Burton Head Office up for sale as Sir Philip Green restructures Arcadia
Sir Philip Green has reportedly put the former London headquarter for Burton up for sale, as the Covid-19 pandemic mounts pressure on Arcadia. Green’s Arcadia group has been losing sales to online rivals such as Asos and Boohoo, and is said to be working with Deloitte on a fresh restructuring. He appointed agents at BNP Paribas to help sell Corinthian House, which is a five-storey office block on Tottenham Court Road, with an asking price of £80 million, The Sunday Times reported. Arcadia’s pension fund took security over the building last year as part of a deal to win the support of the Pension Protection Fund for a restructuring. At its last valuation in 2018, Arcadia had a pension deficit of £537 million, or £727 million on a “buyout” basis. Last year, Green’s wife Tina agreed to fund £100 million, and Arcadia pledged to contribute £75 million over three years to alleviate the debt. The pension trustees were granted security over £210 million of assets. Arcadia furloughed 14,500 of its 16,000 staff and is making a fifth of its 2500 head office staff redundant. Earlier this month, Arcadia took a u-turn and agreed to pay full salaries for head office staff facing redundancy. An Arcadia Group spokesman said its actions related to around 300 redundancies in head office, and that the firm was “extremely sorry to all those individuals impacted for the distress that we have caused and apologise unreservedly”.
Ted Baker signs Ben Sherman's licensee as menswear licence partner
Ted Baker has revealed a new licence partner to help work on its men’s formalwear as part of a three-year agreement. The retailer has entered into a product licence agreement with Baird Group for men’s formalwear. Under the agreement, Baird will work with the creative team at Ted Baker to create and distribute men’s formalwear in the UK and Europe. The first collection will launch in spring 2021. Baird is a licensee of Ben Sherman and Suit Direct, and operates from 48 retail stores and 147 concessions in the UK and Europe. This licence agreement will combine the Ted Baker brand with the benefits of Baird’s expertise and scale. Ted Baker said licence partnerships are a key component of the brand’s ‘Formula for Growth’, which is a three-year transformation plan designed to deliver a structurally more profitable business. The retailer now has 20 Product Licence partners across the globe. “We are delighted to be working alongside Baird, a true expert in their field who share our passion for unwavering attention to detail and firm commitment to quality,” Ted Baker group commercial and business development director Phil Clark said. “This partnership simplifies and helps consolidate a key category for us and we hope to apply the experience from our successful North American partnership across these other territories. “As we continue to rationalise and enhance our product license portfolio, this new partnership is another step in transforming our business and returning Ted Baker to growth.” Last week, Ted Baker signed Next as a lingerie and nightwear licence partner as part of a three-year agreement. Next will work with the Ted Baker team to create and distribute the retailer’s lingerie and nightwear collections, known as B by Ted Baker. The first collection will launch in May 2021 and will be sold through Next’s ecommerce channels as well as Ted Baker’s online platforms.
4000 new jobs as Aldi plans to inject £1.3bn into upgrading stores
Aldi has committed to investing £1.3 billion into upgraded stores and distribution centres by 2022 after sales surpassed expectations last year. The discounter saw a 49 per cent increase in pre-tax profits to £271.5 million in the year to December 31. Sales also rose by 8.3 per cent to £12.3 billion thanks to a rise in new shoppers, up six per cent to 17.6 million in the same year. Under its new investment plan, Aldi is expected to open 100 new stores across the UK throughout 2020 and 2021, creating 4000 new jobs next year alongside the 3000 permanent roles created so far in 2020. This is in addition to its previous plans to create 4000 new jobs across the UK this year as it pushes ahead with plans to open an average of one new store a week between now and Christmas. The plans are in line with Aldi’s long-term goal of 1200 UK stores by 2025. Other investments include refitting and upgrading 100 of its stores under the “project fresh” initiative, building new or expanding its distribution centres, and rolling out new innovations such as its “click-and-collect” service which launched earlier this month. “For over 30 years, our success has been driven by the ever-increasing number of shoppers who put their trust in Aldi every time they shop with us,” Aldi chief executive Giles Hurley said. “This is what enables us to keep investing in Britain – in our products, our prices, our people and in the communities we serve. “With the UK’s economic outlook increasingly uncertain, families are more concerned about their grocery bills than ever. “We’ve seen before that our customers need us most in times of financial hardship, which is why our commitment to remain Britain’s lowest-priced supermarket is more important than ever.
Boots under fire for unethical approach to rent negotiations
Boots has reportedly been accused of using the UK’s moratorium on evictions amid the Covid-19 pandemic as cover for ongoing lease renegotiations. The majority of its 2000 stores remained open during lockdown after being deemed an essential retailer, and according to several landlords, Boots is withholding rents and service charges. The government in April banned UK commercial property owners from pursuing evictions of non-paying tenants, and last week extended the scheme until the end of December. Although Boots is not alone in seeking rent cuts, but landlords have criticised Boots’ “unethical and unpalatable” attitude to a previous consensual approach, Financial Times reported. Boots said it was “continuing discussions with larger commercial landlords on options for rental and service charge payments”. Although stores remained open, Boots said footfall across its estate had reduced and trading has been “severely impacted”. In the three months to the end of May, the company reported a 48 per cent year-on-year decline in same-store retail sales. Pharmacy sales fell one per cent, and the company said it was accelerating a restructuring plan that was likely to result in 4000 redundancies. In May 2019, Boots said it will close about 200 mainly smaller stores, but 75 have shut so far. “Whilst we have reached revised agreements with many landlords, where discussions are ongoing we have paused some payments as we look to agree fair and equitable solutions,” Boots said.
Boohoo group profits surge despite "most challenging time"
Boohoo Group, which owns Boohoo, PrettyLittleThing, and Oasis and Warehouse among others, has reported a rise in profits despite a “challenging” time. Profit before tax for the group rose 51 per cent year on year to £68.1 million in the six months to August 31, 2020. Adjusted EBITDA rose 48 per cent to £89.8 million in the period, compared to the same six months in 2019. Revenues were up 45 per cent to £816.5 million, due to strong revenue growth across all geographies and brands. International revenue increased by 55 per cent, while UK revenue was up by 37 per cent. Boohoo Group now expects its revenue growth for the year to February 28 2021 to be between 28 per cent and 32 per cent, up from approximately 25 per cent as had previously been guided. Adjusted EBITDA margin for the year is expected to be around 10 per cent, up from the 9.5 per cent that had previously been forecast. The group closed the six-month period in 2020 with a net cash balance of £344.9 million, compared to £207.3 million in 2019.
Retail rent arrears "to exceed £2bn" as landlords warn on lower payments
Retail rent arrears are set to exceed £2 billion as landlords anticipate receiving less than half of due payments for the third quarter of 2020, an industry body has warned. Revo said landlords are expecting another set of low payment figures after Tuesday’s deadline for quarterly rent. “Retail property owners are braced for another hugely damaging quarter with fears that once again less than 50 per cent of rent due will be paid by operators whatever their balance sheets,” Revo chief executive Vivienne King said. The organisation said landlords saw around £1.5 billion of rent payments go unpaid during the first and second quarters of the year. Retailers and hospitality businesses have held off rent payment or agreed delayed payments due to a ban on business evictions until the end of the year. The ban, put in place at the start of the pandemic to protect struggling firms, was due to expire at the end of the month but was recently extended amid continued pressure from coronavirus restrictions. The government said it would also extend the ban on landlords using bailiffs to enforce unpaid rent on these commercial leases until the end of the year. King said the extension has fuelled confidence for “well-heeled” tenants to “continue exploitation of a system intended to protect businesses in genuine distress”. “There is little justice in singling out property owners as the fall guys to indiscriminately compensate large and valuable operators for their cashflow,” she said. “But having done so, the repercussions will reverberate through the economy for years to come as the capital for regeneration dries up, investors look to safer havens elsewhere and anyone who has put their savings into retail property faces huge losses. “Moreover, with the rental shortfall in the retail sector alone set to exceed £2 billion, the stress may begin to have material impacts on credit supply if lenders find themselves overwhelmed by defaulting borrowers.” Retail and hospitality tenants have also benefited from a business rates holiday for the tax year ending March 31. However, property landlords will still have to pay business rates on empty units. “Despite a £12.18 billion UK-wide business rates holiday, whilst landlords are precluded from enforcing rent arrears, they are also precluded from that holiday on impossible-to-let retail, leisure and hospitality premises,” Altus Group head of property tax Robert Hayton said. “The lack of tax parity with tenants is not only unfair, given the part they are being asked to play, but their tax burden is now increasing exponentially through insolvencies as more properties become vacant.”
900 high street jobs in the firing line as TSB shuts down 124 branches
TSB has revealed plans to axe around 900 high street jobs and close 164 of its branches, delivering the latest blow to UK high streets since the Covid-19 pandemic started. The Spanish-owned bank said the cuts were driven by a “significant shift in customer behaviour”, as fewer people use branches and instead favour online banking. The high street bank, which is based in Edinburgh, had previously said it intended to reduce the size of its branch network but it has now accelerated plans amid the pandemic. It will leave the bank with 290 branches, more than halving its store estate over the past seven years. “Closing any of our branches is never an easy decision, but our customers are banking differently – with a marked shift to digital banking,” TSB chief executive Debbie Crosbie said. “We are reshaping our business to transform the customer experience and set us up for the future. “This means having the right balance between branches on the high street and our digital platforms, enabling us to offer the very best experience for our personal and business customers across the UK. “We remain committed to our branch network and will retain one of the largest in the UK.” The firm said the cuts are being made across its high street branch network, as well as in its mortgages and customer service operations teams. TSB customer banking director Robin Bulloch said: “Alongside these changes, we will continue to invest in our remaining branch network to offer high quality banking services, fully integrated with improved digital capability. “We are working to ensure the transition towards digital – which is being seen right across the economy – is handled sensitively and pragmatically for our colleagues and customers. “We’re taking steps to support vulnerable customers and those in rural locations.” Dominic Hook, national officer, at workers’ union Unite, said: “Unite has urged the bank to rethink these plans and protect these much-needed jobs during the current health pandemic. “Not only do these staff deserve more from their employer after showing the utmost loyalty to TSB, customers will be deeply hit by these branch closures. “Unite has argued for some time that the financial services industry has a social responsibility not to walk away from its local customers, who continue to need access to banking in bank branches.”
Morrisons is hiring 1000 new staff to fulfil Amazon Prime Now orders as demand skyrockets
Morrisons is hiring more than 1000 new permanent staff to help it meet skyrocketing demand for online orders through Amazon Prime Now.
After dramatically expanding its partnership with Amazon in August, seeing its entire range of goods sold via the ecommerce giant’s website for the first time, Morrisons is now embarking on a recruitment frenzy to meet demand.
The grocer is recruiting over 1000 new permanent ‘Customer Assistant – Pick and Pack’ staff in 50 stores across the UK to help fulfil orders made via Amazon.
“At Morrisons, we’re doing everything we can to ensure everyone can order our great value food and have it delivered to their doorstep,” Morrisons head of Amazon Hannah Horsfall said.
“We’re looking for team players, with good customer service skills that can play their full part in helping to feed the nation.”
These new employees will be tasked with picking orders placed on Amazon, before packing them in a dedicated area and handing them to Amazon Flex delivery drivers, who will deliver orders the same day.
The partnership represents a further push into the UK grocery market for Amazon, which announced plans to scrap grocery delivery charges for its Prime customers in the UK in July, a move analyst’s believe will cause “major disruption” in the market.
It is also a major win for Morrisons which will be keen to cash in on the seismic shift in UK grocery shopping habits to online services during lockdown.
While other grocers have struggled to increase their delivery logistics networks at a pace that could match demand, Morrisons will now have Amazon’s formidable network at its finger tips and millions of customers to access online.
14'000 serious injuries reported at Amazon fulfilment centres last year marking 33% rise
Amazon workers suffered more than 14,000 serious injuries last year as the ecommerce giant’s investments in automation and safety fail protect its employees.
A new damning report published by Reveal from the Centre of Investigative Reporting found that for every 100 employees Amazon staff experienced 7.7 serious injuries, double the most recent industry standard.
It also represented a 33 per cent rise in injuries compared to four years earlier, despite Amazon investing tens of millions into new automated technologies designed to improve safety measures.
The wide-ranging report from Reveal examined internal safety reports and weekly injury numbers from 150 Amazon fulfilment centres.
According to the investigation, Amazon’s injury rates have been steadily increasing since 2016, and appear to spike during “peak” shopping events like its upcoming Prime Day.
Furthermore, despite its heavy investment in robotics in an effort to reduce injuries, Reveal found that workers at heavily automated facilities were expected to pick up and scan around 400 items per hour compared to the 100 items per hour at other facilities, leading to higher injury rates.
Reports obtained by Reveal marked “Privileged & Confidential” revealed that Amazon intended to reduce injuries by 20 per cent in 2018 and just five per cent last year, but saw them rise both years instead.
Amazon refuted many of Reveal’s claims, including it characterisation of “serious injuries” stating that the term can refer to a “small strain or sprain”.
It added that it continued “to see improvements in injury prevention and reduction”.
Iceland & Morrisons launch online initiatives to help thousands of students
Iceland and Morrisons have both launched online initiatives aimed at helping the thousands of students self-isolating in halls and student campuses.
This week Iceland said it was offering students £5 off a £40 online shop “as part of our efforts to support those most affected by lockdown measures”.
Students who register for an account using a university email will also be offered “priority delivery slots” Iceland said.
Morrisons also launched a “Serve out Students” (SOS) food delivery service for students self-isolating at Manchester Met University where a spike in cases has forced around 1700 students to self isolate.
Students at its Birley and Cambridge Halls campuses can email students-ug@morrisonsplc.co.uk to place their orders which will be delivered the following day.
According to Morrisons students won’t be charged for their delivery, and it will expand the offer to more locations during the week.
Around 40 universities across the UK have reported spikes in coronavirus cases, leading face-to-face teaching to be cancelled and isolated lockdowns to be imposed.
“With self-isolation in place across university campuses, we want to make it as easy as possible for students to complete their weekly shop and ensure their freezers and cupboards are stocked,” Iceland’s managing director Richard Walker tweeted.
“Our exclusive discount and priority delivery slots will go some way to help our student customers in their time of need.”
Morrisons chief executive David Potts added: “Students have asked for our help and that’s why we are making sure they can safely access affordable food at this very difficult time.
“We’re playing our full part in feeding the nation so that no one is left behind.”
M&S begins selling 3rd party fashion items online for the first time
Marks & Spencer has begun selling third-party fashion items on its website for the first time in its history as part of an ambitious plan to modernise its offering.
M&S has partnered with Nobody’s Child to offer a range of 140 womenswear products including dresses, knitwear and loungewear, all available for next-day delivery.
This marks the first time M&S has sold clothing produced by a brand other than its own, and forms part of its wider strategy to improve its ecommerce offering.
Nobody’s Child was founded in 2015 and focuses on the use of sustainable fabrics, which is understood to have been a key selling point for M&S.
“Nobody’s Child has been selected as our first brand to test this model using a curated range from its wider offer which we think will resonate with our customers,” M&S director of ecommerce Stephen Langford said.
“The Nobody’s Child team is experienced at operating as a third-party brand, has an excellent near-sourcing supply chain and shares our passion for sustainable clothing.”
M&S said that more brands could be added to its fashion range, which has seen a dramatic fall from prominence over the last decade, in a bid to reinvigorate sales.
It comes as M&S powers ahead with its “Never the Same Again” initiative, marking a heavy investment in and focus on becoming a “digital first” retailer.
Alongside its debut launch online with Ocado, M&S has overhauled its iconic “Sparks” loyalty scheme to be entirely digital, and its new app has now been downloaded over 1 million times.
Moonpig mulls stock market floatation
Online greeting cards and gifts retailer Moonpig is reportedly looking at the possibility of entering the stock market. According to Sky News, discussions with investment banks are at an early stage but a decision has not yet been made by parent company Exponent Private Equity. Options being explored reportedly include a public listing. Moonpig has seen sales skyrocket 44 per cent year-on-year to £172.8 million, boosted by a huge shift to online shopping as consumers stayed home amid the Covid-19 pandemic. It also booked a whopping 137 per cent increase in pre-tax profits to £33 million. “As a high growth company we constantly evaluate our funding options, and regularly meet with advisers on this subject,” a Moonpig spokesperson told Sky News. The online retailer said it added 1 million new customers in the first two months of the nationwide lockdown period, and has gained market share from high street rivals such as Clintons. Exponent Private Equity has owned Moonpig since 2016.
Walmart agrees £6.8bn sale of Asda
Asda is returning to British ownership for the first time in 21 years after Walmart agreed terms for the £6.8 billion sale of the Big 4 grocer to the Issa brothers and TDR Capital. Walmart confirmed that it has accepted a bid from a consortium led by Lancashire-based brothers Mohsin and Zuber Issa – the billionaire owners of petrol forecourt firm EG Group – following a lengthy auction process. Under the new ownership structure, the Issa brothers and TDR Capital will acquire a majority ownership stake in Asda. Walmart, the US retail giant that has owned Asda since 1999, will retain a minority stake in the Big 4 grocer as part of the agreement, along with an ongoing commercial relationship and a seat on the board.
The new owners have committed to keeping Asda’s headquarters in Leeds, as well as support the existing management team and maintain competitive pay levels for shop floor staff. They also said they would invest over £1 billion in the next three years to further strengthen Asda’s business and its supply chain, and grow its convenience and online operations. The news comes more than a year after the proposed £12 billion merger between Asda and Big 4 rival Sainsbury’s was blocked by competition regulators at CMA. Asda has seen its fortunes improve recently with trading strengthening throughout 2020, especially in the quarter ending June – the period covering the height of lockdown – as shoppers have spent more money on groceries during the pandemic. Although online sales doubled during lockdown, the new owners will be tasked with expanding Asda’s digital business further to take advantage of soaring demand and make ground on rivals, such as Tesco, who have a larger slice of the market. EG Group and TDR Capital will also face the challenge of keeping prices low amid tough economic conditions for shoppers and potential new tariffs on EU-imported foods, with the other Big 4 supermarkets all announcing a raft of price cuts in recent months. The Issa brothers sealed the deal after Walmart selected their consortium as the preferred buyer earlier this week, placing them in pole position ahead of a bid by US-based private equity firm Apollo. Last week, a third bid from Lone Star Funds, fronted by former Asda executive Paul Mason, was dropped after failing to meet the price of its rivals during the latter stage of the auction process.
“We are delighted to be able to announce this deal today, which we believe creates the right ownership structure for Asda, building on its 71 year-heritage, whilst bringing a new entrepreneurial flair, not only to Asda, but also to UK retailing,” Walmart chief executive Judith McKenna said. “I’m delighted that Walmart will retain a significant financial stake, a board seat, and will continue as a strategic partner. “Asda has been a powerhouse of innovation for the rest of the Walmart world, and we look forward to continuing to learn from them in the future. “This important combination will continue to keep customers and colleagues at Asda’s heart, which is important to us all.”
Asda chief executive Roger Burnley said: “This new ownership opens an exciting new chapter in Asda’s long heritage of delivering great value for UK shoppers. “With our combined investment, expertise and ambition; Asda, Walmart, the Issa brothers and TDR have an incredible opportunity to accelerate our existing strategy and develop an even more exciting offer for our customers as well as strengthen our business for our colleagues. “In a constantly changing retailing environment, our new ownership will further enhance our resilience, whilst creating significant, additional opportunities to drive growth. “For Asda colleagues, a strong and growing business is important for our long-term future.” The Issa brothers said: “We are very proud to be investing in Asda, an iconic British business that we have admired for many years. “Asda’s customer-centric philosophy, focus on operational excellence and commitment to the communities in which it operates are the same values that we have built EG Group on. “Asda’s performance through the Covid-19 pandemic has demonstrated the fundamental strength and resilience of the business, and we are excited to support Roger and his team as they continue to reposition the business to drive long-term growth. “We believe that our experience with EG Group, including our expertise around convenience and brand partnerships and our successful partnership with TDR Capital, can help to accelerate and execute that growth strategy. “After a successful period as part of Walmart we are looking forward to helping Asda build a differentiated business that will continue to serve customers brilliantly in communities across the UK.” Walmart sought to offload a majority stake in Asda after the CMA blocked its merger with Sainsbury’s amid fears the move would push up prices and reduce product quality. The US retail behemoth started new discussions over a sale of Asda in February, but saw these halted due to disruption from the coronavirus pandemic and subsequent lockdown. However, the auction process restarted in July as Walmart sought to exit the UK, 21 years after it first purchased the Leeds-based grocer. Blackburn-based EG Group, formerly known as Euro Garages, already runs forecourt convenience stores for Spar and French hypermarket chain Carrefour. The deal still needs to pass through regulators, although it is expected to be given the green light and be completed by the first half of 2021. Last week, EG Group announced a trial involving three “Asda on the Move” convenience stores at its petrol forecourts. TDR Capital, which also owns the UK’s largest pub group Stonegate, owns a 50 per cent stake in EG Group, sharing ownership with the Issa brothers.
Ken Murphy starts as Tesco's new CEO
New Tesco chief executive Ken Murphy has officially started his tenure leading the UK’s biggest supermarket. Analysts have heralded his tenure as a “new chapter” for the grocery giant, as the leadership team which helped deliver its turnaround after the 2014 accounting scandal steps back. Last year, Murphy – a former Walgreens Boots Alliance executive – was named as the successor to Dave Lewis and finally took the reins yesterday. It represents a major shake-up at Tesco, which has also seen Alan Stewart, its chief finance officer, and Charles Wilson, chief of its Booker wholesale arm, announce their departures. Murphy held calls with shop workers and executives at the business on Thursday morning, introducing himself and answering questions. Shore Capital’s Clive Black said this “represents the arrival of a new chapter” at Tesco where his challenges are set to be external, rather than the internal “chaos” faced by Lewis at the start of his leadership. “The context in which Mr Murphy joins Tesco could not be more different to the chaos inherited by his very effective predecessor, Dave Lewis,” Black said. “Whereas Mr Lewis faced into a tsunami of internal challenge, he passes a leadership ‘ball’ on to his successor at the right pace, direction and height.” He stressed that Murphy would face his own challenges, such as UK-EU relations and potential tariffs from Brexit, economic recession across its markets, and the continuing impact of the Covid-19 pandemic. Tesco delivered strong sales in the face of the pandemic, posting 10.5 per cent growth in the 12 weeks to September 6, according to Kantar. The supermarket has also pushed down on prices to keep customers on board during the recession, which saw it launch its Aldi Price Match in March as well as a raft of Clubcard-only offers. Major investors also have told Murphy that paying dividends to Covid-hit shareholders and selling off its banking arm should be at the top of his in-tray. Last year, Tesco sold its mortgage book to Lloyds for £3.8 billion, while it also recently sold its operations in Thailand and Malaysia for around £8 billion.