin
Sports retailer and gym group DW Sports has said it is expected to tumble into administration, placing 1700 employees at risk. The company is to appoint insolvency specialists this week after its income was wiped out by the protracted closure of stores and gyms during the coronavirus lockdown. DW Sports, which was founded by former Wigan Athletic owner Dave Whelan, operated 73 gyms and 75 retail sites across the UK but announced plans to shut 25 of its stores last month. The firm said it would now wind down its retail business for good, with its website ceasing trading with immediate effect and closing-down sales starting at its 50 remaining stores. The PA news agency understands that DW Sports plans to protect as many jobs and gyms as possible through the restructuring process. The firm also stressed that Fitness First, which is a sister company of DW Sports, will continue to operate as a separate company and its 43 clubs will be unaffected by the administration. The administrators intend to support employees, customers and gym members as far as possible while they look to secure a buyer or buyers for some or all of the DW Sports portfolio. At present, 59 of its gyms have reopened in England and Northern Ireland, with a further 14 sites in England, Scotland and Wales unable to open due to government restrictions. “As a consequence of Covid-19, we found ourselves in a position where we were mandated by government to close down both our retail store portfolio and our gym chain in its entirety for a protracted period, leaving us with a high fixed-cost base and zero income,” chief executive Martin Long said. “Like many other retail businesses, the consequences of this extremely challenging operating market have created inevitable profitability issues for DW Sports. “The decision to appoint administrators has not been taken lightly but will give us the best chance to protect viable parts of the business, return them to profitability, and secure as many jobs as possible. “It is a difficult model for any business to manage through without long-term damage, and with the limited support which we have been able to gain. “Having exhausted all other available options for the business, we firmly believe that this process can be a platform to restructure the business and preserve many of our gyms for our members, and also protect the maximum number of jobs possible for our team members.”
Poundland rolls out chilled & frozen food to 19 stores this month
Poundland has announced the next stores to get a new chilled and frozen food section as part of its transformation programme. Another 19 stores – from Birmingham to Barnsley and Leicester to Kings Lynn – will get the new ranges during August. The discount retailer said up to five stores a week will be converted this month. Another eight will follow in September, taking the total to 60 since the first stores were converted in March following successful trials at selected pilot stores last year. Poundland confirmed that it planned to extend the scheme to more stores later in the year. Meanwhile the stores where the new ranges are being introduced will also get a makeover as part of the transformation plans known internally as Project Diamond. The biggest transformation in Poundland’s history also includes the roll out of simple pricing across all stores by the autumn, the opening of additional “shop-in-shops” for Pep&Co fashion, and investment in new back office technology. The discount retailer added that the work was being carried out in line with official guidance on safe working during the coronavirus pandemic and the revamped stores will provide the same standards of hygiene that apply across all stores to protect customers and staff. “We know that shoppers have got a real appetite for our chilled and frozen food offer which is why we are cracking on and converting up to five stores a week,” Poundland retail director Austin Cooke said. “This is a key part of our transformation plans so that we can bring as many customers as possible even more choice and amazing value in chilled and frozen food.”
Pretty Little Thing to launch own-brand homeware
PrettyLittleThing has announced it will launch its first ever homewares range. The founder and chief executive of the fast fashion etailer, Umar Kamani, made the announcement on Instagram on Sunday morning by posting logo options with the caption “PLT HOME coming soon”. Kamani created the business in 2012 with brother Adam. His father Mahmud, is the co-owner of parent company Boohoo, along with Carol Kane. There is currently no launch date for the range, but this will be the fast-fashion brand’s venture into homeware. PrettyLittleThing said that it has “ambitious plans for the future” after recently submitting plans to expand its Manchester headquarters by 10,000sq ft. The former warehouse on the Ancoats Works site will be converted, with architecture studio Jenkins Design Services appointed to refurbish the space in a move that will create 200 new jobs. The retailer is one of seven brands owned and operated by Boohoo, with the others being Nasty Gal, MissPap, Karen Millen, Oasis, Warehouse and Boohoo itself. Boohoo has been embroiled in controversy in recent weeks after a report from Labour Behind the Label found it to be paying its garment workers at a Leicester factory under the National Minimum Wage.
John Lewis in complete strategy rethink: digital first and new business areas
The John Lewis Partnership, owner of Britain’s leading department store chain, has said it must diversify beyond retail to survive the turmoil on the high street and plans to expand into financial services, gardening, housing and rental options. The coronavirus pandemic has destroyed many retail businesses that were already struggling with high rents and the shift online, leaving gaping holes on the country’s main shopping streets and threatening thousands of jobs. The Partnership, which owns the John Lewis department store chain and the upmarket supermarket Waitrose, said it hoped its plan would help profits to recover over the next three to five years. “As you all know, these are testing times, with profits this year and next likely to be challenged" Chairman Sharon White said in a letter to staff, known as partners. “The beauty of being a Partnership is that we are able to take a long-term view.” Known as middle England’s favourite department store, John Lewis had already said it could cut 1,300 jobs. In an outline of her new strategy, White said retail profit margins were under pressure and for the Partnership to be “sustainable over the long-term”, it needed to expand beyond its traditional role. It wants to grow significantly its financial services arm which offers credit cards, insurance and personal loans, and expand further into horticulture with possible partnerships on landscaping. As the group looks at potentially repurposing its shop estate, it could work with third parties to produce affordable housing, and it is also looking to rent out products or build a marketplace to sell used products. The scale of the plans show how retailers in Britain are having to rethink the way they do business. For John Lewis, it expects to become a 60% online retailer, from 40% before the pandemic, showing how quickly companies are having to adapt.
Dixons Carphone to axe 800 jobs as it overhauls store management
Dixons Carphone has announced plans to cut 800 jobs as part of an overhaul of its store management structure. The parent company of tech retailers Currys PC World said the shake-up would see it create a “flatter management structure” as it adapts to increasing online sales. Dixons Carphone said the changes would it see remove retail manager, assistant manager and team leader roles, while introducing new sales manager, customer experience manager and operational excellence manager positions in stores. The company added that it would also create opportunities for staff to join its ShopLive personal shopping service, where customers are advised by sales staff from home via video-link. Dixons Carphone has already started to consult with affected staff. “We remain committed to our stores as part of an omnichannel future, where we offer the best of online and stores to our customers,” Dixons Carphone chief operating officer Mark Allsop said. “This proposal will ensure in-store roles are focused on giving a seamless customer experience and exceptional service across all our customer channels, whether online or in-store. “Sadly, this proposal means we have now entered into consultation with some of our store colleagues". “This was not an easy decision and we’ll do everything possible to look after those colleagues we can’t find new roles for, financially and otherwise.” The news comes almost four months after Dixons Carphone permanently shut down all 531 of its standalone Carphone Warehouse stores, which resulted in 2900 job redundancies. Earlier this month, Dixons Carphone reported underlying pre-tax profits of £166 million for its financial year ending May 2, a 51 per cent year-on-year drop from £339 million the previous year. On a statutory basis, the electricals retail group saw group pre-tax losses of £140 million, but this was narrowed from losses of £259 million the year before. In its core UK and Ireland markets, Dixons Carphone booked a one per cent uptick in full year like-for-like sales and total revenue, but adjusted EBIT declined 10 per cent to £162 million. Electricals sales held up well amid the lockdown thanks to surging online sales jumping 22 per cent across the year, boosted by a 166 per cent surge in April during the first full month of lockdown in the UK. Dixons Carphone said online sales have continued to grow since the year end.
Waitrose introduces drive through online order collection at 70 sites
Waitrose has rolled out drive-through online grocery order collection services across its store estate allowing shoppers to collect items without entering the store.
Around 70 Waitrose stores are now offering drive-through collection for online orders from car parks, according to The Grocer. In participating stores customers can park in a dedicated parking spot before being greeted by a member of staff.
They can then collect or return items, including John Lewis goods at some locations, from the comfort of their vehicles.
It is understood that customers can also phone the store to confirm their arrival before items are brought to their vehicles.
“We continue to adapt to the changes we have seen since lockdown and explore new ways to ensure we are doing all we can to protect the health and wellbeing of our customers and partners,” a spokesman told The Grocer.
“We have seen a great response to the social distancing measures we have in place, and drive-throughs mean thousands of customers who simply want to collect their shopping can do so quickly and safely.”
1500 job cuts on the horizon at WHSmith
WHSmith is planning to cut more than 1000 jobs across its UK store operations as bosses said its recovery from the Covid-19 lockdown has been “slow”. The books and stationery retailer said it would start consulting with UK staff over plans that could see as many as 1500 of them losing their roles. WHSmith said it needed to reduce costs as its shops in airports and railway stations – usually the star performers in its trading updates – have been hit by low passenger numbers while its high street stores have also suffered from low footfall. “As a result of the impact on passenger numbers and lower footfall on the UK high street, we have taken the difficult decision to review our store operations across both our travel and high street businesses,” WHSmith said in its trading update this morning. “We are now starting a collective consultation on a proposed restructure which could lead to up to c.1500 roles becoming redundant. “This has been a very difficult decision and we are committed to supporting all our colleagues throughout this process and ensuring it is conducted fairly. “Based on our initial assessment, we believe that the costs associated with the restructure will be in the region of £15 million – £19million, reflecting the group’s enhanced redundancy policy.” WHSmith said just over half of its UK travel shops have reopened and that 246 of its largest sites have started trading again. It added that all 575 of its high street stores have opened, but footfall is strongly down compared with the same period last year. Revenue was 57 per cent lower last month compared with July 2019, even as sites started to welcome customers back, with most of this loss coming from the travel arm.
M&S expands grocery offering ahead of Ocado launch
M&S has expanded its food range ahead of its partnership launch with Ocado next month. M&S purchased 50 per cent of Ocado’s UK retail arm for £750 million last year, creating the new joint entity Ocado Retail. This will begin fulfilling online M&S grocery orders this September while 6000 products are available to view on the site now. Over 750 new products have been added to M&S’s range and hundreds of them have started to land in stores across the UK with more arriving August and September. The expansion includes a focus on bigger family pack sizes, a larger range of groceries and household cleaning products and a bigger range of organic products. They have also increased the range of household and grocery staples such as frozen meat, fruit and vegetables and soft drinks. “One year ago today, we began the joint venture with Ocado so that customers can access the full range of delicious, great quality M&S Food products online,” M&S food managing director Stuart Machin said. “The team has worked really hard to make this happen and from this week, customers can view the existing range of M&S products on the Ocado website as well as hundreds of new ones.”
Greenpeace warns Tesco on meat & dairy items linked to Amazon destruction
Environmental campaigners are urging Tesco to stop buying meat and dairy from suppliers they say are involved in destroying the Amazon rainforest. Greenpeace is also calling on the retailer to halve the amount of meat it sells by 2025 to protect wildlife, the climate and people. According to the environmental group, Tesco is buying meat from companies that are linked to destruction of the Amazon, which is being burned and cleared to make way for cattle ranching and growing soy for animal feed.
Footfall drops almost 40% despite hospitality reopenings
The UK high street has seen footfall drop by over 40 per cent during July as Brits continue to stay home following the lockdown ease. For the four weeks covering July 5 and August 1, footfall declined by 39.4 per cent in retail destinations across the UK, an improvement of nearly a fifth from June, according to data from Springboard. However, on high streets, footfall levels dropped by 47.2 per cent, 42 per cent in shopping centres and 19.9 per cent in retail parks. Springboard said the improvement in footfall during July was boosted by hospitality reopening. While high streets and shopping centres saw the most noticeable improvement, retail parks had the advantage of ease of access by car, free parking, open air environments and large stores. The introduction of mandatory wearing of face coverings also occurred at the tail end of the of the month, so its contribution to footfall is yet to be established. Physical retail destinations are still only attracting six out of every ten shoppers that visited last year as online shopping becomes preferable. The significance of online spending, which exceeds the CRR’s forecast for 2028, is unlikely to decline. Other factors constraining footfall are the lack of tourism, the increase in people working from home and rising unemployment. Footfall in central London – which is reliant on tourism – remained 69 per cent lower in July than in 2019. Despite this, the increase in footfall over the coming weeks is likely to be gradual.
Naked Wines expects 73% sales rise as wine proves popular in lock down [surprise!]
Naked Wines has experienced a huge boost in wine orders during the coronavirus lockdown, and expects total sales in July to be up 73 per cent compared to last year, thanks to strong rates of new customer growth. The online wine seller also said it expects a 40 per cent growth in total sales this year under its central performance scenario. Naked Wine said chairman John Walden will step down following the company’s AGM, and will be succeeded by Ian Harding. The group saw its sales during the first four months of the financial year rise by 76 per cent thanks to a 185 per cent rise in new customer sales. While significant uncertainty remains for the remainder of the year around the ongoing response to Covid-19 and the resultant macro-economic challenges, Joules has reviewed potential scenarios for the group’s performance this year. “Our central case assumes that we see the heightened levels of new customers and repeat purchase frequency reduce over summer, entering peak trading with an increased customer base and more normalised trading patterns for each customer,” Joules said. “I’m pleased to report continued strong rates of new customer growth and particularly strong repeat trading momentum as we see evidence of new customers recruited during the Covid-19 pandemic converting to repeat customers,” Joules chief executive Nick Devlin said. “I’m especially grateful for the incredible work of our teams around the world who have enabled us to deliver this step change in performance under challenging operating conditions,” he said. “The evidence we are seeing across our markets is consistent with our view that Covid-19 has served as an inflection point for the online wine market, with Naked uniquely placed to benefit from that. “We have the balance sheet strength and operational agility to enable Naked to continue to focus on ways to accelerate growth and take advantage of the opportunities presented by the new and evolving consumer landscape.”
Hammerson to raise £825m, reboot lease terms with retailers, sell VIA stake
British shopping centre operator Hammerson Plc announced moves to raise a combined £825 million on Thursday and said it would reboot the terms of its leases with UK retailers as it faced a slump in rent collections, footfall and the value of its properties. The deals would significantly strengthen its financial position, providing liquidity headroom as it continues to refocus its portfolio towards its flagship destinations in the UK and Ireland, the owner of the Bullring and Brent Cross shopping centres said. Hammerson also owns retail properties in France. The coronavirus crisis has brought mall operators to their knees as their already struggling tenants have been squeezed further by stay-at-home shoppers, prompting calls for rent relief and deferrals. The FTSE-250 company said it would raise proceeds of about £552 million through a rights issue, and about £274 million through disposal of its stake in successful European outlet malls operator VIA Outlets. Its net rental income fell 44% to £87.3 million for the six months ended June 30, whereas the occupancy rate fell to 94% from 97% in the year-ago period. That divided out as UK flagships' occupancy being 93%, French flagships 94%, Ireland flagships 96%, and Premium outlets 93%.
Castore opens second store in Liverpool
Castore has officially opened its new store in Liverpool, marking the online retailer’s second bricks-and-mortar store and the first one outside of London. The north west city also doubles up as the location of Castore’s headquarters, and is where brothers Tom and Phil Beahon grew up before they co-founded the premium sporstwear label in 2015. Castore’s new store is located within the Liverpool One retail precinct in a 1579sq ft unit on Manesty’s Lane. It was originally slated to open April 10, but the coronavirus lockdown led to a delay in its official opening. Castore said its new Liverpool store will complement its flagship on King’s Road in Chelsea, London, as well as its growing ecommerce presence in 57 countries, which includes online stockists MatchesFashion, Selfridges and Mr Porter. Just weeks before the pandemic escalated in the UK, Castore raised £7.5 million from undisclosed private investors to help expand its range into professional team sports kit and footwear as well as accelerate international growth. Last year, the online retailer announced a partnership with tennis champion Andy Murray, which saw him become a shareholder as well as wear Castore kit on court at Wimbledon and the Australian Open. Designed in-house by the Castore team, its new Liverpool One store complements the adjacent Fred Perry boutique, sharing its premium character and association with world-class tennis. “With our headquarters here in Liverpool it seemed a natural transition for us to open our next store in this vibrant city,” Tom Beahon said. He added: “Following our online inception and entry into the London market, it is so exciting to be launching in our first domestic location, and we are sure Liverpool One will become a firm part of our successful brand history.” The new Castore store will implement regulations to welcome guests safely and ensure appropriate social distancing, in line with government directives.
Coronavirus drives business rates dispute appeals by 690%
Covid-19 has led to a huge surge in tax appeals from retailers and other businesses in England challenging property valuations which form the basis of business rates bills. Data released from the Valuation Office Agency (VOA), an executive agency of HMRC, show a total of 144,910 shops, pubs, restaurants, offices, factories and public sector buildings lodged a Check to their property tax valuation during the first three months of the 2020/21 financial year. This equates to 2230 non-domestic premises every working day to challenge their property valuations. The number of Checks lodged was up by a whopping 690 per cent on the corresponding period last year, when 18,340 Checks were raised between April and June 2019. A Check is the first stage of a formal appeal under a three stage process called “Check Challenge Appeal”. Alex Probyn, UK President of the real estate advisory firm Altus Group, said the impacts of Covid-19 on commercial properties “are already obvious arising from the national restrictive measures introduced to counter the pandemic and grounds exist to support a substantial and prolonged reduction”. The UK Government has delayed the next revaluation of business rates in England until 2023 so that property valuations can be calculated by reference to emerging post-coronavirus rents that are being paid on April 1 next year.
Lakeland to "focus on new strategy" as founding family departs
Lakeland has reportedly announced a restructure at its operating board after its owners the Rayner family stepped down. The kitchenware retailer’s owners Sam, Martin and Julian Rayner have said they will retire from the board, and chief executive Catherine Nunn take over as deputy chair, Retail Week reported. Commercial director Steve Knights will succeed Nunn as chief executive and supported at board level by chief financial and operating officer Paul Lewis, chief commercial officer Scott Jefferson and chief customer officer Neil Piggot. Operations director Gary Marshall will also step down after 16 years with the business. The Rayner family’s departure means this is the first time a family member has not sat on its operating board. The retailer said a “smaller board will allow Lakeland to be more agile while focusing on the most important areas of strategy and operational delivery”. Sam Rayner said Lakeland’s overall strategy “remains even more relevant now than ever before and will provide a clear focus and direction for the years to come”. In the past five months, Lakeland said that certain elements of the strategy will now need to be delivered much more rapidly than was originally envisaged. The Rayner family will retain ownership of the company.
Key themes of the week - Rent & Rates, Jobs, digital
Key article of the week - Waitrose introduces drive through online order collection at 70 sites
Key question of the week - Will the "Eat out to Help out" scheme slow / stop more CVA's or administrations?