Debenhams in 11th hour rescue talks
Debenhams staff have been thrown a glimmer of hope after the department store chain entered 11th-hour talks with Mike Ashley’s Frasers Group about a possible rescue. According to The Sunday Times, the retail tycoon revived his interest in taking over Debenhams over the weekend, after JD Sports withdraw from acquisition talks last week and placed the 242-year-old retailer on the verge of liquidation. While Frasers Group finance director Chris Wootton said the current Debenhams rescue talks were on a knife edge, should it be successful it could save up to 12,000 retail jobs. JD Sports was understood to have been in pole position in a sale process initiated by Debenhams’ administrators following its insolvency announcement in April. JD Sports’ withdrawal on Tuesday was partly linked to the administration of Sir Philip Green’s Arcadia Group, which is the biggest operator of concessions in Debenhams stores. Frasers Group – which owns Sports Direct, Jack Wills, Evans Cycles and rival department store chain House of Fraser – is now looking to buy Debenhams in a deal worth around £200 million, The Sunday Times reported. The last-minute rescue deal could also see Frasers Group operate Debenhams’ 124 stores under 12-month licences. This is not the first time Ashley has expressed interest in acquiring Debenhams. Frasers Group was among the several suitors during the bidding war for Debenhams before it dropped out of the race last month, paving way for JD Sports to enter exclusive talks with the beleaguered department store’s sales advisors. Ashley also grabbed headlines in 2019 for his various takeover attempts of Debenhams in the run-up to its first administration. At the time, Frasers Group was the largest shareholder of Debenhams, and its stake was wiped out when the department store fell into administration before immediately bought out by a consortium of lenders and banks known as Celine. Wootton suggested that Frasers Group’s current rescue talks could be jeopardised because of Arcadia Group’s administration and because of the lack of reform around business rates. “We [Frasers Group] hope to be able to save as many jobs as possible,” he told The Sunday Times. “However, we have found that Debenhams has been overly reliant on Arcadia for many years, and with the administration of Arcadia last week, as well as no end in sight to the outdated business rates regime which unduly punishes the likes of Debenhams, it may be a bridge too far.” When Debenhams fell into administration in April – it was the second such insolvency in 12 months and less than a year since it implemented a CVA process that saw it shut down several stores immediately after last Christmas and before the pandemic. It blamed the latest administration on the Covid-19 crisis and subsequent three-month, UK-wide lockdown that saw the temporary closure of all its stores. Since then, it has scrapped around 6500 jobs – of which 2500 were confirmed in August alone – shut down 18 stores, and advisors were drafted to explore a sale of the business. When JD Sports dropped out of sales talks last week, Debenhams said its administrators “regretfully” decided to start winding down operations while continuing to seek offers “for all or parts of the business”. Those options included a sale of all or part of the UK business, a further restructure of Debenhams’ operations to go forward on a standalone basis, or the orderly wind-down of the Debenhams business. This does not impact Magasin du Nord in Denmark, which is owned by Debenhams and continues to operate independently.
Harrods will take years to rebuild
Harrods managing director Michael Ward has reportedly said it will take him “years to rebuild” the business, as the Covid-19 pandemic continues to hammer sales. However, Ward said he is happier now than he was a week ago, after reviewing the takings from last Wednesday — the first day that England’s non-essential shops were open after the second lockdown. Ward said that although there may have been fewer customers than on the same day last year, those who came spent three times as much, pushing up the day’s sales by 24 per cent, The Sunday Times reported. Meanwhile, optimism arising from the vaccine rollout is tempered by the government’s decision to scrap VAT-free shopping for non-EU visitors next month. The Treasury reckons the move will save £500 million a year, while the Centre for Economics and Business Research predicted that the wider economic damage will end up costing the public £3.5 billion annually. Ward said the policy is “fundamentally wrong” as it is a misguided attempt to save money. The lockdown in March was the first time the store had closed for any significant time since the site opened in Knightsbridge in 1849. Last year, Harrods saw pre-tax sales of £232 million on sales of £871 million, or £1.8 billion including concessions. That has allowed Qatar Investment Authority to declare dividends totalling more than £1.1 billion so far. To shift unsold goods after the first lockdown, Harrods opened an outlet shop on a short-term lease at the Westfield London. At the height of lockdown, about 3500 staff were placed on furlough, with the company topping up their wages from 80 per cent to 100 per cent. However, Harrods made 700 redundancies in July, about 14 per cent of the workforce. Earlier this year, Ward said Harrods was forecasting a 45 per cent drop in annual sales. He is cautious about next year, too with the return of tourists. Ward had planned to step down in 2016, but stayed on to see Harrods through Brexit.
There is a new value system at play - Mary Portas
Mary Portas has said the high street brands that have dominated for years have “failed to offer anything beyond mediocrity” and implored retailers and the government to think about changing the high street, rather than just save it. In an interview with The Observer, the retail guru – who was appointed by former Prime Minister David Cameron to lead a review into the future of British high streets in 2011 – said the days when the strategy of “stacking stuff high and selling it fast” was commonplace was now “completely and utterly over”. She said the retailers that did this for years “failed to offer anything beyond mediocrity” and questioned whether consumers genuinely miss BHS or even care about Dorothy Perkins. Her comments followed a week of high street woes when 26,500 jobs were put at risk at retailers including Debenhams, Bonmarche and Sir Philip Green’s Arcadia Group – all of which have been severely impacted by the pandemic. BHS was once part of the Arcadia Group retail empire, and Dorothy Perkins remains one of its brands. “We’re looking at a whole new generation who aren’t going to prop up the likes of Philip Green any more,” Portas told The Observer. “They’re not supporting businesses who don’t prioritise people or the planet. We’re moving away from that: there is a new value system at play.” Despite the grim news of recent weeks, Portas went on to forecast growth for high streets. She said the future of the sector relied on fewer shops just selling goods and more on retailers that had a strong in-store customer experience focus, as well as spaces that act as community hubs. Portas also said the Conservatives have failed to comprehend how retail has changed, and they “need to wake up” to the reality of online retail giants needing to pay equivalent rates of tax online.
Regent Street owner The Crown Estate hit by string of administrations
The Crown Estate, which owns the whole of London’s Regent Street and around half of St James’s, has been affected by company collapses. The property giant, which manages the monarchy’s £13.4 billion commercial property portfolio in the public interest, has suffered as retailers and casual dining chains restructure due to pandemic lockdowns and restrictions. The Crown Estate was a creditor to high street chains such as Casual Dining Group and New Look, all businesses which have sought CVAs this year. The group returns its profits to the Treasury, which then sends a portion of profits as a “sovereign grant” to the Queen to cover the maintenance of a number of palaces. The Crown Estate was owed a total of £4.2 million from New Look and £219,150 from Casual Dining Group, owner of Bella Italia, Las Iguanas and Café Rouge. It had set aside £12.9 million in provisions for bad debts expected to arise in 2020/21 from its tenants falling into administration. “There’s no doubt this is a difficult time for the retail and food and beverage sectors, and we’re particularly conscious of the impact it’s having in many cases on people’s jobs and livelihoods,” The Crown Estate said. “We are working with our customers to offer them support where we can through this challenging period.” In the 12 months to March 31, it posted pre-tax profits of £345 million, but has since been affected by the ongoing crisis.
Ikea to stop publishing catalogue after 70 years
Ikea has announced that it will no longer publish its popular catalogue after print run that lasted 70 years. The Swedish furniture giant’s said the current edition of the Ikea Catalogue, distributed from summer this year, would be the last to be published. The decision forms part of the retailer’s ongoing ambition to become a more digital and accessible business. However, as a tribute and celebration of the Ikea Catalogue’s 70-year history, the retailer said it would launch a book in autumn 2021, filled with home furnishing inspiration and knowledge. The news comes after Ikea found that its catalogue was being used less due to changing customer behaviour and media consumption. Inter Ikea Systems BV, the worldwide Ikea franchisor, said it would cease production the catalogue – both in print and online – after it collected and considered insights from customers and shops. “For both customers and co-workers, the Ikea Catalogue is a publication that brings a lot of emotions, memories and joy,” Inter Ikea Systems BV managing director Konrad Grüss said. “For 70 years it has been one of our most unique and iconic products, which has inspired billions of people across the world.” He added: “Life at home has never been more important. Over the last few years Ikea has tested new formats and ways to distribute the content of the Ikea Catalogue. “Insights highlight that people are now planning the needs and dreams of their homes with alternative existing and new exciting tools. “Whilst it is time to say goodbye to the Catalogue, Ikea look to the future with excitement – as this chapter closes, another one begins. “We will now take the next steps to amplify the unique Ikea home furnishing knowledge, products and solutions in the best possible way. But we are not starting from scratch. “Over the last few years, we have been transforming many aspects of how to reach and interact with our customers, and the work continues to find new ways, channels and formats to inspire and reach more of the many people across the world.” Ikea said that because of its transformation scheme, which is already underway, has so far led to online retail sales increasing by 45 per cent worldwide on the back of 4 billion visits to its website. Ikea said it has also improved digital services and launched new apps for a better customer experience.
Ikea Catalogue Highlights:
- 1951: Ingvar Kamprad himself put together the first Ikea Catalogue, and the very first catalogue cover featured the MK wing chair in brown upholstery. Printed and distributed in 285,000 copies in the southern of Sweden, 68 pages. In Swedish.
- 1998: First catalogue “Ikea at office” available on internet, which was a special edition only showing furniture for business/offices. The ambition this year was to present the whole catalogue online, but due to the complexity with IT systems the launch was postponed.
- 2000: Launch of both a printed and digital version of the Ikea Catalogue.
- 2001: Ecommerce is launched for the first time in the Ikea history, in Sweden and Denmark.
- 2016: At its peak year, the Ikea Catalogue was distributed in 200 million copies, in in 69 different versions, 32 languages and to more than 50 markets.
M&S announces retails first technical apprenticeship
Marks & Spencer will this week launch a new Data Technician course, aiming to make data training more accessible to staff.
Teaming up once again with data academy Decoded, the retailer will offer 70 colleagues the opportunity to enrol on the technician programme in the next 12 months of the programme.
The 18-month-long scheme will be open to everyone across the business, with apprentices taught how manipulate and scrutinise data, and how to translate it into valuable insights that the business can act upon.
Against the backdrop of a surge in online retailing innovations due to lockdowns taking place across the world, M&S’s new course looks to support its plans to supercharge online growth and create a digitally and data enabled culture in its workforce.
So far over 700 colleagues across M&S have benefitted from specialist data training with Decoded, with the Data Technician course continuing alongside the more advanced Data Analyst Fellowship course.
To date, the Fellowship course has trained over 200 colleagues across M&S from their stores and support centres, in skills such as R, Python, SQL and machine learning.
“M&S has a rich data set – from Sparks to M&S.com to M&S Bank – and in order to thrive in a digital future, we need colleagues who can act upon this insight and put data at the heart of everything we do,” M&S chief digital and data officer Jeremy Pee said.
“With the relaunch of Sparks, the creation of our new data hub BEAM and the continued investment in colleague data literacy programmes, we are building the foundations to deliver a step-change in customer experience, and we’re already seeing the benefits a more data literate workforce can bring,” Pee added.
“This new apprenticeship will give us a new platform to go even bigger and engage even more colleagues through the power of data and we’re really excited about the difference it will make.”
Arcadia suppliers left unsure on payments following administration
Arcadia suppliers have reportedly been left in the dark on whether they will receive any money owed to them since the group collapsed into administration last week, affecting over 13,000 jobs. Deloitte joint administrators Daniel Butters and Gavin Maher were drafted in on November 30 to manage the group, which owns Topshop, Burton, Dorothy Perkins and Evans among others. One Arcadia supplier said they have had no communication from the group or administrators regarding payments, Drapers reported. Another Arcadia supplier said they have some invoice debt, but “can’t see us getting that – although you never know”. A third Arcadia supplier said that they have been told by Deloitte not to deliver any orders, and are not to accept any new orders unless they are authorised by the administrators – but no information regarding payments has been released. Deloitte told suppliers in a letter that if any orders placed by the company prior to their appointment have not yet been completed, these should not be delivered unless suppliers receive written confirmation from the company with approval from the joint administrators that the goods and services are still required. Certain creditors have retention of title claim over goods in the company’s possession, the letter added. Last week, Arcadia’s retailers were reported to be now worth just half their £800 million value, following the administration. Arcadia is set to be watched closely by rival retailers and private equity groups to see if they can purchase a good deal as the brands are put up for sale. Arcadia’s brands were valued at £800 million in January by consultancy Brand Finance, with Topshop alone accounting for almost £400 million.
Small retailers given £1bn boost on record Small Business Saturday
More than £1 billion was spent with the UK’s small businesses last Saturday, as shoppers had their first weekend of being able to shop in-stores before the second lockdown. Data from American Express showed that 15.4 million people hit the streets to shop small on Small Business Saturday, which is designed to encourage shoppers to support independent and small retailers. Between them the shoppers spent around £1.1 billion on the day, the data shows. It is the biggest Small Business Saturday ever since the campaign started eight years ago, and breached the £1 billion mark for the first time. However, the data also shows that 2.2 million fewer people shopped during the day. The low footfall was made up for by higher spend per trip. The average per person spend rose to £70.74, up from £45.42 last year. Around 48 per cent of shoppers said they deliberately chose to spend with smaller retailers because they wanted to support them after a tough year. “It is fantastic to see such phenomenal, record-breaking support for small businesses, in one of the toughest years many have ever experienced,” Small Business Saturday director Michelle Ovens said. “Small Business Saturday has been running for eight years, but this year’s campaign has been our most vital. “We are delighted that it’s generated such a massive boost for small businesses, at a time they are facing huge challenges with the ongoing effects of the pandemic. “I have no doubt that this strong support for small businesses has been driven by recognition of the critical role they played in our communities during lockdown. “So many firms worked hard to pivot and adapt their businesses during this national emergency, often stepping in to offer useful services, vital products, as well as being a source of practical support and kindness, particularly for the NHS and frontline workers.”
Hammerson's build to rent scheme for Leicester to provide over 300 homes
Hammerson has announced a new build-to-rent residential scheme for Leicester City Centre, which will see over 300 new homes being built for locals. Private-rented-sector specialist Packaged Living has been hired as Hammerson’s development manager to formulate the plans ahead of submission early next year. The development would see part of the former Debenhams department store at Highcross, transformed into new homes for locals. The new scheme will provide improved public realm for the city alongside bespoke resident amenities including co-working space and a private dining room. The retail frontage onto the mall at Highcross will be retained and the space transformed into smaller and more flexible space for retail and leisure brands. The proposal supports Hammerson’s strategy to reduce the amount of floor space occupied by challenged retail categories at its flagship destinations, particularly that occupied by department stores. This project is also in line with Hammerson’s target to be Net Positive for carbon emissions, water, resource use and socio-economic impacts by 2030. In addition to supporting up to 800 jobs on site and in the supply chain, Hammerson is working closely with Packaged Living to minimise both embodied and operational carbon emissions. “Today’s announcement is another example of the steps we are taking to manage the structural shift in retail whilst maintaining the vibrancy at our flagship destinations through a diversified offer and mix of uses,” Hammerson managing director UK and Ireland Mark Bourgeois said. “This exciting project will meet demand for rented accommodation in Leicester city centre and ensure Highcross remains an exciting destination for visitors, whilst supporting local businesses and boosting footfall.”
Acadia Group legally robbed by the Greens, says peer
House of Lords peers have rounded on Sir Philip Green over his Arcadia Group retail empire fell into administration and the impact on employees’ pensions. Tory former minister Lord Blencathra said Arcadia Group was “legally robbed by the Greens”. Meanwhile Liberal Democrat Lord Goddard of Stockport renewed calls for Green to be stripped of his knighthood. Arcadia Group, which includes Topshop, Burton and Dorothy Perkins, collapsed into administration last week – placing 13,000 jobs at risk. At Lords question time, Lord Blencathra said: “Let’s be blunt. Debenhams collapsed after three ruthless vulture funds loaded it with debt and then cleaned it out to the tune of £1.2 billion in dividends. “Arcadia was legally robbed by the Greens to the tune of another £1.2 billion in dividends.” He said that in the US, the regulator would have “gotten back every single cent and they would all be serving life without parole”. Lord Blencathra, a former Home Office minister, asked when there was going to be some “proper regulation and legislation to tackle people whose behaviour is de facto criminal but at the moment is technically legally okay”. Work and Pensions minister Baroness Stedman-Scott said the government did need to ensure legislation would deal with those who would “plunder pension schemes”. She said this was why a Pension Scheme Bill was going through Parliament, which would extend the regulator’s sanctions regime, including the power to issue civil penalties and new criminal offences for “bosses who run pension schemes into the ground or plunder them to line their own pockets”. Lord Goddard suggested the minister should contact the Prime Minister and “try to get Philip Green’s knighthood revoked as he is clearly less than an honourable man”. Lady Stedman-Scott said it would not be right to comment on individual cases but added that there was a clear independent process in place for the forfeiture of an honour.
Tesco finalises £8bn sale of Asia business
Tesco is set to complete the £8 billion sale of its Thai and Malaysian business to buyer CP Retail Development Company. The acquisition was given the green light by Thai authorities last month and CP Group has now confirmed it is “satisfied with the formal notice of approval”. The Big 4 grocer said it now expects the disposal to be formally completed by December 18. The acquisition will result in a £5 billion return to Tesco’s shareholders via a special dividend, while £2.5 billion will be invested into the grocer’s pension fund. Tesco has offloaded a host of overseas markets since former boss Dave Lewis took the helm in September 2014. Lewis sold Tesco’s Homeplus business in South Korea for £4 billion back in 2015 and earlier this year struck a deal to offload its operations in Poland for £181 million. Tesco continues to operate stores in Central Europe across Hungary, the Czech Republic and Slovakia. “I would like to thank all our colleagues in Asia for their hard work and dedication to our customers over many years,” Tesco chief executive Ken Murphy said. “They have built a very strong business. I’m confident that the agreement with CP Group will ensure that they are well setup for continued success. “This sale allows us to focus on our businesses across Europe and to continue delivering for customers, make a significant contribution to our pension deficit and return value to shareholders.”
Tupperware-style retail sees 45% growth in 2020
Tupperware-style retail enjoyed significant growth this year, with data suggesting that a correlation with an increase in people looking for new income streams due to the pandemic. According to a new survey from the UK industry body for direct-to-consumer “social shopping” retail, the Direct Selling Association (DSA), there was an average 45.5 per cent growth in sales through in 2020. The findings come as brands including The Body Shop and Amway spoke of record sales through their direct selling divisions over recent months during an industry roundtable event. Other brands and retailers who have a social shopping channel include Avon, Usborne Books at Home, and Neal’s Yard Remedies Organic. During a virtual roundtable event last week chaired by retail analyst Natalie Berg, The Body Shop’s direct selling division revealed that sales in April and May this year – the peak of the pandemic and lockdown – were similar in volume to a full year’s sales three or four years ago. The division also saw a significant increase in its independent salesforce in the UK, with consultant numbers now approximately 60,000, making it one of the largest direct selling brands in the UK. Meanwhile, Amway said November was its strongest sales month in over 15 years, and its UK turnover is set to close approximately 20 per cent up on 2019 levels following a major uplift in sales through 2020. “We anticipated reasonably strong growth for direct-to-consumer retail at the start of 2020, but no-one could have predicted what happened following Covid-19,” DSA director general Susannah Schofield said. “Despite considerable uncertainty for many brands in March and April, direct-to-consumer retailers rapidly adapted to serve customers when other more traditional forms of retail were closed during lockdown. “With low overheads and the ability to be far nimbler than many traditional channels, I expect to see strong sales via the channel into 2021, particularly given the considerable growth in people joining brands to earn this way as independent salespeople.” The number of people joining “social shopping” brands to earn additional income by becoming independent salespeople was also found to have increased by 46.4 per cent this year, the DSA said. Usborne Books at Home saw a 101 per cent increase in people joining, whereby consultants earn approximately 24 per cent commission on each product sold. The DSA said direct selling retail is a £2.67 billion-a-year sector where products are sold directly to consumers outside of a fixed retail environment. This could be via Tupperware-style parties, online or through catalogue distribution. Individuals act as independent salespeople and earn through commission paid on product sales. The latest data, from pre-Covid, estimates that in the UK approximately 563,000 people earn this way, usually on a part-time basis to supplement household incomes. The average amount earned in the UK through direct selling is £373 per month.
Sainsburys is hiring 12,000 seasonal workers to fulfil online orders
Sainsbury’s is hiring 12,000 seasonal workers to help “fulfil online grocery orders” as the grocer prepares for a huge spike in demand for its digital services.
The UK’s second largest supermarket is doubling the number of seasonal hires this year to help it support the rapid growth of its online delivery operation, which has more than doubled since March.
These 12,000 workers will be spread across roles from picking and packing to driving delivery vans, aiming to help Sainsbury’s fulfil 750,000 online orders a week throughout December, either via delivery or click & collect.
The grocer also announced ambitious plans to hire a whopping 75,000 people by March 2021, including the creation of 6000 new permanent roles, most of which will also be tasked with supporting its online arm.
Seasonal workers will receive £9.30 per hour, rising to £9.90 in central London and £9.55 in Greater London, which Sainsbury’s says is the highest rate of pay of the major supermarkets.
“To help (customers) find everything they need and shop how they want, we’re recruiting thousands more Christmas colleagues than in previous years,” Sainsbury’s retail and digital director Clo Moriarty said.
“The roles will receive the highest rate of pay of the major supermarkets while supporting in our superstores and helping fulfil online grocery orders, where we’ve more than doubled capacity since March.”
Alongside its efforts to “supercharge” its online operations, Sainsbury’s has also rolled out its SmartShop system to over 1100 stores including 500 convenience stores, enabling people to shop without visiting tills and maintain social distancing throughout their entire journey.
Primark CEO says those who think online shopping shift is permanent are wrong and naïve
Primark’s chief executive Paul Marchant has slammed claims that COVID-19 has brought about a permanent shift to online shopping.
In an article published in The Times, Marchant took aim at pundits who claim “COVID-19 has merely speeded up an inevitable and permanent shift from in-store to online shopping”, calling them “wrong” and “naïve”.
Marchant cites research conducted by his wildly popular fast fashion brand Primark, which reportedly suggests that shoppers “civic pride and, by extension, self-esteem” comes from their hometown, village or city.
Therefore, boarded up high streets full of closed and collapsed retailers “chisels away” at people’s sense of self-worth.
He goes on to argue that physical shopping is an “extremely important” aspect of our social lives across demographics.
It comes just a week after Primark reopened its doors after the second national lockdown to queues stretching the length of high streets.
The second lockdown hit Primark hard, seeing its parent company Associated British Foods report a £430 million sales decline, significantly more than the £375 million it had previously anticipated.
To make up for lost time Primark announced plans to open 11 of its stores for 24 hours on December 2 when lockdown was lifted.
It is also planning to open one store in Scotland for 36 hours from Friday December 11, hoping to capitalise on a post-lockdown Christmas rush.
This has urged Scotland’s first minister Nicola Sturgeon to call on retailers to “please, please be responsible”.
“I’m not going to stand here and comment on things picked up on social media about 36 hours continuous openings (but) retailers have to be responsible for their own sake,” she continued.
“If we find over the next few days that we start to have crowded people in shops and the virus starts spiralling again, then I can’t rule out standing here shutting down non-essential retail again.”
McColl's revenue reaches £1.25bn thanks to strong demand
McColl’s revenue has risen by 2.3 per cent to £1.25 billion thanks to strong demand throughout the Covid-19 pandemic. In the year November 29, like-for-like sales at the convenience retailer climbed by 12 per cent. However, growth was offset by 179 shop closures as the retailer accelerated its store optimisation programme as part of plans to focus on larger and more profitable convenience stores. McColl’s said the strongest performance was delivered through the Morrisons Daily format where 31 trial stores are currently in operation. “As we look towards the festive period, the safety and well-being of our colleagues and customers continues to be our number one priority,” McColl’s chief executive Jonathan Miller said. “I am extremely proud of all of our colleagues who have been working incredibly hard to keep supplying our neighbourhood communities with the food, goods and services they need. “Since the onset of the pandemic, we have seen strong demand driven by our customer offer and the positioning of our stores in key neighbourhood locations. “At the same time, we have faced significant Covid-19 related costs and our operating margins have been reduced by a change in customer behaviour and product mix. “Despite the challenges of 2020, the pandemic has reinforced our confidence in our ongoing strategic change programme. “The importance of neighbourhood stores has never been greater, and we are well positioned to continue enhancing our convenience offer by further developing our partnership with Morrisons, and further improving the quality of our estate and our overall customer experience.” McColl’s said it is now expecting like-for-like revenue growth to moderate over the course of the period as the sales mix begins to “normalise”. It is also expecting its larger convenience stores to drive incremental sales in grocery, fresh food, and beers wines and spirits.
Heathrow T4 will remain closed until the end of 2021
London Heathrow Airport Terminal 4 will remain closed to travellers until the end of 2021, as Heathrow’s chief executive warns the end of tax-free shopping could be “the final nail in the coffin for struggling businesses”. Heathrow passenger volumes fell by 88 per cent year-on-year in November to 747,000 on the back of coronavirus-related travel restrictions and the month-long lockdown in England. The airport said the drop in travellers and the latest forecasts for recovery have led to the decision to keep Terminal 4 non-operational for a further year. Heathrow is also continuing to urge the government to abandon plans to abolish tax free shopping for international visitors, saying the “disastrous tourist tax” will hurt UK competitiveness. The airport has been one of the vocal opponents of Chancellor Rishi Sunak’s decision to end tax-free shopping and the VAT refund scheme in January. “2021 should be the year of Britain’s economic recovery. But recent announcements, such as the tourist tax, could be the final nail in the coffin for struggling businesses such as restaurants, hotels and theatres that rely on inbound tourists, as well as for retailers,” Heathrow chief executive John Holland-Kaye said. “To make Global Britain a reality, the government should be helping the aviation sector to survive, to develop routes to our key trading partners, and attract businesses and tourists to come to Britain to spend their money,” Kaye added. In November some of the UK’s best-known luxury brands have warned the government that cutting the VAT relief for tourists could result in £1 billion of lost investment. Selfridges, Chanel, Burberry and Bicester Village parent company Value Retail were among the companies that have warned the UK Government over the Treasury’s decision to end tax-free shopping for international visitors.
Arcadia administrators seeking bids of £200m for TopShop
Administrators at Deloitte are looking for bids of up to £200 million for Topshop, according to the Guardian. Deloitte is expecting to see initial bids for the fashion retailer filed by the end of next week, with several sources cited by the Guardian saying administrators would look for as much as £200 million for Topshop. Arcadia’s brands were valued at £800 million in January by consultancy Brand Finance, with Topshop alone accounting for almost £400 million. However, since falling into administration, Brand Finance have estimated that Arcadia’s brands could now be worth just half their value. Fast fashion firm Boohoo is one of the major players to be linked to a prospective deal, with Mike Ashley’s Frasers Group also believed to be considering purchasing Topshop, alongside Dorothy Perkins and Burton. Speaking to BBC News on Thursday, Frasers’ chief financial officer Chis Wootton said that despite Frasers Group’s interest in Sir Philip Green’s Arcadia brands, “the process has only just started so there’s a long way to go”. Deloitte joint administrators Daniel Butters and Gavin Maher were drafted in on November 30 to manage the group, which owns Topshop, Burton, Dorothy Perkins and Evans among others. Arcadia’s collapse into administration affected over 13,000 jobs, with suppliers reportedly left in the dark on whether they will receive any money owed to them.
Ocado begins stockpiling long0life products as no-deal Brexit becomes a strong possibility
Ocado has become the latest UK supermarket to begin stockpiling long-life products as a no-deal Brexit becomes increasingly likely.
The online grocery giant’s chief executive Tim Steiner warned that “you can’t store fresh food because it is fresh”, as he confirmed that his company had begun stockpiling a number of lines.
Despite efforts to sure up reserves in preparation for a no-deal scenario, Steiner warned that Ocado would need four times the amount of warehouse space it currently has in order to store just a month’s worth of food.
The inability to stockpile fresh produce, which Steiner says needs “free-flowing ports to move from its country of origin to the UK”, has caused other industry leaders to warn of potential price rises.
Tesco’s chairman John Allan cautioned that a no-deal Brexit would “almost inevitably” lead to higher prices, estimating average bills could rise by five per cent, while we may experience a shortage of fresh foods.
While Steiner said he did not anticipate any price hikes, he said Ocado would have to “wait and see” whether price rises would be necessary in a no-deal scenario.
President of the European Commission Ursula von der Leyen told EU Leaders today that there was a “higher probability for no deal than deal” as progress between herself and UK Prime Minister Boris Johnson hit a brick wall.
It comes after Ocado announced a 35 per cent boost to sales during the second national UK lockdown, solidifying itself as one of the few retail winners of the pandemic.
Despite Ocado nearly doubling its profit forecasts for the full year, its stocks slipped as much as 4.6 per cent on the news.