Warning of £2.5bn business rates debt crisis
The debt crisis facing English businesses has ratcheted up further as they now owe local councils almost £2.5 billion in unpaid business rates, according to new analysis. Many businesses have seen their debt piles climb higher over the past year after being forced to shut their doors for long periods or having faced disruption from Covid-19 pandemic restrictions. The government has offered retail, leisure and hospitality companies a business rates holiday since the onset of the pandemic last year and recently confirmed it would extend the current ban on commercial evictions until next March. However, analysis of official data by real estate advisers Altus Group has revealed a jump in rates arrears despite financial support measures in place. Councils collected £14.88 billion in business rates in the year to March 31 this year from businesses not eligible for the rates holiday. Altus said the figures also revealed £1.18 billion in rates arrears accrued over the year, taking total rates debt – including arrears from previous years – to £2.49 billion. The large rates debt burden is expected to particularly affect office operators and industrial firms who still had to pay full business rates but have been impacted heavily by Covid-19. This debt mountain comes on top of billions in rent debt arrears, with hospitality and retail trade bosses warning that the firms across the sectors face unpaid rent piles of more than £5 billion. The new figures come as MPs prepare to debate legislation in Parliament today which could rule out Covid-related business rates appeals. “Material change in circumstances” appeals typically allow rate-payers to seek substantial adjustments to the rateable value of properties. The Rating Surveyors Association say that the overall value of appeals due to Covid are worth around £5 billion to firms in England. However, in March, the government said it would provide a £1.5 billion pot to councils outside of the retail, hospitality and leisure sectors aimed at those who had suffered the most economically, rather the normal right to appeal. “Removing the appeal right from firms is a crushing blow to business,” Altus UK property tax president Robert Hayton said. “The replacement scheme is wholly inadequate – it won’t deliver enough support quickly enough and will exclude those firms still trading under restrictions. “This bill threatens the post-pandemic recovery and undermines the whole rating system.”
Morrisons set to be subject of imminent bidding war
The private-equity firm behind rebuffed interest in Morrisons is expected to “clarify” its intentions for the Big 4 grocer imminently, a move that could spark a bidding war. According to the Mail on Sunday, rival investment firms are holding off on triggering active engagement until Clayton, Dubilier & Rice (CD&R) reveals its intentions for Morrisons. CD&R is the New York-based firm behind the £5.5 billion takeover attempt of Morrisons last week – a move that was rejected by the British grocery giant. City brokers have since told CD&R to significantly increase its offer from the 230 pence per share suggested last week. CD&R is now expected to return with another bid in the next 10 days. While rumours about Morrisons’ future ownership have been circulating since CD&R initial bid was rejected and revealed, it’s thought that other private equity firms are waiting for CD&R to return with another bid before expressing interest. Lone Star, Apollo, KKR and Amazon have all been listed as potentially interested in Morrisons, Mail on Sunday reported. Experts believe the grocers’ board, led by chair Andy Higginson, will not accept anything less than 280 pence per share – a sum closer to £6.7 billion. This is the same amount that the Issa brothers and TDR Capital paid to buy Big 4 rival Asda from Walmart earlier this year. CD&R and Morrisons have not provided comment. Separately, analysts speaking to The Telegraph have said that Sainsbury’s could be the next target for supermarket takeover. It comes after the firm headed up by Czech billionaire Daniel Kretinsky increased its stake in the Big 4 giant in April, sparking speculation the grocer could be targeted in a deal to take it private.
M&S partners with Clarks to become a "go to" retailer
Marks & Spencer has partnered with Clarks in an effort to launch its products in eight UK destination stores. The latest brand partnership under ‘Brands at M&S’ is part of continued momentum for the retailer in its strategic shift from “special occasion” clothing & footwear to everyday style & value. This strategy means growing in kids casual categories – from joggers to jeans, alongside M&S retaining its reputation as the “go to” retailer for “trusted-quality, value school uniform”. M&S said it will begin selling Clarks shoes on M&S.com and in eight UK destination stores from this week. The retailer also said it is focused on being a destination for Kids casual as well as uniform and therefore the partnership with Clarks will also include a selection of daywear shoes. “For millions, an M&S uniform with Clarks shoes is a rite of passage – so we’re making it even easier for parents by offering the option to purchase these together on M&S.com, as well as in eight of our destination stores,” M&S Kidswear (Womenswear & Beauty) director, Jill Stanton said. “Our kidswear mission is to remain the ‘go to’ for Back to School whilst growing our daywear offer and that’s all about being more fun for everyday – more comfortable, more colourful, more casual. “As part of this we have a great opportunity to introduce curated brands to complement our offer – from our exclusive ‘mini-me’ Ghost dresses which have been flying off the shelf, to the new brand from Nobody’s Child – Somebody’s Child. “It’s a really exciting time for M&S Kids and we’re looking forward to hearing our customers’ feedback, from both parents and kids.”
Greggs reveals better than expected post lockdown sales recovery
Insatiable appetites for sausage rolls and steak bakes since the easing of lockdown have been greater than first thought, according to Greggs. The high street bakery chain has revealed sales are returning at a faster rate than expected, with bosses saying an expected slowdown at Greggs from the reopening of cafes and restaurants last month failed to materialise. In a short update to the London Stock Exchange, the company said: “We had expected to see increased competition as cafes and restaurants were allowed to compete more effectively with our largely take-out offer. “In recent weeks the impact of pent-up demand for retail has reduced but, nonetheless, like-for-like sales growth in company-managed shops has remained in positive territory ranging between 1% and 3% when measured against the same period in 2019. “This level of sustained sales recovery is stronger than we had anticipated and, if it were to continue, would have a materially positive impact on the expected financial result for the year.” Greggs first indicated in May that it could return to pre-pandemic profit levels later this year. However, bosses now seem convinced it could happen sooner than first thought. In the eight weeks to May 8, sales dropped just 3.9 per cent, compared with a 23.3 per cent fall in the 10 weeks to March 13. Total sales in the 18 weeks to May 8 were £352 million, up from £280 million last year as the pandemic weighed in, but down from £373 million in 2019.
Retailers face £5bn tax liability as rates holiday in England ends
Retailers in England are bracing for £5 billion in tax liabilities as the 15-month business rates holiday ends on Wednesday. According to analysis of official government data by the real estate adviser Altus Group, there are 1.98 million occupied retail, hospitality and leisure premises in England that will liable for business rates from Thursday onwards. Of that total, 727,413 were already exempt from business rates through the 100 per cent small business rates relief. The remaining 394,601 properties received the business rates holiday, according to Altus Group. The real estate advisory firm also calculated that the 15-months business rates holiday in England saved those businesses around £13.8 billion in rates. However, from July 1 this week, for the remaining nine months of this financial year, the relief from the business rates holiday will reduce from 100 per cent to 66 per cent but capped at £2 million per business for properties that were required to be closed on January 5 this year. According to Altus Group, this further relief is expected to cost HMRC another £3.3 billion, taking the total cost of relief to £17.1 billion. The advisory firm said that for large retail, hospitality and leisure firms with big property portfolios, the changes to the relief “are particularly acute”. Altus Group said the £2 million cap on the changes to the relief means that those type of businesses with “very large overall liabilities” will now be paying near full business rates from July 1. Those rates will also be calculated based upon rents being paid in 2015. Altus Group said the changes from July 1 will mean those large retail, leisure and hospitality properties will return to business rates bills totalling £5 billion overall for the remaining 9-months of the financial year. It comes as the government recently announced that it would retrospectively legislate against the ordinary right of “material change in circumstances” appeals, citing the Covid-19 pandemic and its impact upon the rental worth of commercial properties. Altus Group said that with the reliefs tapering off, these appeals would have allowed businesses to seek substantial adjustments to the rateable value of their properties, ultimately reducing the business rates payable. A new £1.5 billion pot to local councils for discretionary relief will instead be provided, although this would exclude the retail, hospitality, and leisure properties that have previously enjoyed the business rates holiday. Altus Group head of UK property tax Robert Hayton said the recovery of the high street post-pandemic was being threatened. “With support now tapering off, it is perverse for the government to be simultaneously legislating against the impact of the pandemic on property values by retrospectively denying hundreds of thousands of firms the ordinary right of appeal to lower their bills,” he said. At the Spring Budget earlier this year, Chancellor Rishi Sunak said retail, hospitality and leisure premises in England would continue to receive the 100 per cent business rates holiday from the 2020/21 financial year up until June 30. Meanwhile the devolved governments of Wales, Scotland and Northern Ireland said the one-year business rates holiday that was announced at the start of the pandemic in 2020 would be extended for another 12 months – expiring at the end of the current financial year.
Dixons Carphone inks exclusive Vodafone partnership deal
Dixons Carphone has struck an exclusive, multiyear partnership deal to sell Vodafone mobile plans across its 300 stores. The move comes as a lifeline for the electricals retail giant after it had been shunned by other mobile phone providers – especially EE and O2, both of which ended their contracts with Dixons Carphone last year. Under the new partnership, Vodafone will underpin Dixon Carphone’s new mobile offer – launching later in the year – alongside the business’s award-winning mobile virtual network, iD Mobile. Dixons Carphone’s problems with mobile phone providers started when former chief executive Alex Baldock sought to renegotiate “unsustainable” contracts three years ago. The firm, which owns Currys PC World and Carphone Warehouse, endured financial penalties because it could not reach sales targets agreed with mobile phone providers when selling their devices. Dixons Carphone’s new deal with Vodafone is based on a share of the margins, as opposed to previous deals which saw the retailer earn a commission from the phone providers for each customer it signed up. In the wake of the new deal, Dixons Carphone said it has made “significant overall progress with its mobile transformation”. “We’re delighted to develop our long-term partnership with Vodafone which will see them become our exclusive MNO partner ahead of our new mobile offer launching later this year,” Dixons Carphone chief commercial officer Ed Connolly said. “Together, we’ll provide an exciting and innovative new mobile offering designed with modern customers’ needs in mind. “The new offer will give customers better flexibility, transparency and value and is the final step in the transformation of our mobile business.” Vodafone consumer director Max Taylor said: “This is a very exciting new agreement for us, that ensures connectivity to our award-winning network is made available to even more people across the UK. “This is a completely new and exclusive arrangement, which will drive customer experience improvements and value growth for both parties. “The partnership gives us the opportunity to work more closely together than ever before, focusing on creating more innovative mobile solutions for customers.”
Screwfix to trial 30-minute delivery service
Screwfix is set to launch a trial which will see it deliver products to customers in as little as 30 minutes. The DIY chain has partnered with delivery courier service Gophr to deliver products in Bristol. While the trial is limited to the area, parent company Kingfisher has been looking to boost its last-mile delivery options. Meanwhile, sister company B&Q has been leveraging its store estate, operating dark stores out of its “digital hubs” to offer next-day delivery. B&Q also offers click-and-collect within an hour, while Screwfix offers the same service within one minute. In March, Screwfix revealed plans to open more than 50 stores in the UK and Ireland this year, a move that would create around 600 new jobs. Of the total new stores, 40 will be in the UK, creating up to 500 new jobs, while the remaining 10 stores planned in Ireland will create 100 new jobs. The DIY retailer said the new roles will be in areas such as retail management, service assistants and supervisors and be created by the end of January next year.
Boots launch online doctor service
Boots has launched an online doctor service that customers can access via its ecommerce store. The retailer’s new Online Doctor service caters for 45 healthcare conditions – from skin conditions to sexual health and family planning, alongside weight loss support, diabetes testing and menopause treatments. The Boots Online Doctor services can also provide online consultation and quick access to advice and prescription-only medicine without having to see a GP. The Boots Online Doctor services are available at Boots.com’s Health Hub. With the addition of the Online Doctor services, Boots said it has almost doubled its range of healthcare and pharmacy services to almost 100. The retailer added that its latest offering provides convenience to people who would consider private services to access treatment for non-urgent healthcare conditions. It comes as patients become more accustomed to remote services and increasingly look online first for their healthcare needs following the Covid-19 pandemic. Notably, over half (54 per cent) of GP appointments were conducted by telephone and video in March 2021. Additionally, sales of healthcare products overall on Boots’ ecommerce store have more than doubled (up 126 per cent) between March 31 last year and March 31 this year. “People are increasingly looking online to access healthcare at a time and place that suits them – a trend that has accelerated during the pandemic,” Boots chief pharmacist Marc Donavan said. “Our expanding range of private digital healthcare services is integral to the work of our pharmacists in stores, who can dispense the medicines prescribed via our Online Doctor service as well as provide expert healthcare advice in person. “We see a future where patients interact with us digitally and in person in a unique blend that suits their personal preferences. “Our ambition at Boots is to become everyone’s first port of call for their health – however and whenever they need us. “We hope that by providing access to both NHS services and private healthcare on the high street or online, we can help to relieve pressure on our NHS.” Boots’ Online Doctor services require customers to visit onlinedoctor.boots.com to register. After registering, customers complete an online consultation by answering a series of questions – a process that can take between five to 10 minutes on average. Patients will find out the outcome of their online consultation between two and 24 hours later depending on the service and, for services where medication is prescribed, they can collect their medicines from any Boots pharmacy in the UK on the same day, or get them delivered to their homes. They will also receive a video with follow up advice from the clinician authorising their treatment. Patients will pay for each service as and when they need it on a pay-as-you go model, with prices starting from £15 inclusive of the prescription costs, with the opportunity to earn Boots Advantage Card points on purchases. Boots said it would look to further expand the services available on its Health Hub in the coming months, and is looking at mental health as its next priority for service expansion.
Sports Direct launches unique multi-destination store in Leicester
Sports Direct has opened a new multi-destination store in Leicester as it seeks to bring a “unique retail offering” to the city. The 35,000sq ft store – which is situated in Fosse Park, has opened as part of the group’s ongoing elevation strategy, spearheaded by group head of elevation, Michael Murray. The store features the brand’s new premium design, and houses a Sports Direct, USC, Evans Cycles and Game as well as a Belong Gaming Arena. “This new store in Leicester, demonstrates Frasers Groups’ confidence in our elevation strategy and commitment to opening new stores in key destinations throughout the UK,” Murray said. “We are the leading destination for sportswear and are committed to meeting the demands of an ever more sophisticated consumer who is increasingly looking for only the very best brands and an enhanced shopping experience on the high-street.” The store houses a USC that offers a selection of premium branded denim, urban fashion, accessories, and footwear. Game also features in the store, alongside a Belong Gaming Arena. As well as games, consoles and accessories, the new store along with the Belong arena provides a dedicated space in the city which will allow fans to join the growing gaming community. Customers can also find an Evans Cycles offering a wide selection of bikes, parts, accessories and clothing.
Dixons Carphone online sales double amid pandemic
The parent company of Currys PC World has revealed it managed to more than double online sales of electronics as it shifted seamlessly to operating an improved web model during the Covid-19 pandemic. Online electricals sales for Dixons Carphone hit £4.3 billion in the year to May 1, including a 114 per cent increase in online sales in the UK of £3.4 billion. Bosses said the strong rise was due to offering online live chat functions with staff in stores, allowing customers to get real-time advice via video services. As a result, its total share of the online electricals market grew six percentage points over its rivals. However, Dixons Carphone’s phone fascia, Carphone Warehouse, suffered heavily as the impact of store closures announced in March last year took its toll. Revenues from mobiles fell 55 per cent to a loss of £117 million. The strong year for Dixons Carphone – which is due to rebrand and change its name to Currys in September – came despite it being forced to close stores for large parts of the pandemic. Total sales rose two per cent to £10.3 billion with pre-tax profits hitting £33 million – up from a pre-tax loss a year earlier of £140 million. On an adjusted basis, profit before tax came in at £156 million compared to the £116 million recorded last year. Sales in electricals rose 14 per cent but the total fell back due to the falling sales in the mobile division. As a result of the performance, Dixons Carphone confirmed it has repaid £73 million claimed under the UK Government’s furlough scheme and a £144 million VAT deferral bill. Following the repayments, bosses also revealed they would start paying a dividend to shareholders of 3p a share – worth around £34.7 million. “I’m so proud of my colleagues. They’ve navigated the challenges of the pandemic with skill and energy, helped many millions of people enjoy vital technology, kept our transformation on track, and performed strongly,” chief executive Alex Baldock said. “Our big investments in colleague wellbeing, skills and reward have meant more engaged colleagues, and in turn more satisfied customers. This bodes well for our sustainable success. Technology has become even more central to people’s lives. As the market leader, with the winning omnichannel business model, we can make the most of that. “The past year has seen us do so, growing a big online business and adding it to our in-store strengths. “We’re now financially stronger too, allowing us to pay back over £200m to governments and to recommence our dividend. “But we’re most excited about what lies ahead. New technology platforms will add more fuel to our growth and to innovation that customers love and no-one else can get close to, whether getting them their amazing technology ever-faster, or helping them 24/7 with live video shopping. “This year, we move to one brand in the UK (as we have in each international market), and Currys can become ever-more the first choice for all things tech, electrical and mobile, products and services alike. “The start of the financial year has seen continued strong trading in all our markets and I’m more confident than ever in our prospects.”
Asda launches one hour express delivery service
Asda has become the latest supermarket group in the UK to launch an online service for delivery in an hour. The Big 4 grocer said its new “Express Delivery” service will offer its full online range of over 30,000 products. The launch also comes after a successful trial, although each delivery will set customers back £8.50. The supermarket said it would become the first grocer to offer its full online product range, with customers living within a three-mile radius of its stores in Halifax, Rotherham and Poole the first to try it. Rivals, including Morrisons, Tesco and Sainsbury’s, already offer one-hour – or faster – delivery services through Deliveroo, Uber Eats, Amazon and other providers. However, none offer a full range of products. Shoppers can order up to 70 items and have them delivered within an hour, or buy an unlimited basket which can be delivered with a four-hour window, Asda said. If popular, bosses hope to roll it out to more customers at other stores – although the £8.50 delivery fee may be prohibitive, with rivals charging far less for each delivery, albeit with fewer products to choose from. Asda is also extending its partnership with Uber Eats from 200 to more than 300 stores, with 500 products including fruit, vegetables, beer, wine and spirits and meals for rapid delivery. “After successfully trialling an Express Delivery service, we know this is something that our customers want as part of our online grocery proposition and we are delighted to be able to offer this service to even more customers,” Asda online grocery vice president Simon Gregg said. “The launch of our new Express Delivery service and extension of our existing partnership with Uber Eats to 300 stores means that customers can get their order delivered to the doorstep at market-leading pace.” Most UK supermarkets are looking into ways in which they can get groceries to customers more quickly. Tesco, which had previously not offered any rapid delivery service, launched its own Whoosh trial in Wolverhampton and now plans to expand it to London and Bristol. Sainsbury’s also operates its own service, called Chop Chop, which it expanded to 50 stores in 20 cities last year. Waitrose announced plans to shut down its own Rapid delivery service, which it launched in 2018, saying it would instead focus on expanding its partnership with Deliveroo. Morrisons offers same-day rapid deliveries as part of its tie-up with Amazon, which also offers customers its own Amazon Fresh products. Other delivery firms in the grocery market include Gorillas, Getir and Fink, which have all raised significant sums of money from investors looking to cash in on the growing industry.
Topps Tiles sales rise as Brits improve homes
Topps Tiles has reported a surge in sales in the first three months since stores have been allowed to reopen, after lockdown restrictions heavily impacted the group’s performance. On a two year basis compared with 2019, retail like-for-like sales increased by 12.9 per cent over the third quarter. Sales surged by 18.5 per cent in the first eleven weeks after stores reopened to customers on April 12, as consumers sought to improve their homes. Topps Tiles said it expects this demand to remain high in the coming months. The retailer said that while percentage gross margins in the period were slightly lower than previous guidance, its gross profits were strong. Topps Tiles remains debt free and repaid all support received in the first half of this financial year from the Coronavirus Job Retention Scheme. At the end of the third quarter, its cash balance had increased to £26.9 million. Chief executive Rob Parker said he was “encouraged” by the results from after lockdown was lifted. “Building on the initial recovery we reported at the time of our interim results, our retail sales strengthened further over the balance of the period,” he said. “We remain positive on the trading outlook for the remainder of the financial year, and are well positioned to take advantage of increased consumer confidence and spending.”
20% of ready meals now plat based or vegetarian
A fifth of ready meals sold by UK supermarkets are now plant-based or vegetarian and are the cheapest option at the majority of retailers, according to a new survey. Among the ready meal category, plant-based options are the fastest growing, up by 92 per cent since the Eating Better alliance’s first survey in 2018. The organisation named Aldi and Tesco as its two best performers for increasing their plant-based options by 175 per cent and 103 per cent respectively after surveying 2743 ready meals across 10 UK supermarkets. Tesco and the Co-op have significantly reduced their meat-based ready meal ranges but Asda, Morrisons and Sainsbury’s “continue to have very meaty ranges”, while Iceland’s range remains at its 2018 level of 85 per cent meat-based, the report said. According to the latest research by Mintel, 86 per cent of UK adults eat ready meals, with three in 10 people eating chilled ready meals at least once a week. The study also found plant-based ready meals were cheaper per portion than meat meals at seven out of 10 chains. The alliance said the Co-op was one supermarket to have significantly altered its pricing, with meat-based meals going from being eight per cent cheaper than its plant-based options last year to the opposite this year, with meat meals now nine per cent more expensive than plant-based. Overall, the survey found a 50 per cent increase in plant-based and vegetarian meals since 2018, with one in five ready meals on offer now plant-based or vegetarian. The amount of cheese in vegetarian meals is also down a third in three years to 62 per cent. “Retailers influence how and what we eat and have a responsibility to help us make healthy and sustainable food choices,” Eating Better executive director Simon Billing said. “Climate-friendly food needs to be mainstream and shouldn’t cost more, so it’s good to see progress on choice and affordability. “Now, we need the same drive on meat options, to make up no more than 50% of the ready-meals ranges at all retailers.” Food Foundation charity executive director Anna Taylor, said: “This year’s survey from Eating Better shows some encouraging progress being made by the retailers, although there’s certainly a lot more that can be done. “While it’s good to see the price of plant-based ready meals come down, the high proportion of meals containing meat remains a cause for concern given their negative impacts on both health and the environment.” British Dietetic Association chairwoman Caroline Bovey said: “It is positive to see major retailers providing consumers with greater choice and more balance. “As we outline in our One Blue Dot campaign, the UK diet as a whole needs to change if we are to meet our ambitious net-zero carbon targets. “That means reducing meat, moderating dairy and increasing fruit, vegetables and plant-based sources of protein. “We hope the trends identified here continue, with more ready meal options that are better for our health and that of the planet.”
Gap to shut down all 81 of its UK&I stores
Gap has confirmed it will be closing all 81 of its stores in the UK and Ireland by the end of this year. The fashion retailer said it intended to take its business online “in a phased manner” from the end of August through to the end of September. It added it would provide “support and transition assistance” to colleagues following the closures, though did not specify how many employees would be affected by the store closures. Gap has been active in the UK since 1987 and has had stores in the Republic of Ireland since 2006. There are a total of 81 stores in the UK and Ireland, according to the Gap online store-finder. Last month speculation emerged that Gap was planning to shut down 19 stores, but today’s announcement confirms that its whole store estate in the two countries will be affected. The announcement also comes following a strategic review aimed at “finding new, more cost-effective ways to maintain a presence and serve customers in Europe”. In a statement, Gap said: “In the UK and Europe, we are going to maintain our Gap online business. “The ecommerce business continues to grow and we want to meet our customers where they are shopping. “We’re becoming a digital first business and we’re looking for a partner to help drive our online business. “Due to market dynamics in the United Kingdom and the Republic of Ireland, we shared with our team today that we are proposing to close all company-operated Gap Specialty and Gap Outlet stores in the UK and Republic of Ireland in a phased manner from the end of August through the end of September 2021. “We are thoughtfully moving through the consultation process with our European team, and we will provide support and transition assistance for our colleagues as we look to wind down stores.” It comes following a spate of high street closures this year, including brands such as Dorothy Perkins, Wallis and Burton – part of the former Arcadia Group retail empire owned by retail tycoon Sir Philip Green. More than 200 shops across the brands were forced to close and over 2000 jobs were axed in February. Food and clothing retailer Marks & Spencer is also set to close more stores after being hit hard by high street lockdowns. The retailer said in May it was targeting 30 more closures in the next phase of its long-term transformation plan. It has already closed or relocated 59 stores but said it is accelerating changes to its portfolio of shops following the impact of the Covid-19 pandemic.
H&M reveals plans to shut 250 stores this year
H&M group has reported a rise in net sales in local currencies of 75 per cent in the second quarter compared with the same period last year. The company said net sales amounted to 465 million SEK (£392 million) in the second quarter. Net sales in the six-month period increased by 12 per cent in local currencies. Profit after financial items increased to 359.3 million SEK (£303 million) in the second quarter, while profit in the six-month period amounted to 220.4 million SEK (£186 million). For the full-year 2021, H&M plans to close around 350 stores and just over 100 new stores will open, resulting in a net decrease of around 250 stores. “With the combination of much-appreciated collections, rapid adaptation and further improvements, our recovery is strong,” H&M chief executive Helena Helmersson said. “Despite continued restrictions, sales increased significantly compared with the previous year. “The third quarter has started well and we are almost back at the level we were at before the pandemic. “Together with profitable online growth and continued store optimisation this will contribute to long-term, profitable and sustainable growth for the H&M group.” The group’s online sales have “developed very well” even as the stores have gradually been allowed to reopen. Online sales increased by 40 per cent in local currencies, and by 47 per cent in the six-month period and by 39 per cent respectively and represented 38 per cent of the group’s total sales. Sales for portfolio brands increased in the second quarter by 59 per cent in local currencies. Net sales in June increased by 25 per cent in local currencies compared with the corresponding period last year. Compared with the same period in 2019, sales decreased by around four per cent. H&M expects the cost of markdowns in relation to sales to decrease by around half a percentage point in the third quarter compared with the corresponding quarter the previous year. Given a gradual improvement in the Covid-19 situation, combined with the company’s continued transformation work, H&M said the group will be well positioned for a continued strong recovery during the year.
Primark upbeat about forecast as sales soar to £1.6bn since reopening
Several new sales records were set in Primark stores following the easing of lockdown restrictions, the owner of the high street retailer said. AB Foods said sales in its value retail business in the 16 weeks to June 19 hit £1.6 billion, “reflecting an increase in both confidence and willingness to spend by our customers”. This compares to the £600,000 in sales recorded in the same period last year, prompting AB Foods to raise the full-year profit outlook for Primark as trading in the latest quarter beat management expectations. AB Foods said Primark’s full-year adjusted operating profit is now expected to be broadly in line with 2019-20, versus previous guidance of “somewhat lower”. The firm attributed Primark’s strong third quarter performance to the reopening of retail in the seven-week period from April 12 – when shops first started to reopen in England and Wales – compared with the equivalent period in 2019 when the UK and much of the world was under the first of several lockdowns amid the Covid-19 pandemic. AB Foods also said a number of new sales records were set and that Primark’s like-for-like performance in the third quarter was up three per cent compared to pre-pandemic 2019, reflecting an increase in both confidence and willingness to spend by customers. However, AB Foods said volatility remained high and performance varied by region depending on the varying levels of Covid-19 restrictions still in place. The firm said data for the total UK clothing market, which includes online sales, for the seven-week period after reopening showed Primark had made both volume and value share gains on a two-year basis. AB Foods also confirmed it was committed to repaying £96 million worth of staff furlough funding by the end of the financial year. This is below the estimate of £121 million the firm had expected to repay earlier this year.
Amazon's carbon footprint increased last year despite figures falling worldwide
Amazon’s carbon emission output rose by 19 per cent last year, despite the pandemic driving a drop in global levels.
The ecommerce giant released its annual sustainability report on Wednesday in which it said its business operations emitted the equivalent of 60.64 million metric tons of carbon dioxide in 2020.
This figure has increased from the 51.17 million metric tons it emitted in 2019.
Global greenhouse gas emissions fell about 7 per cent last year as consumers were forced to stay indoors and businesses were told to close, this figure marks the largest decline on record.
However Amazon has cited pandemic-fueled business for its increase in carbon emissions, with the company publishing a record figure of $386 billion in revenue last year.
While the tech giant’s carbon output increased, it did manage to lower its carbon intensity, a figure used to measure emissions per dollar of sales.
This figure declines 16 per cent in 2020, which Amazon said is in line with its internal targets.
“This year-over-year carbon intensity comparison reflects our early progress to decarbonize our operations as we also continue to grow as a company,” the report said.
“Nearly half of our carbon intensity improvement is a result of our investments in renewable energy and operational efficiency enhancements.”
Amazon recently came under fire after an investigation by ITV News found that the company was destroying millions of unsold goods a year in its warehouses.
The damning footage shows an ITV undercover journalist observing the “destruction zone”, an area where millions of perfectly functional goods are destroyed in Amazon’s Dunfermline warehouse.
The video shows a shocking range of items being disposed of, including smart TV’s, drones, laptops, headphones, hairdryers and brand new books.
Greenpeace’s Sam Chetan Welsh said: “It’s an unimaginable amount of unnecessary waste, and just shocking to see a multi-billion pound company getting rid of stock in this way.”
AOWorld eyes European expansion after being buoyed by pandemic
AO World has revealed plans to expand further across Europe as it posted a surge in annual profits thanks to the accelerated shift to online shopping during the Covid-19 pandemic. Chief executive John Roberts unveiled plans to more than double the size of the online electricals retailer under ambitious five-year goals, with aims to roll out to France, Italy and Spain and hit sales of over £4 billion. It comes after the group, which already has operations across the UK and Germany, reported pre-tax profits of £20.2 million for the year to March 31, up from £600,000 the previous year as revenues jumped 62 per cent to £1.7 billion. AO World said sales growth had eased slightly since the year-end as it laps strong trading from a year earlier, but added the new financial year had started well and it remains “prudently optimistic” of delivering double-digit growth again this year. Roberts said shoppers would not go back to their old ways following the switch to online seen over the past year as customers snapped up electricals over the internet and rushed to stock up for home schooling and remote working. “This is going to stick – when customers find a better way to do something, they rarely go back,” he told the PA news agency. “(The pandemic) has turbo-charged what’s been happening over the past 20 years.” Roberts said AO World has attracted more than two million new customers over the past year, adding a “tonne of fuel to the fire”. The retailer expanded into Germany in October 2014 and said the business broke even in its third quarter. It pledged to ramp up investment with another £30 million earmarked for digital and marketing content and £30 million in upgrading its support systems as it looks to expand its European footprint. “The investments we are making this year underpin those ambitions and ensure that our businesses are fit for continued growth, with a view to more than doubling the size of the Group in that time period,” AO World said.
Boots profits buoyed by pharmacy sales
Boots parent company Walgreens Boots Alliance has recorded an operating income from continuing operations of $1.1 billion (£796.7 million) in the third quarter, compared with a loss of $1.7 billion (£1.2 billion) a year ago. This was primarily due to $2 billion (£1.4 billion) non-cash impairment charges in the year-ago quarter related to goodwill and intangible assets in Boots UK. Adjusted operating income from continuing operations increased 82.9 per cent on a reported currency basis to $1.5 billion (£1 billion), an increase of 82.4 per cent on a constant currency basis. The increases reflect strong adjusted gross profit growth across both pharmacy and retail in the United States and a rebound in International segment sales and profitability due to less severe Covid-19 restrictions in the UK. “This quarter’s results demonstrate continued momentum, and while challenges lie ahead, we are in a strong position to grow and innovate our core retail and pharmacy businesses for the future,” WBA chief executive Rosalind Brewer said. “We are accelerating our investments to advance our operational excellence, including technology innovations that support mass personalisation, pharmacy of the future and the next phase of growth in tech-enabled healthcare. “These investments are fueled by our Alliance Healthcare divestiture. I remain proud of our team members and the essential role they are playing to help end the pandemic as the communities we serve continue to turn to our trusted brands and expert pharmacists.” WBA third quarter sales from continuing operations increased 12.1 per cent from the year-ago quarter to $34 billion (£24 billion), an increase of 10.4 per cent on a constant currency basis, reflecting strong growth in the international segment. Boots UK pharmacists have continued to administer over three million Covid-19 tests in June, the majority in partnership with the NHS, and a growing private test offering with several at home and in-store tests available, in addition to testing partnerships with several major airlines. International segment sales on a constant currency basis increased 12.1 per cent, reflecting a partial recovery in the UK market as Covid-19 restrictions were eased. Boots UK comparable pharmacy sales increased 3.7 per cent compared with the year-ago quarter, reflecting stronger pharmacy services and favorable timing of NHS reimbursement, partially offset by lower prescription volume. Boots UK comparable retail sales increased 38.7 per cent compared with the year-ago quarter. Footfall on the high street showed early signs of recovery amid a partial easing of strict lockdown measures, though travel locations in airports and train stations continued to face challenges. Boots online sales continued to perform strongly, with sales growth of 42.3 per cent compared with the year-ago quarter. Operating income, including a favorable currency impact of 0.1 per cent, was $36 million compared with a loss of $2.2 billion (£1.6 billion), which was primarily a result of the non-cash impairment charges. Adjusted operating income was $94 million (£68 million), an increase of $222 million (£160 million) on a constant currency basis compared with the year-ago quarter, reflecting less severe UK Covid-19 restrictions, Boots.com performance and cost management actions.
Gymshark founder Ben Francis to return as CEO
Gymshark co-founder Ben Francis is reclaiming the role of chief executive this August as the company expands into the US and Asia. Francis is set to return on August 1 to replace Steve Hewitt, four years after stepping back from leading the athleisure retailer. Hewitt was appointed to the role of chief executive in 2017, after two years as the brand’s managing director. Hewitt will remain at Gymshark as its executive president, where he will support the company’s expansion and remain in an advisory role. Francis owns 70 per cent of Gymshark, which was valued at more than £1 billion last August, and said he had been planning to return for two years after Hewitt indicated that a change was needed. Francis sold a 21 per cent stake to the US private equity firm General Atlantic last year in a move that he said would help to accelerate its expansion in the US and Asia. Revenues rose to £260 million last year, with profits of £30 million, and are expected to exceed £400 million in the year to July.
Westfield launches Venture X to diversify retail space
Westfield London has launched a new co-working space Venture X, in an effort to diversify its retail space. Venture X occupies over 19,000sq ft of space, sitting below the Primark store and overlooking Westfield Square. The space was launched to “attract the best concepts and stores” for customers across a wide range of categories. The company is led by Tom Foster and Andrew Ross, who signed an agreement for a long-term lease commitment at Westfield London. Venture X will include podcasting-ready rooms, hybrid meeting rooms enabling digital multicast-screen conferences, in addition to private offices, hotdesking space and shared entertaining spaces with high-speed Wi-Fi. There will also be a wraparound terraces, and private terraces to some private offices within a brand new building. “Since opening in 2008, Westfield London has been an key partner of the local community and a catalyst in the transformation of White City and Shepherd’s Bush into a world-class place to shop, live and work,” Unibail-Rodamco-Westfield chief operating officer UK, Scott Parsons said. “With lifestyles transforming and ways of working becoming more flexible, welcoming Venture X to our offices at 1 Ariel Way expands the shared work space offering within the White City opportunity area and creates an exciting new opportunity for London workers. “The offices, overlooking Westfield Square with view of TVC will, have state of the art facilities attracting creative, tech and entrepreneurial businesses and we have no doubt our new neighbours will enjoy everything the centre has to offer including over 50 restaurants and leisure operators and 300 stores right on their doorstep.” Venture X chief executive of UK & Ireland, Andrew Ross said: “This is game-changing news for us at Venture X, it demonstrates our commitment to growth in the UK and our vision for co-working. “The pandemic in many ways has been disastrous, but it has also highlighted the importance of flexible working and co-working spaces. We are in the midst of a workplace revolution and Venture X is the fastest growing co-working franchise. “We suspect Venture X will appeal to local entrepreneurs, SME’s and corporates looking for project-led space with a ‘plug and play’ ready HQ to attract the best talent. “Westfield London is iconic, continuously transforming its offer and there is a lot of energy in the wider White City area which we hope to be part of its story moving forward.”
Moonpig appoints Royal Mail for Sunday deliveries
Moonpig has appointed Royal Mail to deliver packages across the UK on a Sunday. The online gifts and cards retailer had around 60,000 Father’s Day gifts delivered on a Sunday. This partnership now means that Moonpig can offer its customers “higher levels of convenience” when ordering from them. The introduction of a commercial, seven-day parcel delivery capability for major retail customers is one of the key ways Royal Mail is responding to the growth in parcel volumes. The Sunday parcel delivery is now available for customers every week, with additional plans for Moonpig to make cards part of the regular Sunday delivery offering in the near future as well. “We have an intelligent operations network that enables us to have the best range and the latest cut off times for next day delivery of personalised cards and gifts anywhere in the market,” Moonpig shipping director Tony Bannister said. “We continue to work incredibly hard and keep innovating with our partners like Royal Mail to provide an exceptional service to our customers. “This was a significant milestone to allow our customers to send cards and gifts for the first time that arrived on Father’s Day itself, making the day even more special for Dads.” “We’ve had a record breaking Father’s Day this year, with well over a million Dads receiving a card or gift from Moonpig. “The response on social media has been overwhelmingly positive, with smiling faces and happy families all around the country.” Royal Mail chief commercial officer, Nick Landon said: “We have been delivering for Moonpig for many years and have now extended our partnership to a seven-day service. “We always listen to our customers and Sunday delivery has been one of the services they have been asking for. “The UK already trusts us to deliver their purchases six days a week both quickly and conveniently. Now our posties are doing the same thing seven days a week.” Royal Mail has been delivering cards for Moonpig since the company’s foundation in 2000.