Harrods owner rakes in £648m from Tiffany & Co sale to LVMH
Harrods owner Qatar Investment Authority (QIA) has gained over $892 million (£648 million) when it sold shares in Tiffany & Co as part of LVMH’s $15.8 billion (£11.5 billion) acquisition of the US jeweller. French luxury goods group LVMH finalised its acquisition of the retailer last week in which QIA had been a longstanding investor having initially acquired a 5.2% stake in late 2011. QIA sold its remaining 9.3 per cent stake in Tiffany as part of a renegotiated deal that LVMH had agreed to with Tiffany shareholders in October, which involved it paying $131.5 (£95.5) per share. The $1.55 billion (£1.13 billion) sale by QIA amounted to a total gain of around $892.3 million (£648.09 million) representing an internal rate of return of 9.3 per cent from the sovereign fund’s total investment. Tiffany’s last quarterly earnings saw a 70 per cent rise in sales in China and an ecommerce sales surge of 92 per cent – which indicated a recovery from the Covid-19 pandemic. In December, over 99 per cent of shareholders voted in favour of LVMH’s takeover of Tiffany after more than a year of ongoing negotiations between the parties. Bernard Arnault’s LVMH made the first offer late last year but backed out of the deal when the pandemic began to affect businesses. LVMH also blamed the French political intervention to delay completing the acquisition until January 6. Separately, Harrods managing director Michael Ward said in early December that it will take him “years to rebuild” the business, as the pandemic continued to hammer sales. The first national lockdown in March was the first time the store had closed for any significant time since the site opened in Knightsbridge in 1849. In 2019, Harrods saw pre-tax sales of £232 million on sales of £871 million, or £1.8 billion including concessions. That has allowed Qatar Investment Authority to declare dividends totalling more than £1.1 billion so far. To shift unsold goods after the first lockdown, Harrods opened an outlet shop on a short-term lease at the Westfield London. At the height of lockdown, about 3500 staff were placed on furlough, with the company topping up their wages from 80 per cent to 100 per cent.
The Very Group owners mull £3bn floatation
The billionaire family behind the parent company of online retailers Very and Littlewoods is reportedly mulling the possibility of a stock market flotation. According to Sky News, the Barclay family are in the early stages of exploring plans for a £3 billion-plus initial public offering (IPO) for The Very Group. A decision on or full details of the IPO is not expected any time soon though, especially in the wake of the unexpected death last week of Sir David Barclay, co-owner of the business alongside his twin brother Sir Frederick Barclay. It is also not yet clear if The Very Group’s board has formally appointed bankers to help advise on a potential IPO plan. It comes after the retailer last week reported a record-breaking Christmas and Black Friday trading season, bolstered by a 50 per cent year-on-year surge in website visitors. Should an IPO go ahead, The Very Group would join a list of retailers heading for the stock market in the wake of the pandemic. The Hut Group made a £1.9 billion flotation in September, while Moonpig and Dr Martens both confirmed plans for an IPO just this month. A stock market listing of The Very Group would also make it the first time a Barclay-owned business goes public. Last year, the billionaire brothers sold off London’s Ritz hotel, and the family continues to own The Telegraph newspaper and logistics business Yodel. This would not be the first time The Very Group has explored going public. In 2017, when the firm was then known as Shop Direct, it held talks with private equity firms as it sought the possibility of opening up to external investors. However, it never went ahead. At the time, an estimated £3 billion valuation was sought. A Very Group has not yet provided a comment on the latest IPO news.
Deliveroo sees value rocket to $7bn as IPO looms
Deliveroo has seen its market valuation rocket to $7 billion after its latest round of funding as it prepares for its blockbuster IPO.
Amazon, alongside other key investors including Fidelity Management and Durable Capital Partners, helped Deliveroo raise $180 million (£132 million) in new funding last week.
This valued the delivery giant at $7 billion not including the new funds raised, nearly double the $4 billion it was valued at during its last major funding round in 2019.
According to Deliveroo’s chief executive Will Shu, this money will be put towards “new tech tools” to support restaurants and riders while helping the young company “continue to innovate” in areas like grocery delivery, which has expanded dramatically since the start of the pandemic.
While grocery delivery was a fledgling service for Deliveroo at the beginning of last year, the pandemic has seen it sign 36 deals with major retailers including Aldi and Waitrose, helping it double its revenues since the start of the pandemic.
Alongside a major investment from Amazon, which now owns 16 per cent of the company, this has sparked massive interest in Deliveroo’s stock ahead of its hotly anticipated IPO later this year.
In November, it was revealed that Deliveroo was appointing retail heavyweight Claudia Arney to its board, suggesting it could seek a premium listing on the London Stock Exchange, making it eligible for inclusion in the blue-chip indices.
A month earlier Deliveroo appointed Goldman Sachs to start working on plans to take it public, following months of speculation.
While it is as yet unclear whether Deliveroo will list on the London or New York stock exchange, it is understood that the listing could take place as soon as April.
First full week of lockdown #3 sees retail job vacancies decline 48.6%
New research has shown that job vacancies in the UK retail industry fell by almost half during the first full week of the current lockdown restrictions across the country. According to data from CV-Library, job postings in retail plunged 48.6 per cent year-on-year. However, CV-Library stressed that this was a tough comparison, given that in January 2020 the economy was stable and the world hadn’t been impacted by the pandemic. The current lockdown restrictions in all four countries mark the first time the whole of the UK has been under lockdown since spring last year. While retail wasn’t the only sector that was dealt a blow in job availabilities due to the pandemic, when factoring all the sectors the UK job market overall revealed a resilience in the first week of lockdown. CV-Library said that when compared to the first full week of the nationwide lockdown in March last year, the number of job postings were up by 91.8 per cent. Even compared to the first week of November, when England and Wales were both in a second lockdown, the market also fared much better, with job postings up 0.8 per cent. “The impact of Covid-19 is still clear to see within the individual sectors, but the overall initial impact of this third lockdown appears to be the least damaging, proving that we learning to navigate and adapt in these unprecedented times,” CV-Library CEO Lee Biggins said. “January is traditionally one of the busiest times of the year for the job market and we must acknowledge this seasonal boost.”
Superdry turnaround plan disrupted by Covid-19as losses reach £10m
Superdry has reported a drop in sales and profits as the Covid-19 pandemic continued to slow down trading. The fashion retailer recorded an underlying loss before tax of £10.6 million in the 26 weeks to October 24, compared with a £2.3 million loss in the same period the previous year. Group revenue fell by 23.4 per cent to £282.7 million, down from £369.1 million in the same period in 2019. Superdry founder and chief executive Julian Dunkerton said progress was being made, but the closure of stores during lockdown means it will ”take time” to bear fruit. The company said the revenue decline reflected the impact of the pandemic; 23 per cent of owned-store trading days had been lost under lockdown restrictions and social-distancing measures had reduced footfall. However, online sales were up 49.8 per cent year on year, and partially offset lost store sales, which were down 44.8 per cent. “Covid-19 has brought substantial challenges to Superdry, as with many other brands, and this has continued through the first half and into the second with renewed lockdowns in our key markets,” Dunkerton said. “While revenue and underlying profit have been impacted by the external conditions, the brand has continued to focus on the reset. “However, with more than 70 per cent of stores currently closed and having to shut a significant number over peak, it will take time to see the benefits of all our hard work flow through to the results. “We are making great progress with our influencer-led, digital marketing strategy, enabling us to better target new and existing customers. “I am particularly excited about our recently announced partnership with Brazilian footballer Neymar Jr – a globally recognised sports star with more than 143 million worldwide social media followers. “I am also very proud of how we are embedding sustainability in every part of the business, with responsibly sourced ranges at the heart of our AW20 collection. “I believe sustainability is becoming critically important to our customers and I’m committed to Superdry becoming one of the leading global sustainable fashion brands. “With Silvana Bonello joining our team as chief operating officer, we are well on the way to having the right leadership team in place to see us through the current difficult environment, oversee the delivery of our strategy and return the brand to long-term, sustainable growth once the pandemic recedes.” Furthermore, trading continued to be disrupted going into its third quarter, with further national and regional lockdowns across the UK and Europe restricting the operations of its store estate. This has resulted in 38 per cent store days lost due to lockdowns in the 11 weeks to January 9, including the weeks before and after Christmas in several key markets. As of January 9, 173 stores are temporarily closed, representing 72 per cent of its portfolio. Ecommerce sales were up 13.2 per cent for the period, helping to offset some of the lost store sales, with the strongest performance being seen on its owned sites which were up 25.7 per cent year-on-year. Meanwhile, its wholesale performance ended the 11 week period down 23.0 per cent year-on-year as Superdry continued to face the same Covid-19-related headwinds as its store estate. Superdry said it faces “continued uncertainty and disruption” caused by Covid-19, including the impact from sudden and protracted store closures. The retailer said it recognises the material uncertainty noted in its concern assessment, and it is not providing formal guidance at this time. It expects prolonged store closures and subdued footfall in early 2021 to negatively impact revenues year-on-year, even after considering the six weeks of lockdown in late FY20.
Aldi hands staff New Year pay rise
Aldi has handed its store workers a New Year’s pay rise as its colleagues remain “the best-paid in the sector”. All of Aldi’s 30,000 Store Assistants will benefit from the pay rise, with Aldi paying a minimum hourly rate of £9.55 nationally, up from £9.40. From February 1, the discounter will increase its minimum hourly rates for store assistants of £9.55 nationally and £11.07 inside the M25, rising to £10.57 and £11.32 respectively. Aldi said it remains as one of the only UK supermarkets to pay for breaks taken during shifts. When paid breaks are included, Aldi’s minimum hourly pay rate for store colleagues, based on an average six-hour shift, will be £10.11. Aldi’s new minimum hourly rates exceed the Living Wage Foundation’s recommended real living wage rates of £9.50 an hour nationally and £10.85 an hour inside the M25. These changes mean that Aldi store colleagues across the UK will earn a minimum of £0.83 more per hour than the current National Living Wage, and £2.35 more an hour if they work within the M25. Aldi is recruiting for 4000 new store colleagues in 2021 to support its growth. “I want to express my sincere thanks to every single Aldi colleague who stepped up when it mattered and helped us succeed in our most important mission of all – feeding the nation,” Aldi UK and Ireland chief executive Giles Hurley said. “Their outstanding efforts have ensured that our customers continue to have access to fresh affordable food, every single day. “It has never been more important to ensure that our colleagues are rewarded fully for their immense contribution during a challenging period for everyone.” Aldi now has more than 900 stores throughout the UK and is working towards a long-term target of 1200 stores by 2025.
Moonpig proceeds with £1.2bn LSM listing
Moonpig has announced that it is going ahead with its stock market debut valuing the online retailer at up to £1.2 billion. Following the initial announcement last week regarding the publication of a registration document, Moonpig today confirmed its intention to proceed with as well as further details of its initial public offering (IPO). The firm said at least 25 percent of its share capital would be made available for trading in the IPO, which is set to take place next month. It added that the final offer price in respect of the IPO would be determined following a book-building process. However, investment firms BlackRock and Dragoneer have already signed up for £130 million worth of shares in Moonpig when it lists, at £80 million and £50 million respectively. Moonpig – backed by Exponent Private Equity Partners, which owns a 41.3 per cent stake – said last week that it was considering the move as it looks to expand and capitalise on the surge in demand for online cards and gifts amid the pandemic. It comes amid a rush of IPOs as retailers look to take advantage of stock market optimism over vaccines, with footwear retailer Dr Martens also revealing plans for a possible £3 billion flotation earlier this month. “As leaders of a market undergoing an accelerating shift online, we’re delighted to bring Moonpig Group to the public market,” Moonpig chief executive Nickyl Raithatha said. “Our data-powered technology platform makes it incredibly easy for our customers to create more special moments for the people they care about. “As the market-leading platform, with a strong track record, and a huge opportunity to grow, we are confident about our decision to become a publicly traded business.” Moonpig chairwoman and former WHSmith boss Kate Swann is helping oversee the listing as the retailer seeks to tap further into a cards and gifts market which is worth £24 billion across the UK, the Netherlands and Ireland, and is rapidly switching online. Moonpig said only around 10 per cent of card purchases were made online in 2019, which is forecast to double to 20 per cent by 2021. The ecommerce firm already has 12.2 million customers and sends 46 million cards a year but is trying to position itself as a technology business, using customer data and predictive technology. Bosses hope harvesting customer data will help remind them of birthdays and cash in on additional gifts. The firm said the sale of gifts alongside cards – such as flowers, wine and chocolates – is “critical” to the group and is now almost half of the business. It claims to be among the top five largest florists in the UK, sending out more than 200,000 bouquets of flowers for Mother’s Day. The IPO comes in the same month that rival Paperchase said it was looking at bringing in administrators due to plunging sales, putting 1500 jobs at risk. Moonpig by comparison has benefited from the lockdown, with families and friends turning to gifts and cards to help get through long periods without contact. The retailer has a 60 per cent share of the online cards market in the UK and a 65 per cent share in the Netherlands, where it trades as Greetz. It made underlying earnings of £44.4 million in the year to April 30 on sales of £173.1 million, up 44 per cent year-on-year. In the half-year to October 31, it saw sales jump 135 per cent to £155.9 million. With the proceeds from the float, it aims to invest further in technology and staff, having hired 50 people during lockdown. Moonpig, which launched 20 years ago, has a team of more than 400 staff across the UK and Netherlands, with an office in London, a technology hub in Manchester and factory in Guernsey.
Deliveroo appoints Next CEO Lord Wolfson to its board
Deliveroo has appointed fashion retail giant Next’s chief executive Lord Simon Wolfson to its board as the company prepares for what could be this year’s largest initial public offering (IPO).
Wolfson joined the rapidly expanding delivery company as a non-executive director this week, aiming to bring his “great knowledge and insight” to the company.
The appointment comes just days after Deliveroo completed a new Series H funding round, raising $180 million (£132 million) and valuing the company at a whopping $7 billion, nearly double the value seen during its last funding round in 2019.
“We are excited about his appointment,” Deliveroo’s chief executive Will Shu said.
“We are looking forward to working with him as we continue to innovate, developing new tech tools to support restaurants, to provide riders with more work and to extend choice for customers, bringing them the food they love from more restaurants than ever before.”
Wolfson added: “I am delighted to be taking up this role. Deliveroo is an exciting, innovative and fast-growing company that, like Next, relies on advanced technology to deliver a market-leading proposition. I look forward to working with the talented leadership team on the many opportunities ahead.”
While grocery delivery was a fledgling service for Deliveroo at the beginning of last year, the pandemic has seen it sign 36 deals with major retailers including Aldi and Waitrose, helping it double its revenues since the start of the pandemic.
Alongside a major investment from Amazon, which now owns 16 per cent of the company, this has sparked massive interest in Deliveroo’s stock ahead of its hotly anticipated IPO later this year.
In November, it was revealed that Deliveroo was appointing retail heavyweight Claudia Arney to its board, suggesting it could seek a premium listing on the London Stock Exchange, making it eligible for inclusion in the blue-chip indices.
A month earlier Deliveroo appointed Goldman Sachs to start working on plans to take it public, following months of speculation.
While it is as yet unclear whether Deliveroo will list on the London or New York stock exchange, it is understood that the listing could take place as soon as April.
Dixons Carphone online sales grow 121% as new finance boss jumps on board
Dixons Carphone has seen its sales increase during Christmas after it reported an online growth of over 100 per cent. The retailer said sales of electricals jumped 11 per cent on a like-for-like basis during the 10 weeks to January 9. In its core UK and Ireland business, like-for-likes in its electricals category were up eight per cent, while online growth climbed 121 per cent. The highest growth was seen in sales of large screen TVs, smart tech, food preparation, health & beauty and all areas of computing & gaming. Meanwhile, sales in its mobile phone division dropped by 40 per cent, but the retailer said this was “in line with plan” after the closure of all standalone Carphone Warehouse stores in April last year. Group electricals online sales rose by 118 per cent while its ShopLive 24/7 live video shopping service was also growing strongly. “We’ve continued to trade strongly, both in the UK and Internationally, while ensuring colleague and customer safety is paramount,” group chief executive Alex Baldock said. “We’re winning online, where we’re the biggest and fastest-growing specialist technology retailer in all our markets. And even where stores have been closed, our work to bring the best of digital and physical shopping to every customer has borne fruit in such innovations as our one-hour drive-thru Order & Collect and ShopLive. “Our flexible infrastructure and accelerating transformation mean we’ve been able to react ever-faster to changing trading restrictions, while building more lasting and valuable customer relationships. “The outlook remains uncertain, and we’re still far from our full potential. But this strong performance makes us more confident than ever that we’re on the right path to create a world class business for colleagues, customers, shareholders and society.” Dixons Carphone also revealed the appointment of Tesco finance director Bruce Marsh as its new chief financial officer to replace Jonny Mason. Marsh has served at the supermarket giant since 2015. He has also spent time at Kingfisher, where he was director of Kingfisher future homes and group strategy director, and also held a number of senior finance roles at Dixons Retail prior to its merger with Carphone Warehouse. Mason will remain in his existing role to support the company through the current financial year and “ensure a seamless and orderly transition”. A departure date will be confirmed in due course. “Bruce brings a strong track record over many years in retail, and in the successful delivery of large complex business transformations in rapidly changing environments,” Baldock said. “He has extensive experience leading high-quality finance teams, maintaining robust financial controls and improving planning and performance. Bruce has played a pivotal role in Tesco’s revitalisation. “Jonny has been an outstanding leader at Dixons Carphone. He’s made a big contribution to the great strides we’ve made in our transformation, particularly in UK Mobile, to a stronger balance sheet, and to a sharper focus on cash and cost control. “This will serve the group well as we continue to build on these achievements.” Marsh said: “Having spent the early part of my career in Dixons Retail, it is wonderful to be returning to a great business. I am excited to be joining the group as it continues its ambitious transformation to a world class business helping everyone enjoy amazing technology.” Mason said: “I am pleased with the progress the business has made in its transformation which has seen the Company grow its market leading position and develop its omnichannel capability. “Although my departure is still some way off, I would like to take this opportunity to thank all my colleagues and wish Dixons Carphone every success for the future.”
WHSmith Christmas sales recover but continues to burn through £20m a month
WHSmith has witnessed a “better than anticipated” performance during Christmas despite the impact of store closures and reduced footfall. The retailer said it has been burning through £15 million to £20 million in cash a month since the first Covid-19 lockdown in March. Despite this, WHSmith said group revenue recovered to 67 per cent of pre-Covid levels during December 2020. The group saw a “good” performance in its high street business, with total revenue at 87 per cent of 2019 revenue for the 20 week period up to January 16. Sales across high street stores – the majority of which remain open under the latest lockdown measures – came in at 92 per cent of pre-Covid levels last month. That was the same percentage it achieved in October but represented an improvement on the 82 per cent registered in November. Meanwhile, sales reached just 36 per cent of 2019 levels across WHSmith’s travel division in December, which marked a slowdown from the 37 per cent it achieved in November. Although total sales slowed due to “significantly reduced passenger numbers”, WHSmith said it continued to drive average transaction values during the festive season. In its financial year to date, WHSmith said group sales were less than half of last year’s total but chief executive Carl Cowling insisted he was “pleased” with the group’s performance over the Christmas period. “Covid-19 continues to have a significant impact on the WHSmith Group, however we are pleased with our performance over the Christmas period which was better than anticipated,” Cowling said. “We generated cash during November and December and ended December with a stronger cash position than anticipated with liquidity of £90 million, which is materially ahead of our original plan. “I am extremely grateful to all our colleagues around the world and, in particular, our store teams who have worked exceptionally hard throughout what has been a very challenging period. “We remain well placed to navigate our way through this ongoing period of uncertainty and benefit from the recovery of our key markets in due course.”
Burberry sales driven by digital as younger customers shop online
Burberry has reported a rise in digital sales during the golden quarter thanks to “good progress” in its transformation strategy. The luxury fashion retailer said online sales increased by more than 50 per cent in the 13 weeks to December 26, 2020. Burberry said full-price sales were driven by “new, younger clientele” as well as its existing customer base. However, the retailer’s physical store sales continued to suffer due to ongoing store closures across its global markets. Like-for-like store sales dropped by nine per cent across the quarter, as fewer markdowns and a drop in tourist numbers to its outlet stores affected performance. Across the group, total retail sales dropped by four per cent on a reported basis compared to the same quarter in 2019. “Despite the challenging external environment, we made good progress on our strategic priorities in the quarter,” Burberry chief executive Marco Gobbetti said. “We saw a strong increase in full-price sales as our collections and communication resonated well with new, younger clientele as well as existing customers. “While the short-term outlook remains uncertain due to Covid-19, we are well placed to accelerate when the pandemic eases.”
WHSmith faces investor revolt over CEO's £25,000 pay rise
WHSmith has delayed a £25,000 pay rise for its chief executive Carl Cowling after a third of its shareholders rebelled against the remuneration report. The retailer said Cowling had been due for the increase since last April, but it will be “postponed” after investors revolted at its general meeting on Wednesday. The revolt came after increased concerns over the pay rise during the Covid-19 pandemic. Although WHSmith said its pay committee thought Cowling was owed the first salary increase he received last July, it was now unlikely to hand Cowling the money before the end of the financial year in August. “We acknowledge that a significant minority of shareholders chose not to support this resolution. We will continue to actively engage with shareholders on executive remuneration to ensure their views are fully understood during 2021,” WHSmith said. The revolt was larger than the 12 per cent of investors who voted against the company’s remuneration report last year due to objections over Cowling’s pension contribution. The news came after WHSmith appointed a non-executive director. Kal Atwal has been hired from Royal London Asset Management and Admiral Financial Services to join the retailer on February 1. Atwal is currently the chair of Simply Cook, a tech-enabled meal kit subscription service. Prior to this, she spent 16 years at BGL Group where her roles included founding managing director of Comparethemarket.com and group director with responsibility for brand-led businesses, group strategy and corporate communications. “We are delighted to welcome Kal on to the board of WH Smith. With her marketing and digital expertise and entrepreneurial approach to business, Kal will be a valuable member of the board,” WHSmith chairman Henry Staunton said. On Wednesday, WHSmith reported that its Christmas trading performance was better than expected despite reduced footfall due to Covid-19 restrictions. In a trading update covering the 20 weeks to 16 January, the book and stationery retailer said total group revenue came in at 59 per cent of 2019 revenue for the period. While its high street stores delivered revenue at 87 per cent of the same period in 2019, the retailer’s travel business, which operates stores at airports and railways stations, could only achieve 37 per cent of the 2019 level. The retailer said January has proven to be the worst month out of the last five, with sales falling to 46 per cent of last year’s levels – a decline of more than two-thirds compared to December. Although trading at its stores in airports and train stations remained weak in December, high street revenues reached 92 per cent of 2019 levels in December. Meanwhile, WHSmith said it had not experienced any Brexit-related disruption after the transition period ended. Cowling said: “In our high street business, we worked hard to navigate our way through the evolving Covid restrictions as we approached the Christmas trading period.”
Primark's refusal to go online could mean "the start of the end" for the beloved brand
Primark’s continuing insistence not launch an ecommerce offering despite taking a £1.1 billion hit could “be the start of the end” for the beloved brand.
Last week the fast fashion giant, owned by Associated British Foods (ABF), reported a 30 per cent drop in sales in the 16 weeks to January 2, as 305 of its 389 shops around the world remained shut.
This means roughly 28 per cent of Primark’s stores remain open, while the retailer reported that sales performance at stores that remain open is varied as less tourism and more people working remotely hammered footfall.
Despite this plunge in sales, Primark has remained staunchly opposed to experimenting with selling its goods online, even as its fast fashion rivals like Boohoo report runaway sales.
“Are we losing sales here during these store closures? Yes, that is not in dispute here,” AFB’s finance director John Bason said.
“But that does not mean that it pushes you to make uneconomic decisions about changing a winning business model.
“Our price point is the reason that we can’t and other people cannot make money online. That makes us different.”
Analysts across the industry have questioned its hard-headedness, arguing Primark could suffer irreparable damage without exploring ecommerce options.
Fluent Commerce’ managing director Rob Shaw said: “The irony is, Primark has procured most of the technology components they need to open up an eCommerce channel which, if utilised correctly, would have preserved significant amounts of lost revenues and potentially consumer advocacy, during the COVID-19 lockdown period – even if this was offered via limited regions in the first instance as a pilot.”
Andy Barr, retail expert and co-founder of online price tracking website Alertr, argued that while Primark has until now faired fairly well during the pandemic, now “might be the time to reconsider” their offline-only approach.
“We have seen even the biggest retailers take huge blows over the last year, with store closures and job losses being reported almost daily,” Barr said.
“If Primark continue to ignore online shopping, they could well go the same way, despite their popularity.”
Rick Harris, director of discount online retailer offeroftheday.com, warned that Primark’s loyal fanbase would not remain so forever, and months without being able to shop with Primark could force customers to turn elsewhere.
“If truth be told, the resistance to move online is no doubt in part due to there not being a large enough margin in their clothes to justify a high level of return,” he said.
“Customers will only remain loyal for so long though; could this be the start of the end for Primark?”
Pets at Home sales reach £302m in challenging environment
Pets at Home has recorded a rise in revenue by 18 per cent to £302 million in the 12 weeks to December 31. The pets goods retailer said it recorded the uptick in sales over the Golden Quarter, as it “adapted to the changing environment”. Group like-for-like sales growth came in at 17.6 per cent after retail like-for-like sales rose 17.5 per cent despite the impact of Covid-19 restrictions. Pets at Home said trading momentum was boosted across the Christmas period, with December like-for-likes rising by 19.3 per cent. Meanwhile, vet group revenue rose by 22.1 per cent, with like-for-like sales increasing by 17.8 per cent in the period. “Against a backdrop of continued uncertainty our pet care model remains robust, with our performance during the third quarter testament not only to the advantages of our scalable omnichannel pet care platform and unique joint venture veterinary model, but also the hard work and commitment of all our colleagues across the group,” Pets at Home group chief executive Peter Pritchard said. “Mindful of this challenging environment, I remain confident that the changes we have made to our business enable us to continue providing essential pet care to our customers in a safe and appropriate manner. “I am very pleased with the progress we have made in this quarter, in particular how we have adapted to the changing environment in which we operate. “We remain as determined as ever to create the best pet care platform in the world, and our strong liquidity gives us the capacity to make the right investments to support our ambition”. Pets at Home launched a one-hour click-and-collect service across its 451-strong store estate during the period. It also launched two smaller next generation shops in London’s Camden and Putney.
200,000 retail redundancies forecast for 2021
The UK’s retail sector is forecast to report 200,000 job losses this year as Covid-19 restrictions continue to affect the industry. The latest research from the Centre for Retail Research (CRR) showed that an average of 320 stores were shuttered every week in 2020. New figures show a bleak retail landscape for 2021, with high streets and shopping centres likely to be most affected by social distancing rules. The CRR said the retail sector’s troubles are “caused by high costs, low profitability, and losing sales to online shopping”. “These problems are felt by most businesses operating from physical stores in high streets, shopping malls or neighbourhoods. “The low growth in consumer spending since 2015 has meant that the growth in online sales comes at the expense of the high street.” The third lockdown and tiered restrictions have impacted stores as a large proportion of retail trade has been lost. “Although a lot of money has been channelled into the retail sector ‘to preserve jobs’, businesses cannot operate with zero revenue and constant threats of pandemic-driven closure,” CRR said.
Next pulls out of race to buy Arcadia Group
Next has pulled out of the race to acquire Sir Philip Green’s Arcadia Group from administration, clearing the way for Authentic Brands, G-III Apparel and Shein to place their final offers. A consortium comprising Next and US investment firm Davidson Kempner Capital Management, have withdrawn from a process being run by Arcadia Group’s administrator. Next said it was “unable to meet the price expectations of the vendor”. The news of Next and Davidson Kempner’s interest in Green’s empire was reported over the weekend, which would have seen Next take a minority stake. Arcadia fell into administration last year, putting 13,000 jobs at risk across 500 outlets. Earlier this week, Arcadia – which also owns Dorothy Perkins, Miss Selfridge and Burton – said it will close more than two dozen stores by the end of the month, with 700 staff expected to lose their jobs. Interested parties had been asked to submit bids for the whole company or individual brands at the start of this week. Administrators Deloitte have been looking for buyers for some or all of Arcadia, after a slump in sales caused by the Covid-19 pandemic resulted in its collapse. The demise of the empire comes after the collapse of retailers such as Cath Kidston, Oasis and Warehouse and Debenhams. Topshop is considered Arcadia’s flagship brand, and a sale could fetch about £200 million. Evans, its plus-size clothing brand, has already been sold to City Chic Collective, an Australian retailer, for £23 million. Shein has tabled an offer worth well over £300 million for Topshop and Topman. Other bidders include Boohoo, Asos and Authentic Brands Group, which is working with JD Sports. It has been estimated that Arcadia’s pension fund has a £350 million deficit and Green is facing renewed pressure to plug it with his own money, just as he did so with the BHS pension deficit after it collapsed in 2016.
Price gouging still very much an issue on Amazon
Price gouging on Amazon’s marketplace remains “very much an issue” despite widespread attempts from the retailer to crack down on the phenomenon.
Amazon’s marketplace is still rife with examples of price gouging on essential items, according to new research published by the US Public Interest Research Group (PIRG).
The non-partisan consumer advocacy organisation compared the pre-pandemic prices of over 750 items which have become essential during lockdown, including face masks, hand sanitiser and computer monitors, to their prices at the end of 2020.
It found that 409 of the 750 items had seen prices rise by an average of 20 per cent, but many items had seen far greater price hikes since March, including 136 items which doubled in cost.
Amazon has repeatedly come under fire for allowing major cost spikes on key items, but the retailer says it has removed millions of items and tens of thousands of bad actors which it suspected of price gouging, alongside millions items making false medical claims.
In November, three third-party Amazon sellers were forced to pay fines of $52,000 and refund customers nearly $23,000 after being found to have sold thousands of units of hand sanitiser at “grossly” inflated prices.
While the most extreme cases of price-gouging have largely been addressed, PIRG says hundreds of products have had less dramatic but far longer-term levels of cost increase.
Using data from Keepa, PIRG found that the prices of 80 per cent of disinfectant wipes had risen by more than 20 per cent, while 66 per cent of cloth face masks rose by the same amount.
“What we found was that while Amazon is taking measures to crack down on price-gouging on their site, it is very much still an issue,” the study’s author Grace Brombach said.
“Amazon has blamed third-party sellers, for the most part, when it comes to price gouging. And so I think it’s important to show that there were cases where Amazon was the supplier of these products that were seeing these massive price spikes.”
In response to the report, Amazon said: “We have a longstanding policy against price gouging, have processes in place to proactively block suspicious offers, and monitor our store 24/7 for violations,”
“In 2020 alone we blocked or removed over 39 million offers and suspended more than 13,000 selling accounts for attempted price gouging.
“We also referred the most egregious offenders to federal and state law enforcement, have worked with more than 40 state attorneys-general across the country to prosecute bad actors, and advocated for a federal price gouging standard.”
Northern Ireland lockdown extended until March 5
Non-essential retailers in Northern Ireland face an additional four weeks of enforced closure after the Executive extended the country’s lockdown until March 5. An extended shutdown closing non-essential retailers, keeping schools closed to most pupils and encouraging employees to work from home began after Christmas and had been scheduled to February 6. While transmission rates are decreasing slowly, new, more contagious variants are causing Stormont ministers concern. Curbs may not ultimately be lifted until Easter. “I appreciate that this will be disappointing to many people listening to us this evening,” Stormont First Minister Arlene Foster said. “I think particularly of those who are feeling the pain of separation from loved family members and friends, for workers and employers worried about their livelihoods and indeed parents who are juggling the education of their children with work and other responsibilities.” She added: “The Executive today has reviewed the current restrictions and agreed that they remain an appropriate and necessary response to the serious and imminent threat posed by Covid-19. “Following a detailed outline from health highlighting continuing pressures on hospitals and intensive care units and the emergence of highly transmissible variants, the Executive has agreed that the restrictions will be extended for four weeks until March 5 2021.” Stormont health minister Robin Swann proposed the step to help drive down case numbers and ministers agreed yesterday. Deputy First Minster Michelle O’Neill said it was a difficult decision and the position would be reviewed next month. “It has been a long and hard road for all,” she said. “There is no doubt that there are better days ahead but we need to keep working together right now to save lives and protect the health service.” She also acknowledged that people were worrying about what the lengthy restrictions would mean for their businesses and families. “We know that we are asking a lot of everyone, we will do everything we can to make sure you are supported during this time,” she said. CBI Northern Ireland director Angela McGowan said the economic damage could not be underestimated. “The Northern Ireland Executive must now redouble efforts to get business support to the firms that need it as quickly as possible,” she said. Lockdown measures that enforce the closure of non-essential retail in other UK countries are also set to continue until at least February. Earlier this week, Scotland First Minister Nicola Sturgeon said lockdown restrictions were to be extended until at least the middle of February. In Wales, the lockdown is due to be reviewed at this month, but the Welsh Government has already stated it did not see “much headroom for change”. Meanwhile, England’s lockdown laws end on March 31. However, the government has previously said it hoped to ease some restrictions during March. When England’s third national lockdown came into force earlier this month, it did so after the other countries has already implemented their own lockdowns at different dates prior to it. Nonetheless, the current restrictions mark the first time the whole of the UK has been forced into lockdown since last spring.