Dunelm sales rise 59% post-lockdown thanks to pent up demand
Dunelm has reported a sales rise as post-lockdown sales began to rise thanks to “pent up demand”, putting its financial performance for the year ahead of expectations. The homewares retailer said that sales rose by 59 per cent in July after customers flocked to stores following the reopening of its store estate. It also benefited from the timing of its summer sale after reporting “strong” trading in August, which saw like for like sales grow 24 per cent. “The sales rise reflects the strength of our proposition within a resilient homewares market, positive footfall growth to our mainly out-of-town superstores and continued strong growth in our home delivery offer,” Dunelm said. Despite market uncertainty, Dunelm said its performance was “materially ahead of initial expectations”. Dunelm said it remained “confident in our ability to adapt to the environment and well-positioned to continue to grow market share”. Last month, Dunelm reported declining sales after sales in its fourth quarter slumped 29 per cent due to store closures while online sales almost doubled during the 16 weeks to June 27, rising 85 per cent. Moreover, Dunelm had made losses during April and May and said full-year sales were down 3.9 per cent to £1.05 billion.
Ann Summers mulls CVA as landlords bury heads in the sand
Ann Summers is reportedly expected to launch a CVA after facing increased losses in its recent financial report. The lingerie and sex toy retailer’s chief executive Jacqueline Gold said the company might opt for a CVA as some landlords refused to work in partnership, despite the owning family injecting cash to keep the business afloat, Retail Week reported. Losses increased £3 million to £16 million in its most recently reported year, and Gold expects business rates and property costs to increase next year.
M&S and Ocado's joint venture goes live
The Ocado and Marks & Spencer partnership has officially begun as the first deliveries of groceries is expected to reach customers today. M&S’s venture into the online food shopping sector amid the Covid-19 crisis is forecast to benefit from the increased amount of consumers shopping from home. The embattled retailer has made over 6800 products exclusively available through Ocado. Meanwhile, Ocado has introduced 10 Percy Pig-branded vans to its national fleet and 20,000 packets of the sweets have been ordered so far. “Taking our full food range online for the first time is transformative,” M&S Food managing director Stuart Machin said. “In preparation for go-live we have listened intently to customers to deliver an even bigger, better range". M&S chairman Archie Norman and chief executive Steve Rowe hope the new deal will play a significant and positive role in the retailer’s ongoing turnaround strategy.
Is sustainability killing off fast fashion for good?
Fast fashion was booming in the early 2000s when consumers connected with Primark’s luminous mesh clothing and chunky plastic hoop earrings, and as the likes of Topshop, H&M and Zara embarked on ambitious expansion schemes around the world. However, in more recent years ethics and corporate transparency in fast fashion has been the topic of numerous debates – especially since the Covid-19 pandemic swept the world in March this year. The sector has been seeing an increase in calls for transparent corporate practices as well as sustainable offerings from retailers that were once the mascots for fast fashion. Retailers have also had to deal with a domino effect on the high street – where competition led to many of them “greenwashing” to appear ethical. The term “greenwashing” was coined in the 1980s by environmentalist Jay Westerveld to describe retailers which grossly overstate the environmental or ethical benefits of their products and services. Despite sustainability already being one of the buzzwords in retail before the pandemic, GlobalData predicted in April that Covid would put sustainability concerns on hold as retailers focus on the battle for survival. Nonetheless, a major reason why Brits were increasingly avoiding fast fashion was because its effects range from low-paid or poorly-treated workers to environmental destruction through burning excess clothes or eye-watering amounts of apparel sent to landfill. Oxfam urges retailers to ensure the jobs of garment workers are “fair and safe – and that people are paid a living wage for the work that they do”.
Debenhams sets deadline for suitors to place their takeover bids
Debenhams has reportedly told potential suitors interested in buying the 242-year-old business to place their bids by the end of today. According to Sky News, advisers from Lazard – who are working with the department store chain on the sale of the business – has asked interested buyers to submit offers by 5pm today. Debenhams’ administrator FRP Advisory had drafted in Lazard in July, when the retailer was first put up for sale.
UK's largest grocers sign Marcus Rashfords food poverty taskforce
Some of the UK’s largest grocers and suppliers have signed up to a new food poverty taskforce set up by footballer Marcus Rashford. The Manchester United player launched his campaign in June in an effort to extend free school meals over the summer. Rashford’s food poverty taskforce means grocers and suppliers will lobby the government for spending in the autumn statement to support those children who are currently struggling financially. Grocers and businesses including Aldi, Asda, Co-op, Deliveroo, Iceland, Kellogg’s, Lidl, Sainsbury’s, Tesco and Waitrose have all joined the taskforce. They have pledged to hand over their social media channels to share stories of children affected by food poverty over the next six weeks. The retailers, alongside charities FareShare and The Food Foundation, have also written to MPs calling on them to implement proposals from the National Food Strategy.
Burberry wins £573k PPE government contract
Burberry has been handed more than half a million pounds to make PPE equipment for the NHS, according to newly released records from the UK Government. The luxury fashion retailer had previously announced it would donate 100,000 items to healthcare workers back in April and was singled out for praise by Health Secretary Matt Hancock. Two months later, it was handed a £573,000 contract to make gowns and protective equipment. The contract was not advertised to other potential suppliers, according to the government records which were published today. EU rules allow the government to circumvent the usual processes if only one supplier is capable of delivering on the contract, or if unforeseen events mean that speed is vital. During the early days of the coronavirus pandemic several luxury fashion brands turned their production lines over to make desperately needed PPE. Burberry’s Castleford site in Yorkshire retooled to produce gowns for healthcare workers. It allowed the company to win the £573,000 contract, in addition to donations of around 160,000 pieces of PPE to date to the NHS and healthcare charities since the pandemic started. This has included non-surgical gowns made at its Castleford site, and surgical masks that it bought abroad, points heavily publicised by the business.
B&M set to enter FTSE100
Speculation is rife that discount retailer B&M is likely to be promoted into the coveted FTSE 100 index after a quarterly reshuffle takes place later today. The blue-chip index for the London Stock Exchange is updated every quarter, with the new rankings revealed tonight to be based on Tuesday’s stock market data. Analysts have said that B&M’s closing market value of £4.75 billion means it is above the 90th place required to secure a spot on the FTSE 100. The discount retailer, which has never advertised on TV, is set to replace commercial broadcaster ITV which is dropping out of the blue-chip index. B&M has been among the retail winners during the Covid-19 crisis, boosted by its low prices and the fact its were stores allowed to remain open during lockdown. B&M trades from 656 stores across the UK, sell food, toys, stationery, toiletries and household goods, hence why it was classified as an essential retailer during the lockdown. This year alone, shares in the retailer have increased by 17 per cent. It made its debut on the stock market in 2014. In July, B&M posted a “strong” first quarter, with its UK business trading ahead of expectations despite the period covering the height of lockdown. In the period from March 29 to June 27, the discount retailer saw group revenue rise by 27.7 per cent to £1.15 billion. Revenue at the UK business was 33.7 per cent higher, with a like-for-like growth of 26.9 per cent, up from 3.9 per cent in the corresponding period a year ago. This came after it recorded a 3.2 per cent rise in full-year pre-tax profit to £252 million for the 52-week period ending March 28, driven by a 16.5 per cent rise in revenue to £3.8 billion. Full-year llke-for-Like revenue grew by 3.3 per cent, including a 6.6 per cent boost in the fourth quarter. Meanwhile, B&M’s full-year adjusted EBITDA grew by 8.7 per cent to £319.8 million.
The Hut Group confirms £4.5bn stock market float
The Hut Group has confirmed plans for a £4.5 billion stock market listing in what will be London’s first major flotation since the coronavirus crisis struck. The online retail company, which owns the likes of MyProtein, Lookfantastic, Illamasqua and ESPA, said today that it would look to raise around £920 million through a share offering of around 20 per cent of its stock. This values The Hut Group at £4.5 billion, and it is expected to start trading on the stock market later this month. The firm said BlackRock, Henderson Global Investors and funds managed by Merian Global Investors and the Qatar Investment Authority had agreed to buy £565 million of shares on offer. The flotation is set to be the biggest listing of a UK firm since 2013 and will tap into surging investor appetite for online retailing amid the Covid-19 pandemic. It will also be one of the first big floats in London after the pandemic halted the recovering initial public offering (IPO) market. The Hut Group, founded in 2004, has rapidly expanded as shoppers increasingly turn online for health and lifestyle brands, with around 7000 staff now employed by the Manchester-based business. The Hut Group owns a variety of its own cosmetic brands – many of which it has acquired in recent years – but also sells third-party brands through ecommerce sites it operates, such as Glossybox. In 2019, the company saw revenues jump by 24.5 per cent year-on-year to £1.1 billion, with adjusted earnings before tax and interest of £111.3 million. It told potential investors that its growth has accelerated recently as it saw revenues increase by 35.8 per cent to £676 million for the six months to June 30. Bosses at the group said the IPO would boost the firm’s growth plans by increasing its public profile and brand awareness.
1650 high street jobs at risk at Costa Coffee
Costa Coffee has said 1650 high street staff are at risk of redundancy as it looks to cut costs amid continued uncertainty over when trade will fully recover following the pandemic. The coffee chain told staff today that it has started consultations which could affect more than a 10th of its high street roles. The move comes a week after rival Pret A Manger revealed it was slashing 2800 high street jobs as part of a restructure of its UK business. Costa Coffee closed nearly all of its 2700 UK stores for six weeks during the pandemic but has now reopened around 2400 sites. The Coca Cola-owned high street chain said trade is “returning” after being boosted by the UK Government’s VAT reduction on food and non-alcoholic drinks and the recent Eat Out To Help Out scheme. However, it said the proposed job cuts had been driven by “high levels of uncertainty as to when trade will recover to pre-Covid levels”. The restructuring proposes removal of the assistant store manager role across its UK business. Costa Coffee stressed that it would seek to find those at risk alternative jobs in the business where possible, and provide support for those leaving. The company has also frozen all pay increases within its head office and axed all non-essential expenditure as part of its cost-cutting efforts.
Amazon to create 7000 new UK jobs in 2020 in major vote of confidence
Amazon is set to create 10,000 jobs in the UK this year in a “clear vote of confidence in the UK economy”. Amazon is set to extend its UK workforce to over 40,000 by the end of the year, hiring 7000 new employees across more than 50 sites, adding to the 3000 it has already hired in 2020. These include three new state-of-the-art fulfilment centres in Darlington, Durham and Sutton-in-Ashfield which will create over 1000 permanent roles each. The robotic fulfilment centres in Durham and Sutton-in-Ashfield are due to launch in the autumn, while the site in Darlington has been operating since May. Aside from warehouse teams hired to pick and pack items, Amazon is hiring thousands of engineers, HR and IT professionals alongside health and safety and finance specialists. Amazon says all full time, part time and temporary employees will earn a minimum of £9.50 per hour outside of London, rising to £10.50 inside the city, alongside benefits including medical insurance, life assurance and employee discount. A further 20,000 seasonal workers are set to be hired ahead of the holiday season. “While this has been a challenging time for many businesses, it is hugely encouraging to see Amazon creating 10,000 jobs in the UK this year,” business secretary Alok Sharma said. “This is not only great news for those looking for a new job, but also a clear vote of confidence in the UK economy as we build back better from the pandemic. The government remains deeply committed to supporting retailers of all sizes and we continue to work closely with the industry as we embark on the road to economic recovery.” Amazon’s vice president of European customer fulfilment Stefano Perego added: “Our people have played a critical role in serving customers in these unprecedented times and the new roles will help us continue to meet customer demand and support small and medium sized businesses selling on Amazon. “The new state-of-the-art robotics fulfilment centres in the North East and the Midlands, as well as the thousands of additional roles at sites across the country, underline our commitment to the people and communities in which we operate. “We are employing thousands of talented individuals in a diverse range of good jobs from operations managers and tech professionals through to people to handle customer orders.”
Lego to open 120 new stores as more adults purchase toy sets
Lego has reported a rise in sales during the first half of the year as an increased number of children were gifted its toy sets during the UK lockdown. The toy brand and retailer reported a seven per cent increase in revenues to DKr 15.7 billion (£1.9 billion) for the for the six months to the end of June. Meanwhile. operating profit jumped 11 per cent to DKr 3.9 billion. Lego also reported a sales rise of over 10 per cent in its biggest markets across western Europe, Asia Pacific, the Americas and China despite its temporary store closures. The retailer said the number of visitors to its website doubled during the period. “When our stores have reopened after lockdown, there have been queues,” Lego chief executive Niels Christiansen said. Lego now plans to open 120 new shops this year. The company currently has 612 stores across the globe, 14 of which are in the UK. At least 80 of the new stores will be in China. Christiansen said Lego’s shift to online shopping before the pandemic benefited the firm during the lockdown. “Our strong portfolio appealed to builders of all ages and our recently upgraded ecommerce platform and agile global supply chain allowed us to fulfil online demand,” he said. “More families are playing and learning together with Lego bricks and we are seeing more adults than ever before enjoying building our more challenging sets.”
Pret a Manger launches monthly subscription service
Pret A Manger has launched an in-store subscription service for customers to pay for the coffee they order each month as part of a major shift in its high street business model. The food-to-go retailer last week axed 2800 roles after reporting that sales had been significantly hit by low footfall in city centres following the coronavirus pandemic. It said is now launching the YourPret Barista service which will allow customers to buy up to five drinks each day for a month on a £20 monthly subscription. The offer – which could add up to 150 drinks a month – will cover all in-store barista-made coffees as well as teas, hot chocolates, smoothies and frappe drinks. Pret A Manger said the subscription, which will officially launch on September 8, will be free to subscribers for the first month. Chief executive Pano Christou said its coffee sales have grown faster than its food sales since reopening sites as it continues on the path to recovery. In May, the company, which was bought by JAB Holdings in 2018, expanded into its own branded supermarket coffee products for the first time, launching a range of coffee beans and pre-grounded coffee on Amazon. “As people across the UK begin to get back to the things they’ve missed, our new subscription service is perfect for customers who have been craving one of our barista-prepared drinks,” Christou said. “Whether you’re a coffee enthusiast or tea devotee, we hope this new service helps you start your day strong. “This is just the first step in our plan to bring Pret to more people. “We now have the building blocks to establish Pret as a multi-channel, digitally-led business, and YourPret Barista is the first big launch we’re able to deliver through our new technology platform.”
Amazons top reviewers making tens of thousands of pounds exchanging 5 star reviews for free goods
Amazon’s top reviewers are thought to be making tens of thousands of pounds from offering 5-star reviews in exchange for free products. Amazon UK is reportedly investigating its top reviewers after an investigation by the Financial Times found evidence they were receiving free items from Chinese brands, giving them 5-star reviews, then reselling them on Ebay. The number one ranked reviewer on Amazon.co.uk, Justin Fryer, was found to have given a 5-star rating to £15,000 worth of products last month, the vast majority of which were from unknown Chinese brands. Since June Fryer has also sold around £20,000 worth of “unused” goods on Ebay many of which were the same goods he had reviewed for Amazon just days earlier. According to the FT’s investigation, nine of the UK’s top 10 Amazon reviewers had huge numbers of 5-star reviews for unknown Chinese branded products, many of which were found in groups and forums offering free products or money in exchange for reviews. Fryer and at least two other top 10 reviewers removed their review history from Amazon after being approached by the publication. After being contacted earlier this week, Fryer denied that he was receiving free products in return for positive reviews, adding that a “large majority” of the goods he had paid for. “I have relationships with and I know some of the sellers,” he said. “My partner’s Chinese and I know a lot of the businesses over there . . . and I just review.” Amazon said it would investigate the FT’s findings adding that it suspends, bans and sues people who violate its policies, which explicitly forbid “creating, modifying or posting” content in exchange for compensation.
Article of the week - Lego to open 120 new stores as more adults purchase toy sets
Question of the week - Will office workers ever return to city and town centres frequently enough to help local trade survive?