Issa brothers to cut grocery store space in Asda stores for nail bars & cafes
The new owners of Asda are reportedly mulling plans to cut grocery floor space in stores to make way for cafes, takeaways, nail salons and beauty bars. According to The Sunday Times, the billionaire Issa brothers are looking to shrink grocery floor space in Asda stores by about a quarter in a bid to create new customer experience incentives. The brothers also reportedly have plans to make Asda’s supermarkets become distribution centres for its online arm. It comes after reports last month indicated they were considering spinning off the grocer’s own-brand fashion label George under licence to help reduce debt. The Issa brothers are already trying to add Caffè Nero to their estate by buying part of its £350 million debt pile. Mohsin and Zuber Issa have started approaching lenders to the coffee chain seeking to build a position that would allow them to bid for control in a debt-for-equity swap if Caffè Nero was forced to restructure its borrowings. The brothers, who are co-chief executives of global convenience and forecourts retailer EG Group, acquired a majority ownership stake in Asda late last year. In February, the Issa brothers and their private equity partners TDR Capital confirmed that their £6.8 billion acquisition of Asda was complete. However, any plans by the Issa brothers cannot yet be implemented as their takeover deal still needs a final clearance from the CMA. Asda’s former owner Walmart is retaining a stake in the grocer and is reportedly going ahead with a partnership strategy that could see it introduce Accessorize, Claire’s Accessories and MusicMagpie to its larger stores. The Issa brothers also plan to replace most third-party convenience stores in EG’s 397 UK forecourts with an Asda convenience store. They have promised to invest £1 billion in Asda over the next three years.
John Lewis launches its own buy now pay later scheme
John Lewis has launched its own “buy now, pay later” scheme offering customers interest free credit of up to £35,000.
The department store has partnered with financial giant BNP Paribas to launch its very own delayed payments service to rival the likes of Klarna and Laybuy, This Is Money reported.
Unlike its rivals however, customers will need to spend a minimum of £1000 and up to a maximum of £35,000 before repaying the sum over a 12-month period.
Customers can apply for the interest free credit of up to £25,000 to purchase home, garden, nursery, furniture and lighting goods from John Lewis’ website.
The online-only service will also offer customers up to £35,000 credit for fitted rooms.
Shoppers will need to undergo a credit application process in order to qualify for the buy now, pay later scheme, and will be required to supply valid identification in order to be accepted.
“We’re making it easier for customers to pay the way they want – obviously in a responsible way,” a John Lewis spokesperson told This Is Money.
For a £1000 purchase customers can expect to pay back £83 over 12 months and “won’t be charged any interest or additional fees as long as all repayments are kept up to date”.
It comes as buy now, pay later services have skyrocketed in popularity during lockdown.
Earlier this month Swedish delayed payments giant Klarna raised a further $1 billion in a fresh funding round at a valuation of $31 billion.
This astronomical valuation is three times the $10.65 billion valuation it received during its last funding round in September, despite growing calls for regulation of the industry.
In September, Klarna said that the coronavirus crisis it had driven a 36 per cent rise in year-on-year revenue for the first half of 2020, up to $466 million.
WHSmith hails better than expected trading since January
WHSmith has hailed a “better than expected” trading performance since January as online demand helped bolster its overall sales. The retailer said sales in its high street division hit 74 per cent of January 2019 levels and 84 per cent of February 2019 levels – with both figures being ahead of previous forecasts. WHSmith said trading was boosted by “significant growth” in ecommerce sales, which forms part of the retailer’s high street division. WHSmith’s online greeting cards fascia, Funky Pigeon, also booked record sales over the Valentine’s Day period. Meanwhile, the retailer’s travel division – once the star of WHSmith’s trading channels – continued to be adversely impacted by Covid-19 restrictions. In the first two months of the year, revenues in that division hit just 35 per cent of January 2019 levels and 33 per cent in February. WHSmith now expects monthly cash burn between January and March to be about £12 million to £17 million, compared with a range of £15 million to £20 million it had estimated earlier. The retailer also said it had extended the maturity of its two existing £200 million loans until October 2023, and agreed on a new minimum liquidity covenant with its lenders for both the August 2021 and February 2022 tests. WHSmith said this means it could cancel an existing £120 million loan, which had been undrawn and was due to expire in November. WHSmith is slated to publish the full details on sales and profits in its half-year results on April 29.
Online retail sales continue staggering growth in February rising 70%
Amazon is pushing “aggressive” and “painful” terms on its UK grocery suppliers as it calls for lower cost prices and longer payment terms.
As the retail giant continues to assertively expand into the UK’s grocery sector, it is putting pressure on suppliers who are increasingly reliant on its sales, The Grocer reported.
Amazon has sent newly proposed terms to many of its suppliers calling for lower cost prices, which it said “is essential for the overall health of your business on Amazon and may have an impact on the number of orders you receive”.
Alongside bigger marketing fees, Amazon is also understood to be calling for payment terms to be extended from 60 days to 90 days, or for terms to remain at 60 days with a one per cent discount.
Suppliers said they are given the option to either agree or disagree with the terms, and although they are able to push back would they are often forced to concede at least some of the new terms.
Currently Amazon’s grocery sales in the UK are below £1 billion annually, meaning it is not yet regulated by the Groceries Code Adjudicator, giving suppliers who depend on Amazon for a bulk of their sales little recourse.
“They are imposing aggressive terms to brands for whom they represent the majority of their business,” Young Foodies co-founder Theadora Alexander told The Grocer, adding that these terms were a “painful squeeze” on the sector.
“As a faceless robot, it is even harder and more intimidating than a normal buyer.”
An Amazon spokesperson said that it reviewed term agreements individually and did not unilaterally impose them on all suppliers, adding: “We strive to build successful, long-term relationships with our vendors, and work with them every day to help them be successful.
“We are always looking at new ways to help our vendors grow their business and offer a great shop window for products in the UK and around the world.”
Pent up demand from lockdown bolsters DFS profits & sales
DFS has revealed bumper half year results as more people splashed out home furniture as a result of pent-up demand from nationwide lockdown and stay at home orders. For the six months to December 27, the furniture retailer posted a 17.3 per cent increase in group revenue to £572.6 million. This meant underlying pre-tax profit came in at £76.5 million for the half-year period, compared to £16.6 million in the same period in the previous year. On a reported basis, pre-tax profit increased by £56.2 million to £72.1 million. DFS said revenue excluding its Sofa Workshop fascia climbed by 18.7 per cent to £567.5 million, as the retailer benefited from pent-up demand following the first lockdown in spring last year and an acceleration in consumer spending towards the home. It also said online revenue was strong, rising by 66.2 per cent year-on-year. DFS added that its order bank was currently over £65 million higher in revenue terms than the prior year, with a £200 million higher order bank at Christmas time, providing resilience through the current lockdown. “This strong first half profit and cash flow performance is a true reflection of the supreme efforts put in by our teams right across the group since the start of the pandemic,” DFS chief executive Tim Stacey said. I am hugely grateful to every colleague for their constant focus on the safety, health and wellbeing of all their colleagues and also our customers. “Our business has proven to be resilient throughout the period, despite showroom closures and a significant amount of external disruption in our supply chains. “The investments we’ve made in our digital channels have generated exceptional revenue growth. “Consequently our order bank remains well above normal levels and, subject to showrooms reopening by April 12, our central planning scenario is for an expected full year profit before tax outcome of approximately £105 million, with further benefits to be realised in next year’s financial results.” He added: “We expect to see a good level of activity in the home market as Covid-19 restrictions ease and, having accelerated the execution of our strategy and grown our market share, we are well set for future growth.”
Pandora sales rise despite lockdowns closing 25% of store estate
Pandora has reported a sales growth of 12 per cent in February despite temporarily closing a quarter of its 2700 stores worldwide. The Danish jeweller said the number of Pandora stores closed due to the Covid-19 pandemic fell from around 30 per cent at the beginning of the month to around 25 per cent by the month-end in February. Sales in shops or online to customers in February grew seven per cent year on year, while organic growth stood at four per cent. For the month of February, organic growth was 12 per cent and total sell-out growth was seven per cent compared to February last year. This translates into a quarter to date organic growth of four per cent and total sell-out growth of one per cent. Pandora said it will not change its financial guidance for its full year with organic growth above eight per cent and EBIT margin above 21 per cent. “Pandora is pleased with the performance so far in 2021. Considering that 25-30 per cent of the stores were closed during January and February, the underlying trading continues to indicate that sell-out is stabilising or growing,” Pandora said.
Tesco to sell unwashed muddy potatoes to cut down on food waste
Tesco is expanding a trial to sell unwashed, muddy potatoes in its stores as part of a strategy to cut down on food waste. The Big 4 grocer said the move could also potentially double potatoes’ shelf life. According to advisory action group Wrap, potatoes are the UK’s single most wasted food in the home. Until the 1970s, most UK supermarkets and greengrocers used to sell unwashed potatoes and by leaving soil on them it would help block out light and slow down their natural decay. Tesco said it was now looking to bring back selling potatoes in the traditional way after it conducted a trial of selling organic white potatoes across 120 stores with positive results. Run in partnership with potato supplier Branston, Tesco said the trial would now now be extended to 262 stores. The trials have so far determined that shelf life for the unwashed potatoes nearly doubled and offered up to an extra five days freshness. “Up until about 50 years ago potatoes would generally be sold unwashed and having a natural film of soil around them would help keep them fresher for longer,” Tesco produce lead technical manager Rob Hooper said. “But towards the end of the 1970s, supermarkets and greengrocers in general moved towards selling more cosmetically perfect produce and as a result, potatoes were washed before being put out on display. “Last November we ran an initial trial at stores in Bristol and the surrounding areas to see how shoppers would respond and it was a success, so now we are widening this trial across the south of England.” Branston technical manager Dominic Groom said: “Working in partnership with Tesco, we identified a potential opportunity to extend the shelf-life of our organic potatoes by leaving them unwashed. “Soil coverage can offer a layer of protection from the impact light can have on the skin turning green, which is a factor we consider when determining shelf-life. “This trial should provide us with a clearer understanding of how this impact manifests and how customers feel about soil on their potatoes.” When potatoes are exposed to light, chlorophyll forms within its cells which gradually turns its skin green. Chlorophyll is the natural green pigment found in plant leaves and stems and is used along with sunlight energy to generate nutrients needed for growth.
Next buys 25% stake in Reiss
Next has purchased a 25 per cent stake in upmarket fashion retailer Reiss in a deal worth £33 million. The move comes after Next added hundreds of brands including Barbour, Boden and Gant to its website over the years. Reiss is owned by US private equity firm Warburg Pincus and was up for sale prior to the Covid-19 pandemic. Reiss chief executive Christos Angelides, who previously worked for Next, will continue to lead the business after four years at the helm. Reiss will have its own independent board of directors and continue to be headquartered in London. Reiss’s websites and online operations, both in the UK and overseas, will be contracted to Next through its total platform. It is anticipated Reiss will go live on Next’s total platform in February 2022. Upon completion of this deal, which is subject to regulatory clearance, Next will make an equity investment of £33 million and a debt investment of £10 million, financed from its own cash resources. Under the terms of the agreement, Next has an option to acquire an additional 26 per cent interest at pre-agreed terms which, if exercised, would take Next’s holding to 51 per cent. The option falls away after July 2022. “Whilst we will continue to focus on creating authentic and timeless collections, today’s announcement provides a great opportunity for Reiss to realise the Brand’s global potential as a modern fashion house,” Angelides said. Next chief executive Lord Wolfson said: “Reiss is an outstanding brand with enormous potential and a first class management team. “We are excited to see what can be achieved through the combination of Reiss’s exceptional product, marketing and brand building skills with Next’s total platform infrastructure.”
Lidl, B&M, Pets at Home the latest to forgo business rates support
Lidl is the latest essential retailer to reject the Chancellor’s extended business rates holiday after major supermarket rivals turned down the support last week. According to the PA news agency, Pets at Home and B&M – also essential retailers – have also said they would not take the latest rates support offered by Rishi Sunak in his Budget last week. Shortly after Sunak’s Budget speech, five of the UKs largest supermarket chains – Tesco, Sainsbury’s, Asda, Morrisons and Aldi – said they would not accept rates relief. However, a week on, a number of other essential retailers have remained silent over whether they would benefit from the government policy. At the onset of the pandemic, retailers, hospitality and leisure firms were handed a business rates holiday for the year to the end of this month. In his Budget the Chancellor confirmed plans to extend this support in England for another three months, with retailers who have stores still closed then able to claim a two-thirds discount to their rates bills up to £2 million for the rest of the financial year. Wales and Scotland made separate announcements, with both extending the business rates holiday for another 12 months. A host of major essential retailers, including the UK’s six largest supermarket chains, revealed plans in December to hand back more than £2 billion in relief for the current financial year after their sales were boosted by pandemic demand. Nevertheless, a number of major retailers who traded through the pandemic – including Waitrose, Iceland, Co-op and Wilko – decided not to return the tax relief and are expected to utilise the latest support. Lidl GB had already agreed to repay its rates relief of around £100 million for 2020-21 but has now confirmed that it would take the same stance regarding the Chancellor’s latest support. “Lidl GB confirms it will not be claiming the business rates relief for 2021-2022,” a spokesperson for the German discount grocer said. “We believe it is the right thing to do, and that the business is well placed to manage any further challenges the pandemic may present.” Pets at Home and B&M both declined to comment. B&Q parent company Kingfisher was another essential retailer which agreed to repay its tax break for the 2020-21 year, but the company declined to comment regarding whether it would receive the extended relief measure. Some non-essential retail bosses have also been critical of the Chancellor’s move regarding rates. Mike Ashley’s Frasers Group said last week the new holiday was “near worthless” for larger firms and made it close to impossible for it to take on old Debenhams shops. The Sports Direct and House of Fraser parent company said that the £2 million cap on the amount of relief a company can claim means it will have to review all its stores to find any that might no longer be viable.
Lego celebrates best growth in 5 years
Lego saw consumer sales jump 21 per cent last year as its digital investment strategy fuelled its best growth in half a decade.
The world’s largest toymaker reported a revenue rise of 13 per cent to DKK 43.7 billion (£4.95 billion) throughout 2020, driving a 19 per cent jump in operating profits to DKK 12.9 billion (£1.48 billion).
While its supply chains were impacted by the pandemic through much of the year, closing stores and temporarily closing its manufacturing sites in Mexico and China, Lego managed to achieve a net profit increase of DKK 9.9 billion (£1.4 billion).
Lego attributed this growth to its increasing investment in digital operations, largely spearheaded by chief executive Niels Christiansen who was appointed in 2017.
Visits to Lego’s website doubled throughout 2020, and the retailer said it plans to further increase digital investment in 2021 and expand its digital and technology teams.
“We have a solid digital foundation, but must move faster,” Christiansen said.
“The past year has shown the importance of having an agile, responsive business built on strong digital foundations.
“We will further develop our capabilities in this area so we are well positioned to meet the evolving needs of our retail partners and consumers now, and in the long term.”
Consumer sales reportedly grew in all Lego’s market groups, while its market share expanded in all 12 of its largest countries.
Alongside its focus on ecommerce expansion, Lego opened 134 new retail stores in 2020 and plans to open a further 120 this year, including 80 in China.
“People are looking for unique and memorable physical brand experiences, so we will continue to invest to expand our global retail footprint, as well as elevate our instore shopping experiences,” Christiansen said.
“This approach strengthens our brand, creating a positive impact across all channels. We will also further build our e-commerce capabilities to support online shopping on our own and our partners’ platforms.”
Tesco rolls out recycling points for old soft plastic packaging
Tesco has started rolling out “soft plastic” recycling points so customers can recycle old packaging such as bread bags, pet food pouches and crisp packets. The Big 4 retailer said it had started putting the recycling points into 171 stores in the south-west of England and Wales with plans to roll out to all large stores nationwide, following a successful trial in 10 shops. Once collected, the soft plastic packaging brought back by customers is sent for recycling where it is washed, sorted and processed before being turned into new packaging for food, household and beauty products. Tesco said the trial had seen customers return more than 10 times the expected amount of plastic, with bread bags, fruit and vegetable packaging, crisp packets, salad bags, baby and pet food pouches topping the list of items returned. Material already collected has been used to produce food grade packaging for a selection of Tesco cheeses. The supermarket said the move would provide the UK’s biggest network of recycling points for soft plastic, which is not commonly recycled by councils in kerbside collections and often ends up in the bin. It expects to collect and recycle 1000 tonnes of plastic a year through the scheme, with consumers allowed to return all their soft plastic, regardless of where they bought it. “It is an absolute priority to remove and reduce as much plastic as possible and ensure everything we use is recycled and kept out of the environment,” Tesco quality director Sarah Bradbury said. “Where plastic serves an important purpose such as reducing food waste, these new recycling points make sure that every piece can be easily recycled. “Trials have shown they are popular with customers, so we believe rolling them out at scale will have a real impact.” The move has been welcomed by environmental charity WWF. “Plastic pollution is one of the most visible symptoms of the environmental crisis and is devastating our natural world,” WWF sustainable materials specialist Paula Chin said. “Businesses, governments and households have all got an important part to play in tackling the issue, so it’s encouraging to see Tesco extending their successful soft plastics collection trial across more of their stores, giving their customers even more opportunity to recycle these valuable materials.”
M&S to downsize Marble Arch flagship and add office space
Marks & Spencer has revealed redevelopment plans for its Marble Arch flagship in central London that will see it downsize retail space and create offices on upper floors. According to The Times, M&S’s flagship, located just a few blocks down from other department store flagships on Oxford Street, could be demolished and then redeveloped with reduced retail space and new offices. It’s thought that the redevelopment could comprise of three lower floors trading as M&S, offering a broad range of food, fashion and home goods and with in-store technology to promote products from its ecommerce site. Meanwhile the six upper floors of the redevelopment would be made up of 300,000sq ft of office space. A planning application is expected to be submitted later this year after M&S completes a consultation process with interested parties, such as customers and the local community. M&S said its proposal would offer “a modern retail environment” while also allowing it to “unlock value” through prime office space. Unlike retail space, top-quality offices have retained high demand and valuations during Covid-19 pandemic. “The launch of our proposal to redevelop Marble Arch is the latest example of how we are shifting gears in creating a store estate fit for the future,” M&S retail and property director Sacha Berendji said. “Under our Never the Same Again programme we are focused on emerging stronger from the pandemic, and today’s proposal not only means we can redevelop and modernise our store so that it better serves the local community on the UK’s destination high street, but by taking an assertive approach to the management of our asset base, we can unlock additional value from the site at the same time and further support our transformation.” M&S’s proposal has similarities with that of John Lewis, which also wants to convert parts of their large shops into either co-working space or residential flats.
Adidas to cut ties with retailers amid ambitious growth plans
Adidas is planning to cut ties with retailers and focus on direct-to-consumer sales amid ambitious plans to grow sales by a third by 2025.
Adidas is following in the footsteps of its larger rival Nike and shifting away from third-party retail sales and sharply towards maximising sales via its own platforms.
The German sportswear giant unveiled its bold five-year plan yesterday, promising to double payouts to shareholders and drive revenues to more than €30 billion (£25.6 billion) over the next four years.
To achieve this Adidas plans to dramatically increase the amount of sales made directly to consumers through its own stores and ecommerce platforms.
Adidas says it expects a whopping 80 per cent of its growth to come from direct-to-consumer sales, driven primarily by a significant digital expansion.
Over the next four years it plans to invest €1 billion (£860 million) into digital operations, helping double online sales to €9 billion (£7.7 billion) over the period.
By 2025 Adidas hopes to sell half of all products to consumers directly through its first-party channels, up from around a third prior to the pandemic.
It comes after Nike announced last August that it had cut ties with nine major wholesalers in a move which will see its products no longer stocked in over 1000 stores.
As part of its relentless shift towards a digital direct-to-consumer model, Nike said it would stop selling its products to a host of “strategic partners” including Zappos, Belk, Dillards, Boscov’s, Bob’s Stores, Fred Meyer, EBLens, VIM, and City Blue.
Collectively this means that its products will no longer appear in over 1000 stores, marking a major step in its “Consumer Direct Offense” strategy, aimed at driving customers to its own websites.
Prada posts 93% drop in profits as Covid19 batters sales
Prada has revealed a drop in its sales and profits as the Covid-19 pandemic continues to hammer the luxury retail sector. Net revenue at the luxury Italian retailer dropped 24.9 per cent to €2.4 billion (£2 billion) in the 12 months to December 31. The pandemic has caused an average of 18 per cent of stores to be closed during the year. It also reported a 93 per cent drop in operating profit to €20 million (£17.1 million) during the period. Meanwhile, its operating losses reached €196 million (£167.7 million) in the first six months of 2020, with an operating profit of €216 million (£184.8 million) in the second half of the year. Retail sales of €2.1 billion (£1.8 billion) for 2020 were down by 32 per cent in the first half of the year, compared with 2019, but this reduced to six per cent in the second half, representing an 18 per cent drop over the full year. Online sales increased by 217 per cent compared with the previous year, as consumers shifted to online shopping.
The Very Group reveals hybrid working model as it revamps HQ
The Very Group has announced a refurbishment of its Liverpool headquarters as it prepares for a new permanent hybrid working model. The group, which owns online retailers Very and Littlewoods, said the renovations aim to create the optimum team working space for when staff split their time between home and office working later this year. At Skyways House, the group has introduced an open plan environment with hot desks and bespoke break-out and collaboration spaces. A second office called The Hub has been transformed into a flexible contact centre with collaborative zones, hot desks, quiet pods, training rooms and break out spaces of different sizes and specifications. The offices also feature accessible kitchen spaces and gender neutral facilities. “Remote working during Covid-19 has seen our people operate with even greater ingenuity at a time when we’re attracting record numbers of new customers,” The Very Group chief people officer Sarah Willett said. “Our colleagues have told us they like the greater flexibility that comes with working from home and when the UK starts re-opening, we’ll make some permanent changes to the way we work. “Our new spaces will be about high energy, high impact creativity and collaboration, all with a focus on improving the experience for our colleagues and our 4.5 million customers. “We’ll also continue investing in our technology and systems to make sure our people have the best tools for the job.”
John Lewis Partnership slumps to £517m loss
The John Lewis Partnership has warned over further store closures as it swung to a £517 million annual loss after the pandemic battered its department stores. The group, which also owns upmarket grocery chain Waitrose, said it does not expect all its John Lewis shops to reopen at the end of the current lockdown. It did not specify how many of its 42 John Lewis shops are under threat, but confirmed it was in talks with landlords and would make a final decision at the end of March. Recent reports suggested another eight stores were earmarked to be shut, on top of the eight that closed down last year – alongside seven loss-making Waitrose stores. The latest imminent store closures suggests that further jobs could be at risk, after 1300 were impacted by the eight John Lewis store closures last year. A John Lewis Partnership spokesman said the firm would always try to redeploy elsewhere in the business, with redundancies a “last resort”. The retailer’s trading update for the year ending January 30 showed that the Covid-19 pandemic had plunged the retail giant into hefty loss before tax of £517 million. This compared to profits of £146 million the previous year. The partnership attributed this to substantial exceptional costs of £648 million, mainly the write down in the value of John Lewis shops owing to the pronounced shift to online, as well as restructuring and redundancy costs from store closures and changes in head office. On the partnership’s balance sheet, John Lewis shops are now at almost half the value they were before this year’s and last year’s write downs. However, when taking exceptionals out of the equation, John Lewis Partnership recorded a full-year profit of £131 million – up from £70 million last year. It said that figure would’ve been a loss if the business did not take advantage of £190 million worth of government support through the business rates holiday and furlough scheme. Meanwhile, John Lewis Partnership’s overall trading operating profit declined to £1.69 billion from £1.79 billion last year. It said it was “significantly challenged” as the improvement seen in Waitrose, helped by its status as an “essential” retailer and being allowed to remain open during lockdown, was insufficient to cover the substantial decline in John Lewis which had endured restrictions. Waitrose trading operating profit grew to £1.14 billion compared to £1.06 billion previous year, while John Lewis trading operating profit declined to £554 million after £734 million last year. On the other hand, Waitrose sales grew 10 per cent year-on-year to £7.6 billion while John Lewis sales dropped two per cent year-on-year to £4.72 billion. Overall, John Lewis Partnership’s full year sales increased five per cent year year-on-year to £12.32 billion and revenue increased six per cent year-on-year to £10.77 billion. These figures were boosted by a surge in ecommerce growth in both its fascias. Waitrose.com grew fourfold since February 2020, taking in around 240,000 orders a week, while Johnlewis.com’s sales skyrocketed 73 per cent, now accounting for three quarters of John Lewis’ total sales. The partnership said its results were expected to get worse in the current financial year as it looks to invest £800 million as part of an overhaul to turn around its fortunes, which will only partially be offset by annual cost savings of £300 million. The firm also said it wanted to restart staff bonuses as soon as profits recover to at least £150 million on a sustainable basis. Last year, the John Lewis Partnership had scrapped its staff bonus for the first time since 1953. It hopes to be back to profit in 2022-23, with £200 million next year and £400 million by 2025-26. “All our John Lewis stores need to be exciting places to shop, more reflective of the tastes and interests of local customers,” John Lewis Partnership chair Dame Sharon White said. “This will require investment and we are working closely with landlords and local authorities. We are keen to play our part in the revitalisation of the high street. “Hard as it is, there is no getting away from the fact that some areas can no longer profitably sustain a John Lewis store. “Regrettably, we do not expect to reopen all our John Lewis shops at the end of lockdown, which will also have implications for our supply chain. “We are currently in discussions with landlords and final decisions are expected by the end of March. “We will do everything we can to lessen the impact and will continue to provide community funds to support local areas.” She added: “We are going through the greatest scale of change in the partnership’s 156-year history. “As employee-owners, we share the responsibility of securing the partnership for future generations of customers and partners. “Difficult decisions taken now will hopefully set the course for those next generations.”
Morrisons full-year profits plunge 50% after £290m Covid19 costs
Morrisons has extended its 10 per cent discount for NHS workers until the end of the year to express its “continuing gratitude”. The extension comes as the government faces a backlash over its planned one per cent hike in pay for nurses. The Big 4 grocer first introduced its discount for NHS workers in April last year at the height of the Covid-19 pandemic. The government is currently facing criticism for undervaluing the work of nurses during the crisis by proposing an award of just one per cent. Morrisons’ announcement comes as it revealed its financial results for the year to January 31, which showed a 62 per cent plunge in pre-tax profits despite a sales rise during the pandemic. The supermarket reported an 8.6 per cent rise in group like-for-like sales during 2020 with total revenues hitting £17.6 billion. However, profit before tax and exceptional items dropped 50.7 per cent to £201 million – a result of £290 million in coronavirus-related costs including staff absences and measures to keep staff and customers safe. The costs figure included £230 million in business rates relief that has been handed back to the Treasury. Profit before tax fell to £165 million from £435 million the previous year once other costs, including restructuring costs, were included. “Morrisons key workers have played a vital role for all our stakeholders during the pandemic, especially the most vulnerable in British society, and their achievements over the last year have been remarkable,” chief executive David Potts said. “I am delighted that we are recognising their enormous contribution by becoming the first supermarket to pay a minimum of £10 an hour to all store colleagues. “We are also today showing our continuing gratitude and appreciation for the incredible work of other key workers in the nation, by extending our 10 per cent discount for NHS staff for the whole of 2021.”
Boots removes damaging great ape greeting cards
Boots has stopped selling cards that feature “damaging” images of great apes in all its stores following a call with animal rights organisation PETA US. This follows a similar move by online greeting cards retailer Moonpig, which scrapped images of captive great apes from its products in 2019. Meamwhile, stock-image agencies including Getty Images, Shutterstock, and Dreamstime are banning such images of primates. “Chimpanzees aren’t models or props, and clownish photos of them wearing clothes or sitting at desks put these endangered animals at risk,” PETA corporate projects director Yvonne Taylor said. “PETA urges everyone to make loved ones smile with greetings cards featuring humans or cartoons, not endangered and exploited animals.” The organisation said that images of chimpanzees wearing costumes, displayed in studios, or interacting with humans are “misleading” as it leads to consumers believing the primates are thriving, when they are currently facing extinction. Peta added that these portrayals may also increase the black market demand for endangered great apes as “pets”, which is one of the main forces driving them towards extinction.
Hammerson profits nosedive 83%
Hammerson has written down the value of its shopping centres and stores by nearly £2 billion as Covid-19 saw rental income suffer the biggest fall in its history. Bosses at property giant, which owns Birmingham’s Bullring and London’s Brent Cross, said its properties were worth £6.34 billion at the end of 2020 compared with £8.33 billion a year earlier. Net rental income in 2020 fell 48.9 per cent to £157.6 million, with adjusted profits at the firm falling 82.9 per cent to £36.5 million. Hammerson’s UK portfolio was the worst affected, with flagship sites and retail parks suffering like-for-like declines of 51 per cent and 42 per cent respectively, compared to 18 per cent falls in France and 30 per cent drops in Ireland. Drops in valuations were particularly hard for shopping centres – down 35.8 per cent – and retail parks were off by 23.3 per cent. However, Hammerson’s discount outlet retail parks only fell 6.2 per cent. Commercial landlords are contemplating a difficult future with the shift to home-working and most companies expect staff to no longer commute five days a week, making city centres less attractive to tenants. “By any measure, 2020 was an unprecedented year with every business and household affected by Covid-19,” Hammerson chief executive Rita-Rose Gagne said. “As our results show, Hammerson was hit hard. The retail sector, already in the grip of major structural change, has been significantly impacted by the restrictions imposed to tackle the pandemic, and we’ve also seen an increasing number of retail failures. “Combined, this has resulted in the largest fall in net rental income and UK asset values in the group’s history.” Gagne added she was hopeful for the future as lockdown restrictions ease and the vaccination rollout continues at pace. “As a business, Hammerson provides the places and social infrastructure where people want and need to be, and I am confident it will have a vital role in shaping neighbourhoods and communities in the future,” she said. The firm will also sell off more properties and confirmed it would end a joint venture on two shopping centres in France.
John Lewis to lower prices ahead of reopening
John Lewis Partnership has announced plans to lower prices in its department store brand ahead of reopening stores in England this April. The plans come as the partnership seeks ways to boost footfall, particularly as stores remain shut nationwide due to the Covid-19 pandemic. The new campaign will be titled “John Lewis quality at prices you wouldn’t expect”. The parent company of John Lewis and Waitrose recently warned of further store closures as it swung to a £517 million annual loss for the year ending January 30. The group said it does not expect all its John Lewis shops to reopen at the end of the current lockdown, though it did not specify how many of its 42 John Lewis shops are under threat. The latest imminent store closures suggests that further jobs could be at risk, after 1300 were impacted by the eight John Lewis store closures last year. John Lewis executive director Pippa Wicks said the department store chain is preparing to cut prices on unsold stock. However, she said John Lewis will “not be Argos for the middle classes”. “When we open up from lockdown you will see in our stores lots of new entry price points, lots of other products repriced at different levels,” Wicks said. Meanwhile, John Lewis Partnership chairwoman Sharon White said John Lewis had assessed its pricing structure and readjusted its entry price points. “We’re really going to be dialling up our focus on value with new pricing later this year – we want customers to think, ‘Gosh this is John Lewis quality, but at prices that you wouldn’t expect’,” White said.