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Posts Tagged ‘Retail industry’
De Beers profits lose their sparkle
July 24th, 2009 |
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Luxury goods sector is being hit hard by the financial crisis
Profits at diamond firm De Beers have been crushed after demand for luxury products was hit by the recession.
The world’s largest diamond producer reported a 99% drop in net profits for the first half of 2009 this morning, to just $3m (£1.82m). It made $316m in the same period a year ago, before the economic downturn deterred even the wealthy from splashing out on non-essentials.
De Beers blamed an “extraordinarily difficult” trading environment for the slump in profitability. Sales of rough diamonds were down by 57% to $1.4bn, with production slashed by 73% to 6.6m carats.
“The industry has been severely impacted by the global economic environment being the most difficult in decades,” said the company, which has cut its global workforce by 23% and temporarily halted production at mines in Africa and Canada.
On a pre-tax basis, stripping out various charges, profits fell almost 80% to £140m.
The poor figures add to growing evidence that the luxury goods sector is being hit harder by the financial turmoil this year. Consultancy Bain predicted last month that the sector would contract by 10% this year as the world’s millionaires adjust to the drop in their net worth. In the UK, jeweller Theo Fennell has turned to its founder in an attempt to return to profit.
De Beers struck a somewhat optimistic note on outlook, saying that “industry sentiment improved significantly” in the second quarter of this year with the price of rough diamonds beginning to rise again. While diamond demand is still subdued in the US, there is stronger interest in emerging markets such as China and India.
“Looking to the medium term, diamonds have historically performed well in periods following recessions, with significant price growth seen in almost every recovery period dating back to before the 1970s,” said the company.
De Beers pointed out that no major new diamond deposits have been discovered in over a decade, suggesting that demand will increasingly outpace supply.
But it also admitted that few of the jobs it has eliminated in the downturn will be recreated even if the market rises again.
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Retail sales rise sparks recovery hope
July 23rd, 2009 |
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The retail sales figures are likely to fan speculation that the economy will start to grow again in the third quarter
Britain’s economic recovery prospects were given a boost today on news that spending in the high street rose sharply last month.
June’s fine weather and early summer sales led to a rush for the shops and the volume of sales was 1.2% higher than in May, according to the latest data from the Office for National Statistics.
June’s jump in spending in shops and stores was three times the 0.4% increase expected by the City and more than reversed May’s 0.9% drop.
Retail sales account for around one third of consumer spending and have held up reasonably well in the face of the economy’s descent into recession over the past year. Sales were 2.9% higher last month than they were in June 2008, despite rising unemployment and weak growth in earnings.
Broader measures of consumer spending – including sales of cars and spending on restaurant meals – have been less buoyant, but today’s figures are likely to fan speculation that the economy will start to grow again in the third quarter.
A breakdown of the ONS figures showed that the good weather encouraged spending on summer clothes, footwear, outdoor leisure goods and food.
Price cuts also helped to woo consumers into the shops. The retail sales deflator – a measure of inflation on the high street – showed an annual fall of 0.2% last month against a rise of 0.7% in May.
In the past, July has been the peak month for summer bargains, but the fall in the deflator suggests retailers brought forward sales this year.
Kitchens, bathrooms and bedrooms
The official data reflects recent upbeat noises from Britain’s big retailers, who have seen shoppers shrug off the recession and splash out on summer clothes in the recent heatwave.
DIY sales have also held up better than expected. B&Q owner Kingfisher today posted forecast-beating figures, highlighting strong UK trading in kitchens, bathrooms and bedrooms.
“We have continued to perform well in a tough environment, profitably growing market share [and] strengthening our leadership position in Europe,” said the chief executive, Ian Cheshire.
B&Q like-for-like sales grew 0.7% in the 10 weeks to 11 July.
Earlier this week Next and Morrison’s cheered the market with announcements that they are on course to turn in better than expected profits this year.
Morrisons, the UK’s fourth biggest supermarket chain, and Next, the second biggest fashion chain, expect to rake in a combined £100m more than City analysts had forecast.
But economists cautioned that consumer spending would remain on shaky ground for some time to come.
“Sharply reduced mortgage payments and moderating inflation are boosting many people’s purchasing power, thereby making them more able and willing to step up their discretionary spending when circumstances are particularly attractive, such as when the weather is hot or when there is increased discounting,” said Howard Archer, economist at Global Insight. “Nevertheless, consumers remain under serious pressure from sharply higher and rising unemployment, markedly reduced earnings growth and heightened debt levels.”
“On balance, we suspect that consumer spending will be largely muted over the coming months, thereby limiting recovery prospects, especially as unemployment is likely to rise markedly further and earnings growth is continuing to moderate.”
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Forecasts boost Next and Morrisons
July 21st, 2009 |
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• Morrisons to make extra £50m profit for first half of year
• Next says profits will be £30m higher than forecast
Supermarket group Morrisons and fashion retailer Next cheered the City this morning as they said profits for the last six months will be considerably higher than expected.
Both companies rushed out unscheduled trading updates today after calculating that, despite the recession, their earnings have beaten market forecasts.
Morrisons said it will make an extra £50m profit for the six months to the start of August. Its store modernisation plan is also expected to yield an extra £20m in savings, which should push pre-tax profits up from the previous forecast of £670m to around £740m.
This sent shares in the UK’s fourth largest supermarket chain soaring by 10% to 279p when trading began in London. Other retailers also rallied, with Marks & Spencer, Sainsbury’s and Tesco all among the biggest risers on the FTSE 100.
Nick Bubb, retail analyst at Pali International, said today’s trading updates were a welcome surprise.
“The green shoots are alive and well and it will take a hurricane in the autumn to blow them over,” Bubb said.
Morrisons said that the number of customers visiting its stores was continuing to rise. The average basket size has also increased, indicating that it continues to be one of the winners of the economic downturn.
“The strong start to the year has been maintained through the second quarter,” the company said. “An increasing number of customers are shopping with Morrisons attracted by the group’s fresh offering, keen positioning on price and promotions and its industry-leading service and availability.”
Bank of America analyst John Kershaw said Morrisons had “hit expectations for six”.
“We felt Morrisons was driving sales and margins but this profit performance is in a different orbit,” said Kershaw, who raised his target for its shares from 280p to 310p.
Kershaw added that Morrisons would have benefited from the sunny weather in May and June.
David Buik, City commentator at BGC Partners, said that today’s figures showed that Morrisons’ chief executive, Marc Bolland, was the right man to succeed Sir Stuart Rose at Marks & Spencer.
“Morrisons has never looked back [since Bolland took over] and is clearly snapping at the heels of Tesco, Asda and Sainsbury’s,” said Buik. “If there was any way that M&S could crowbar Marc Bolland out of his current employers, he would make a massive contribution to M&S rising like the phoenix from the ashes.”
Clearance sales start well
Next also said it was profiting from the warmer weather, as it told investors that it expected profits for the current financial year would be £30m higher than forecast.
Sales of summer clothing rose sharply and Next struck better deals than expected with suppliers. It began its end of season sale last weekend with less unsold stock than a year ago, which should mean less pressure to slash prices.
“The initial clearance rates have been encouraging,” said Next.
It had been due to release its first-half trading statement next week, but said today that like-for-like sales on the high street were down 1.9% – a smaller drop than expected. Sales through its catalogue business were up 1.1%.
Shares in Next slipped slightly today, down 0.6%, having risen by 20% in the last month.
The firm did caution that rising unemployment would have an impact on its performance in the next six months, and warned that swine flu could outweigh the benefits of good weather later this summer.
“Our forecasts do not account for any significant impact on sales from swine flu, and as yet we have observed no material effect. However, there is downside risk to our expectations if wider infection rates deter shoppers,” Next said.
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Allied Carpets in administration
July 17th, 2009 |
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More than 1,000 jobs at risk at 217-store chain
Allied Carpets has been placed into administration, putting about 1,100 jobs under threat.
Administrators for the firm said they had immediately sold 51 stores and Allied Carpets’ insurance inspection business, protecting about 400 jobs, but the remaining stores were in the hands of administrators BDO Stoy Hayward.
The stores were bought by new firm, Allied Carpets Retail Limited, set up by the Allied chief executive, Clive Hutchings.
BDO said selling the remaining stories to Allied Carpets Retail Limited was “subject to a satisfactory outcome being reached in ongoing negotiations with the firm’s existing landlords”.
Hutchings said: “Allied Carpets is a good business and, through this sale and additional funding, the retail and inspections businesses now have the opportunity to strengthen their respective market positions, build on the Allied brand and ensure an ongoing commitment to unrivalled customer service.”
Allied Carpets, which had a total of about 1,500 workers and 217 stores across the country, has been a victim of the housing market stagnation which has stalled spending on its products.
Its headquarters are in Orpington, Kent and it has a distribution centre in Lancashire.
Customer deposits are protected, the administrators said, and outstanding customer orders will be fulfilled.
Dermot Power, BDO Stoy Hayward business restructuring partner, said: “Allied Carpets is a well-established brand in the marketplace but, like many companies, has suffered because of the economic climate and difficult trading conditions. The stagnation of the housing market has meant that fewer people are buying carpets and flooring.
“We’re pleased to have safeguarded the future of 51 stores and more than 400 jobs.”
He said administrators were working to secure the sale of the remaining Allied Carpets stores as a going concern.
All staff wages will be paid on the normal payment dates and customers with any questions about purchases have been advised to contact their local store.
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M&S investors attack Rose’s dual role
July 8th, 2009 |
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• Activist rebellion expected at annual meeting
• Up to half of shareholders may oppose chairmanship
Marks & Spencer boss Sir Stuart Rose is braced for up to 50% of shareholders to support a proposal calling on him to stand down as chairman within a year.
He faces a showdown with M&S’s private and institutional shareholders at the retailer’s annual general meeting at the Royal Festival Hall. The vote would be a serious humiliation for Rose, who is determined to stay on as chairman until he retires in July 2011.
Investors do not want to oust him, but wish to dismantle his power base by forcing him to split the roles of chief executive and chairman. He combined the two jobs last year, with unanimous support from his board, even though the arrangement contravened corporate governance guidelines.
The proposal has been tabled by the Local Authority Pension Fund Forum, which represents 49 public sector pension funds with assets of £75bn. It calls on M&S to appoint an independent chairman from outside the company by July 2010 – a year earlier than Rose intends. He is unlikely to want to revert to the lesser role of chief executive, which would be the outcome of acting on the resolution.
The LAPFF has urged shareholders not to protest directly against Rose by voting against his re-election as a director, but to support their proposal for boardroom change. The proposal has also won the backing of three other shareholder advisory groups: America’s Glass Lewis, Pensions and Investment Research Consultants (Pirc) and RiskMetrics, which advises UK pension fund investors. Most big shareholders have already cast their proxy votes, but the result will not be made known until after the vote at the annual meeting. Sources close to M&S believe that about half of shareholders who vote will either back the proposal or abstain to demonstrate their lack of support for Rose’s combined role.
“We have stressed all along our support for the company and for Sir Stuart, and made it explicit that our sole concern is good governance”, said the LAPFF in a statement “We have framed our actions, and made our arguments in the most constructive way possible. Therefore if our initiative garners significant support we urge the board to reflect upon the result, and respond in an equally positive fashion.”
The pressure on Rose from shareholders comes as investors have become increasingly militant since it became clear that City bonus culture was partly to blame for the current financial crisis. City minister Lord Myners – who was previously chairman of Marks & Spencer – has urged institutional shareholders to become active investors to keep companies in line. A series of companies have faced investor revolts in recent weeks, including Xstrata, BP, Shell and Tesco.
Bradford City councillor Ian Greenwood, chair of the LAPFF, said the body was taking its shareholder responsibilities seriously: “Since the onset of the financial crisis, institutional shareholders have with some justification been criticised for failing to exercise their ownership responsibilities effectively. However, it is also incumbent on boards to listen to their shareowners when concerns are raised.”
Rose said last week that he was “not concerned” about the resolution.
About 1,200 shareholders are expected to attend the meeting – one of the biggest turnouts among FTSE 100 companies. Most will be private shareholders, who control some 20% of M&S shares. In previous years, they have been charmed by Rose, but their loyalty this year will be sorely tested after the retailer slashed their dividend by 30% as a result of a 40% slump in profits. Other retailers have performed much better, especially the big supermarkets, although a better-than-expected trading statement last week suggested Rose is stopping the rot.
M&S need not heed the vote on the LAPFF resolution, as it would require 75% support to be effective, but if there is a substantial rebellion it will be a major embarrassment. The retailer attempts to present itself as an exemplary corporate citizen with its green initiatives and “doing the right thing” advertising campaign.
The LAPFF resolution and the potential backlash from private shareholders is not the only problem the company faces. Lady Patten, who chairs the remuneration committee is also in the firing line as she stands for re-election to the board. Patten, a former management consultant, sanctioned huge share awards to Rose and marketing director Steven Sharp. However, faced with a near-certain shareholder backlash at the annual meeting, the pair last month voluntarily handed back one-third of their awards, worth £1.6m.
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Mike Ashley bankrolls JJB chairman
July 8th, 2009 |
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Row between sportswear tycoons reveals dog-eat-dog nature of a lucrative sector
• The tangled world of sports retailing (pdf)
“There is a club in the north, son, and you’re not part of it,” was the immortal line uttered by Dave Whelan, the JJB Sports founder, to Sports Direct’s Mike Ashley, who at the time was the young pretender to the UK’s sportswear crown.
The club in question was a tight-knit group of Manchester businessmen who had dominated what was a thriving sector during the 1990s and early part of this century, as sportswear became big business thanks to its adoption by the masses as casualwear.
By 2000, Ashley was the upstart southerner snapping at their heels. His revenge was to report their plan to fix the price of England and Manchester United shirts to the Office of Fair Trading, prompting an investigation that landed the protagonists with multimillion-pound fines.
Fast forward a decade, and Ashley is now the kingpin, calling shots that reverberate through the sector. This week it emerged that Ashley had bankrolled the JJB executive chairman, Sir David Jones, dishing out a £1.5m loan which the former Next supremo had used to finance Advanced Network Technologies (ANT), a private technology firm that his family controls.
The controversial arrangement raises fresh questions about the incestuous relationships and old enmities that have made the sector as gripping as a local derby, amid claims Ashley is trying to embarrass the retail grandee after he decided to stock less of Ashley’s brands.
The “club in the north” referred to the so-called sportswear mafia that dominated the UK sportswear market. JJB was founded in Wigan, while David Makin and John Wardle founded JD Sports in Heywood, near Manchester. The now defunct Allsports was based in Stockport, while brands such as Umbro, Nike and Reebok also had bases there.
“These guys created a whole new type of fashion retailing,” says one industry insider. “They used football terrace fashions, but also created new looks by mixing sports tops and jeans and creating demand for the latest trainers from Adidas and Nike. It was a real street culture thing.”
Minor player
“Mike Ashley came from the south and didn’t grow his business organically; he just bought out all the smaller independent chains and, at the time, Whelan regarded him as a minor player,” he added.
The geographical reach of the club also extended north of the border, to Sir Tom Hunter, who has used the £300m he made selling Sports Division to JJB in 1998 to embark on his philanthropic career. At Sports Division, Hunter gave the disgraced former JJB chief executive Chris Ronnie his big break, inviting him to join the board a year before the sale.
Like characters in a novel by David Peace, author of The Damned Utd, the men behind Britain’s biggest sportswear companies are hard-edged with rivalries and friendships that divide along team lines. Like a Boy’s Own story, Whelan, Ashley, and Wardle and Makin have all used the fortunes made from selling replica football shirts to buy the real thing, investing in Wigan Athletic, Newcastle and Manchester City respectively.
In 2007 eyebrows were raised when Ronnie – a former new business director for Ashley – emerged from the shadows with £190m to buy out Whelan’s remaining shares in JJB. The deal, bankrolled by the Icelandic investors Exista, was seen as a fresh start for the chain, which had seen profits wiped out with England’s Euro 2008 hopes.
But there were suspicions that Ronnie, a failed professional squash player, was on a secret mission for his former paymaster. At the time of his appointment, Ronnie batted away analysts’ concerns, saying: “Sportswear is a very friendly industry.”
But if Ronnie was on a mission at JJB, it was a kamikaze one. His 18-month tenure brought the business to near collapse and culminated in suspension at Jones’ hands in January, after it emerged that Exista’s shares had been seized by Kaupthing’s administrators.
There were more suggestions of foul play in March, when Ronnie popped up at a meeting between Ashley and Whelan, who by then was in the final stages of buying JJB’s fitness chain. The sports tycoons met in Wrightington Hotel & Country Club in Wigan, where Whelan alleges Ashley encouraged him to let JJB go bust. “He said if I backed off from the deal, he’d guarantee I’d get the health clubs at half the price I’d agreed to pay,” said Whelan.
If JJB failed, not only would thousands of jobs go, but suppliers would face substantial losses.
Top dog
“In my view Whelan and Ashley are two peas in a pod,” continues the insider. “They are both overbearing and bullying and used to being top dog. They also hold grudges for years.”
Jones was brought in as the man to clean up JJB and return it to financial health. But the revelations about his loan from Ashley have cast doubt on his integrity.
In an attempt to draw a line under the loan scandal, JJB issued a statement yesterday stating that the board and its advisers had known about the loan for several months but had decided it was a “private” matter. It said the loan was made before Jones joined as a non-executive director in October 2007 and insisted it did not “give rise to any conflict of interest”.
Jones has now told the board he intends to repay the loan “as soon as possible”. “The board considers the matter closed,” the company added. But Jones’s reputation as one of the UK’s most respected corporate grandees has been dented.
There is still a club in the north and Jones is definitely not in it.
The rival and the loan
JJB Sports chairman Sir David Jones yesterday vowed to pay back a controversial £1.5m business loan “as soon as possible”. The money, borrowed from business rival Mike Ashley, was used to prop up software firm Advance Network Technologies (ANT), a company 70% owned by the Jones family, in which his son Stuart is also involved.
The company, which offers services such as IT support, owed creditors about £4.4m at the end of 2007, according to Companies House.
JJB said yesterday the loan was agreed prior to Jones joining its board in October 2007 and that executive directors were informed of its existence and terms, including the option of Ashley converting his loan into shares, earlier this year. The board maintains the transaction was a “private” matter and as a result it did not need to tell the stockmarket. “The board considers the matter closed,” it said in a statement.
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Ikea founder warns: we must cut jobs
July 7th, 2009 |
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Ingvar Kamprad tells Swedish newspaper that even the 5,000 redundancies the furniture retailer has already made will not be enough
The founder of Ikea has warned that the Swedish retailer must lose more jobs after the recession squeezed sales of flat-pack furniture.
Ingvar Kamprad believes that the 5,000 jobs that the company has already shed will not be enough to deal with the tougher economic climate.
“We need to decrease the number of staff further, particularly within manufacturing and logistics,” Kamprad told the Swedish newspaper Dagens Industri. “It’s about adjusting to sales being a lot less and becoming more efficient.”
The Swedish billionaire revealed that sales are running at about 7% below its target, adding that the company can no longer match its rapid expansion of recent times, when up to 20 new stores would open every year. “The forecast is that our margins and profits are decreasing substantially this year. This is proof that we have been too negligent in how we take care of our existing stores.
“Actually, I have long tried to warn about our excessive focus on expansion, and now the board has also decided to hit the brakes,” Kamprad said.
A spokeswoman confirmed that there may be further job cuts at Ikea, but insisted that the company was also hiring at its new stores. She added that the company was still committed to opening between 10 and 15 stores a year.
Kamprad founded Ikea in 1943 and still advises the company, which posted record global sales of €21.2bn (£18bn) in the last financial year.
But its expansion hit a roadblock last month when it suspended its investment in Russia, which had been a major target for Ikea this decade. It blamed the “unpredictability of administrative processes”.
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Coffee Republic collapses into administration
July 7th, 2009 |
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High street coffee chain blames downturn in consumer spending for failure to move into profit
High street coffee chain Coffee Republic has collapsed into administration, blaming the downturn in consumer spending.
Richard Hill and David Crawshaw of KPMG have been appointed joint administrators. The chain had previously called in restructuring adviser Osborne Clarke, while management tried to improve rental terms for the outlets. It could now buy back a rump of the profitable cafes from the administrators.
Hill said: “The recession is hitting discretionary spending on the high street and some of the less profitable bars with expensive leases have suffered. However, Coffee Republic has a strong brand and I expect considerable interest in the profitable parts of the business. We will be doing whatever we can to find a buyer.”
Chief executive Steve Bartlett has stepped down, replaced for the time being by executive chairman Peter Breach.
The administrator is assessing the viability of individual Coffee Republic outlets and said it expected to close loss-making bars with inevitable job losses. The business has 187 sites, including 10 overseas, many of which are franchises. It directly employs 153 staff.
The chain was the brainchild of brother and sister Bobby and Sahar Hashemi, but they were ousted two years ago by Bartlett, who led an investor revolt.
The group, which has continually struggled to make money against competition from Starbucks and Costa, was founded in 1995 in a single outlet in South Molton Street, in London’s West End.
It has grown rapidly in recent years as a result of selling franchises, but it is thought that these outlets are the source of Coffee Republic’s problems. In December, the company said it had made a loss of £527,000 in the six months to 28 September 2008, but had no debts. At that time, Breach said the company would be in the black for the first time in its history by the end of this year.
However, the market has been under severe pressure as consumers around the world cut back on treats such as the morning latte. In the year to September 2008, Starbucks profits halved to $350m. In the past year, it has announced more than 10,000 job cuts around the world and nearly 1,000 store closures.
Coffee Republic’s shares were suspended yesterday at 22p. They were worth 160p when the founders departed.
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Ikea founder warns: we must cut jobs
July 7th, 2009 |
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Ingvar Kamprad tells Swedish newspaper that even the 5,000 redundancies the furniture retailer has already made will not be enough
The founder of Ikea has warned that the Swedish retailer must cut more staff after finding that sales of flat-pack furniture were not immune from the recession.
Ingvar Kamprad believes that the 5,000 jobs that Ikea has already shed from its workforce will not be enough to bring the company in line with the tougher economic climate.
“We need to decrease the number of staff further, particularly within manufacturing and logistics,” Kamprad told Swedish newspaper Daily Industry. “It’s both about adjusting to sales being a lot less than budgeted, and about becoming more efficient.”
The Swedish billionaire revealed that sales at Ikea are currently running around 7% below its target, adding that the company can no longer match its rapid expansion of recent times, when up to 20 new stores would open every year.
“The forecast is that our margins and profits are decreasing substantially this year. This is proof that we have been too negligent in how we take care of our existing stores. Actually, I have long tried to warn about our excessive focus on expansion, and now the board has also decided to hit the brakes,” Kamprad said.
A spokeswoman confirmed that there may be further job cuts at Ikea, but insisted that the company was also hiring at its new stores. She added that the company was still committed to opening between 10 and 15 stores a year, despite the recession.
“Turnover has decreased because of the current economic situation. We have to look at our costs, but we are still doing very well, generating good profits – but we had counted on doing better than we are doing today,” she said.
Kamprad founded Ikea in 1943 and still advises the company, which posted record global sales of €21.2bn (£18bn) in the last financial year.
But its seemingly relentless expansion hit a roadblock last month when it suspended its investment in Russia, which had been a major target for Ikea this decade. It blamed the “unpredictability of administrative processes” in the country.
Analysts said the move showed that Ikea had lost patience with being asked for bribes by corrupt Russian officials. They pointed out that a new Ikea store in the city of Samara was completed a year ago but has still not been given permission to open until the firm has paid to fix alleged “deficiencies” with the building.
Kamprad said he supported the decision to postpone building up to 30 more stores in Russia. “Hopefully we can restart the offensive later on, and in the long term I’m convinced that Russia will be a good market for Ikea,” says Kamprad.
The popularity of Ikea has prompted a Swedish museum to host an exhibit looking back at its history, including early tables, chairs and advertising material.
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Think big
July 7th, 2009 |
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Can singer Beth Ditto turn the decidedly un-cool high-street chain Evans into a magnet for hipper, younger women with her new plus-size collection? Sarra Manning, a former size 32, reckons she might
Whether she’s wearing a purple lamé catsuit, a skin-tight dress hitched up to show off her control pants, or even no clothes at all, Beth Ditto is a style-icon size 28 and the darling of the fashion pack. So it was only a matter of time before she had her own clothing line, probably sold somewhere achingly hip such as American Apparel or Colette in Paris.
But God love her, because in fact the Beth Ditto Collection (sizes 14 to 32) goes on sale in Evans on Thursday. That’s right, Evans. Apart from a brief moment in the early 80s when Morrissey favoured their blouses, Evans has never been this cool. I should know. I started my 20s as a size 20 and ended that decade straining the seams of a size 32. It was hard to find anything fashion-fabulous. Usually I shrouded my body in shapeless black pieces and pretended they were flattering. But there were days when I stopped deluding myself that I was anything other than fat and went clubbing in retina-searing, horizontally patterned 70s crimplene dresses from charity shops. I sewed marabou trim on to my black frocks and re-purposed nylon nighties with sneakers and a long-sleeved T-shirt. I wish during those years when I vacillated between fat-acceptance and self-loathing that I had a style icon like Beth Ditto, let alone one who was designing clothes available on my local high street for under £65.
The collection is a glorious homage to Ditto’s favourite things: Grace Jones, the Bauhaus movement, or a stained-glass print on a vintage shirt. Bang on-trend with its 80s reference points, there’s a Debbie Harryesque blue harem-pant jumpsuit, leggings and matching stretchy dress in a white domino print, a batwing jumper with a spider’s web picked out in delicate chain, even dinky jazz shoes and a cropped leather jacket. Each piece in the collection oozes Ditto.
“First we talked about Beth’s frustrations in never being able to find fun must-haves,” says Lisa Marie Peacock, head designer for Evans, whose team apparently spent weeks last summer tailing Ditto on the festival circuit and talking to her fans about their clothes and where they shopped. “Beth arrived with loads of cute little sketches and a suitcase full of amazing vintage clothes that she’d begged, borrowed and stolen over the years. She was even involved choosing fabrics and prints.”
There are cunning little tricks in the collection to ensure a good fit. The high-waisted leggings have reinforced waist panels, so won’t have to be yanked up every five minutes, and the stretchy domino dress is made of double fabric. “We tried every piece on a size-16 model and a size-22 model, then Beth would try them on too and jump around a lot.”
Ditto’s name might get the cool kids through the door, but Evans hopes to attract another untapped demographic: girls who are squeezing into clothes that are far too small for them because they wouldn’t be seen dead in the same shop as their mothers or grandmothers. But won’t these girls balk at wearing white domino-print leggings, especially if they are not as comfortable in their own bodies as Ditto?
Ditto believes her collection will do more than provide a real, fashion-forward alternative to what’s on offer for the plus-size customer.
“I wanted to make something special, just for us, something never seen before,” she says. But persuading plus-size women to celebrate their bodies is going to be a hard sell. I’m not convinced the target audience for the collection is going to buy into fat acceptance as they rifle through the rails. I’m a size 14 now (on a good day) and just like my younger, size-32 self, I still refuse to bare my upper arms or wear a tight white dress, even if it is made with double fabric. The pieces that will fly off the racks will be items such as the black leggings and the purple sequinned batwing tunic that hides a multitude of sins while fulfilling its remit to look utterly fabulous.
That aside, it is heartening to see Evans striving to change the perception of plus-size fashion. And the collection is a winner whichever way you look at it: Evans racks up some serious cool points and a hipper, younger generation of customers, while Ditto continues her meteoric rise as the most awesome woman on the planet – and may encourage others to take baby steps on the road to loving their bodies.
Even better, after years of having to trail miserably around the high street trying to find a killer outfit for Saturday night, women can dress to rock their curves, not conceal them. And in a sweet role reversal, they will have to leave their conventionally sized friends outside the changing room doors.
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JJB backs chair in Ashley loan row
July 7th, 2009 |
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• Sir David Jones gets vote of confidence
• Attempt to calm crisis over loan taken from rival sports magnate
• Shares make slight recovery after 25% plunge
JJB has given chairman Sir David Jones a public vote of confidence in an attempt to calm the mounting crisis over the controversial £1.5m loan that he took from rival sports magnate Mike Ashley.
The sports retail company insisted this morning that the loan, which became public knowledge last weekend, did not create a conflict of interest and was a private matter between Jones and Ashley, the founder of Sports Direct and ownert of Newcastle United football club.
“The board has been informed by Sir David that he intends to repay the loan as soon as possible in order to avoid further distraction for the company and its business. The board considers the matter closed,” said JJB.
Yesterday, shares in JJB plunged by a quarter, driven down by the news that the company may try to raise another £50m from shareholders as well as the escalating row over the Ashley loan. City insiders believe the timing of the revelations suggests an attempt to derail the fundraising.
The revelation that Jones took the loan from Ashley, and has not yet paid it back, is a major embarrassment for the former boss of Next. The deal was agreed in October 2007, two months after JJB announced Jones would be joining the company as a non-executive director that autumn.
It emerged today that JJB’s board and its financial and legal advisors only learned of the loan earlier this year. Jones was promoted to executive chairman on 2 January. Three weeks after that chief executive Chris Ronnie was suspended, and later dismissed, after it emerged that his 27% stake in the business had been seized by the administrators of Kaupthing Bank.
According to Jones and JJB, the money was invested in software firm Advanced Network Technologies, in which Jones and his family are majority investors.
However, a letter sent in February from Ashley to Jones, obtained by the Sunday Times, states the loan followed an approach from Ronnie, who said Jones was in “temporary personal financial difficulties”. Jones rejects this and has also denied allegations that he asked executives at Sports Direct to lie about the borrowing.
Since taking control of JJB, Jones has sold its profitable leisure division of 53 fitness clubs and adjoining stores to company founder Dave Whelan. He also hammered out a company voluntary arrangement (CVA) that offered some cash to landlords of 140 empty stores and allowed it to pay monthly rent on its other outlets, helping the company avoid administration.
“The board expresses its unanimous support for Sir David and takes the opportunity to thank him for leading the company through the successful disposal of the group’s fitness clubs business, the CVA process and a bank refinancing in his first six months as executive chairman,” said the JJB board.
“The board believes that he is the right person to lead the company through the next phase of the group’s restructuring and to turn around its sports retail business.”
JJB shares rose 1.5p to 24.5p in early trading, having crashed by more than 25% to 23p. The company is understood to be considering selling new shares at 12p to raise more capital, a price that Altium analyst David Stoddart warned was “excessively dilutive”.
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UK shops criticised over plastic bags
July 6th, 2009 |
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Bag for life manufacturer says major stores do not prioritise reducing plastic bag use and the UK lags behind other countries
The world’s largest manufacturer of “bags for life” has criticised UK retailers for not doing more to restrict the use of plastic carrier bags and warned that the UK is lagging behind other countries after failing to agree a national policy involving an outright ban.
Supreme Creations, based in India, makes millions of cotton and jute bags every year for retailers such as Tesco, Sainsbury’s, Boots, the Co-operative, Debenham’s, the Energy Saving Trust, Oxfam and Topshop, as well as celebrity handbag designer Anya Hindmarch who designed the sought after “I’m not a plastic bag” bag for Sainsbury’s.
Last night after receiving an environmental award from the Prince of Wales’s Business in the Community charity, the founder of the company said the “crucial environmental issue” appeared not to be a priority for British retailers and urged them to do more to catch up with international competitors.
Dr R Sri Ram, who founded Supreme Creations 12 years ago, said: “The UK lags way behind many other countries in the world on reducing plastic bag usage. Supreme Creations has really seen this issue drop off retailers’ agendas recently, perhaps due to economic difficulties.
“However, it is the responsibility of retailers to work with consumers to come up with innovative alternatives to help people switch from environmentally damaging plastic bags.”
Unlike Ireland, India, South Africa, most of Europe and parts of the USA, the UK has not banned or imposed a tax on single-use bags. But some retailers have been more pioneering than others with Tesco, the Co-op and Boots each producing their own reusable bags.
The Department for Environment, Food and Rural Affairs will shortly announce the progress made towards meeting a national target of 50% reduction in plastic bag usage.
Its figures show that while 45% of shoppers say they have bought a bag for life, only 12% use one regularly.
A Defra spokesperson said: “Shoppers in the UK each get through 13,000 carrier bags in their lifetime. We can’t continue this – it is a huge waste and a visible symbol of our throwaway society.
“Retailers and the public have already made great steps in the right direction as they have reduced the amount of bags given out by 26% since 2006, but we do need to do more. In support of this the government launched the ‘Get a bag habit’ campaign earlier this year aiming to help everyone to reuse their bags.”
In April 2007, Modbury in Devon became the first European town to ban plastic bags as a result of a ground-breaking campaign led by Devon camerawoman Rebecca Hoskings. Supermarkets, meanwhile, have relied on voluntary action by consumers, but despite numerous bags for life offers, free plastic bags are generally still available on demand.
According to a BBC study, 58% of the public would like a ban on plastic bags, while a recent report from the Institute of Grocery Distribution showed that nine in 10 consumers feel it is their duty to contribute to a better society and environment, while 89% say all products should use recycled packaging.
Last week, the Welsh assembly asked for public views on its plans to ban free plastic bags in the country. The proposal, which is based on a highly successful move in Ireland, will involve putting a 15p charge on shopping bags to encourage people to reuse them and so reduce unnecessary waste.
Ireland introduced a charge of 15 cents in 2002 and has since seen a 90% reduction in single use carrier bags.
Tesco, the UK’s biggest supermarket chain, said it had reduced its plastic bag usage by awarding customers reward points. “We believe encouraging customers to reuse bags and rewarding them for doing so is more effective and sustainable than the alternative approach sometimes advocated of taxing bags or charging for them.
“We believe that climate change will only be tackled successfully if people are encouraged to change their behaviour willingly.”
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Tesco chief takes flak at fiery AGM
July 3rd, 2009 |
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• Changes to share option scheme attacts significant protest vote
• Unite demands better treatment of agency workers in UK meat factories
Tesco came under fire from both investors and union leaders at a fiery annual general meeting in Glasgow today, with changes to the retailer’s share option scheme attracting one of the biggest protest votes the City has seen.
Investors have become increasingly militant since it became clear the City “bonus culture” was partly to blame for the financial crisis, with the current AGM season filled with challenges over executive pay.
Tesco’s desire to extend the period during which leaving or retiring executives can exercise their share options from one to three years met with only narrow approval, with 45% of its shareholders either rejecting or abstaining over the plan. In City terms, anything over 10% against is considered significant, even if that disapproval is registered as an abstention.
A resolution requisitioned by Unite, Britain’s largest union, demanding better conditions for agency workers in the meat factories that supply Tesco, also won considerable backing, with 18% of shareholders showing their support. Within that figure, 11% of shareholders voted in its favour – more than double Unite’s expectations – while a further 7% abstained, which the union also counted as its own. The special resolution required a 75% vote in its favour to be carried.
It was a similar outcome to last year’s campaign, led by celebrity chef Hugh Fearnley-Whittingstall, to improve the welfare standards of chickens, which saw 9% of shareholders support the motion and another 10% abstain.
Protest votes are the latest sign that investors are prepared to speak out against company boards, which they have traditionally been reluctant to do – particularly over pay. Royal Dutch Shell and BP are among the companies that have been singled out, while Home Retail Group saw 43% of its investors either vote against or abstain over its new executive bonus scheme at its AGM on Thursday.
Tesco had argued that “good leavers” were prey to stockmarket volatility under the previous share options scheme, as they had to exercise their options within a year of departure. But RiskMetrics, the investor advisory service, had urged shareholders to block the proposition, as creating such a long time gap was “not in line with best practice recommendations”.
Up to 50 Unite members, some of them wearing chicken suits, protested outside the meeting at Glasgow’s exhibition centre. Unite’s deputy general secretary, Jack Dromey, said there was “disturbing evidence” of discrimination within the meat processing industry, with agency workers – who are predominantly economic migrants – paid less than permanent staff. As market leader, Dromey said, Tesco had a duty to “lead and not lag” on an issue that was causing racial tension in xsome communities.
The Equality and Human Rights Commission is already investigating the issue, which Unite says stems from the way supermarkets order food at short notice and put pressure on suppliers to cut costs. However Tesco argues that this is an industry issue rather than a Tesco-specific one. “This is not a question of labour relations within Tesco,” said the company’s chief executive, Sir Terry Leahy. “You have to accept that when we’re talking about workers in other privately owned companies we’ve crossed a boundary.” He also said Unite had not provided Tesco with hard evidence to substantiate its claims.
The United Food & Commercial Workers International Union (UFCW) of America also used the meeting to air its grievances. Relations between Tesco and the union have been tense since the chain announced its ambition to enter the US market more than two years ago. UFCW director Michael Bride accused Tesco of “union-busting” tactics, claiming the retailer “refused to engage with the union” while managers at its Fresh & Easy US chain sought to block workers from forming chapels.
Leahy hit back at this charge, saying: “Your union has accused us of bad labour practices and tried to destroy our business before we’d even opened a shop or taken a dollar.”
Referring to the company’s relationship with the Union of Shop, Distributive and Allied Workers in the UK, Leahy said: “We do work with unions.” The retailer will create 26,000 jobs this year, including 11,000 in the UK.
Leahy told the UFCW: “Your deeds do not match your words. Your words are conciliatory but your deeds are aggressive and seek to undermine our business.”
The audience of about 300 small shareholders – many of whom were celebrating this year’s near 10% hike in the dividend over a generous buffet lunch – seemed bemused by the tenor of the debate, with many clapping the board’s responses.
“I think Tesco is a good corporate citizen,” said Roger Weizer, a retired fashion retailer who had travelled up from London for the event. “I am more interested in Tesco as a British success story, forging ahead in the Far East and Europe.
Leahy said the retailer, which made profits of £3bn last year, had encountered “some of the toughest conditions it had ever seen” during the period. He also trumpeted the group’s green credentials, with plans to open its first carbon-neutral store in Ramsey in Cambridgeshire and have carbon-labelling on 500 products by the end of this year. He refused to comment on speculation that named Tesco as a potential acquirer of the state-owned mortgage lender Northern Rock.
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Constantine lands key M&S role
July 3rd, 2009 |
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Former Arcadia man tipped as potential successor to Sir Stuart Rose after taking over as director of international property and store design
Marks & Spencer has named one of its arch-rival Sir Philip Green’s former lieutenants to lead its international expansion.
Clem Constantine takes over as director of international property and store design with immediate effect. The promotion will make him a candidate for a boardroom role and could position him as a potential successor to Sir Stuart Rose.
Constantine’s promotion comes just six weeks after the role became unexpectedly vacant, when Carl Leaver quit M&S. Leaver, who was previously in the hotel business, had joined M&S two years ago to lead the retailer’s ambitious overseas expansion plans. He was later given responsibility for online sales and homewares and was seen by many as a future boss of the company.
Rose has pledged to split his controversial double role as chief executive and chairman by 2011, although he will come under pressure from shareholders at next week’s annual meeting to bring this forward by a year.
Constantine joined M&S in 2006 from Green’s Arcadia group. He trained as a chartered accountant with Stoy Hayward, joining Debenhams in 1989 and moving through various finance roles within the Burton group. At M&S he led a far-reaching review of the company’s property portfolio and a strategy to open more shopfloor space, in out-of-town retail parks and through store extensions.
A spokesman for M&S said: “He has played a significant part in growing the UK business and now the focus is turning to international expansion.”
Rose has set out a plan for M&S to crank up the pace of its international expansion to generate 20% of its total sales from outside the UK by 2012. M&S currently has about 285 stores in 40 countries, from Bahrain to Ukraine, with some operated under franchise, some joint ventures and others wholly owned.
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Tesco picketed by unions at AGM
July 3rd, 2009 |
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Demonstrators descend on supermarket’s annual general meeting in Glasgow to protest about working conditions
Demonstrators descended on Tesco’s annual gathering with shareholders today to protest about the conditions suffered by workers, often from overseas, who supply the company with meat and poultry.
Around 40 members of the Unite union staged a protest outside the SECC exhibition hall in Glasgow before the AGM started. They sported brightly coloured T-shirts with the slogan “Every Worker Counts”.
Unite has tabled a resolution that accuses Britain’s biggest supermarket chain of exploiting the foreign workers employed at its UK meat supply chains, claiming they suffer harsh and divisive conditions and are paid less.
According to the union, this “divides workplaces, damages community social cohesion and fuels racism”.
Unite’s deputy general secretary, Jack Dromey, said this was the first time that a British union had tabled a resolution in this way. He called on Tesco’s chief executive, Sir Terry Leahy, to address two questions.
“Are you personally prepared to meet agency workers from your meat factories so you can hear first-hand of the grim reality of life at work?
“And are you prepared to sit down with Unite and end discrimination in your supply chain?”
Unite’s resolution calls for Tesco to make a non-executive board member specifically responsible for eliminating discrimination against foreign workers by suppliers, and says the Tesco board lags behind its peers in oversight of human and labour rights in its supply chain.
It is opposed by the company, which insists there is no evidence of poor treatment of workers in its meat supply chain.
“Tesco has a strong and proactive approach to ethical issues throughout its business and supply chain,” it insisted.
Unite’s resolution is being backed by the West Yorkshire Pension Fund, which owns more than 15m Tesco shares.
Ian Greenwood, who chairs the fund’s pensions committee, said the fund believed that Tesco treated its own employees well, but was concerned about the people employed by companies that work for it.
“Tesco is an outstanding company which is brilliantly managed and run, with good labour relations and policies in the UK. In those circumstances, what we are asking is that those standards apply to the rest of their supply chain to the best of their ability,” he said.
Investors will also vote on a resolution to change Tesco’s share option scheme, so that departing executives have three years to exercise their options, rather than the one year limit at present.
Riskmetrics, the investor advisory service, wants shareholders to oppose this change. But Tesco has argued that it is important to ensure fair treatment of workers after they quit the company.
Riskmetrics has also advised that shareholders oppose Unite’s resolution.
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Return of summer boosts M&S
July 1st, 2009 |
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• Like-for-like sales down 1.4%
• Rose says consumer confidence stabilising
The return of the British summer, its 125th anniversary celebrations and the first indications that consumers are willing to spend just a little bit extra for quality food and clothing have helped Marks & Spencer’s sales beat City expectations.
The UK’s biggest clothing retailer, which has seen sales decline for the last two years as it faces fierce competition from discounters amid the economic downturn, reported a smaller than expected 1.4% drop in like-for-like sales over the 13 weeks to 27 June. Food sales were down 0.5% and general merchandise – which includes fashion and homewares – down 2.4%.
Including the impact of new store openings and store expansions, total UK sales were up 1.7%, with food up 2% and general merchandise up 1.2% – consisting of a 1.4% increase in clothing and 0.1% increase in homewares.
The executive chairman, Sir Stuart Rose, said the company, which has more than 600 UK outlets, was “still uncertain about where the recession is going” but confidence among consumers does look to be stabilising.
“There are some people who are trading up,” he said on a conference call with reporters this morning. However, the company has not relaxed its pursuit of discount-hungry shoppers. Its Wise Buys food line, designed to lure shoppers away from the likes of Aldi and Lidl, now makes up 18% of total food sales a year and a half after launch.
The sunny weather has also helped boost M&S’s sales compared with last year when, Rose said, the summer “fell apart” in mid-May. “Last year’s weather pattern was not very great and if we have some more of this (sunshine) we’ll take it,” he said. The timing of Easter also boosted sales by about 0.7%.
Last month’s 125th anniversary celebrations brought legions of shoppers through M&S’s doors as the retailer went back to its roots as a Victorian market stall by launching penny bazaars across its 300 largest stores.
In a note on the company this morning, Singer Capital Markets analyst Matthew McEachran described M&S’s UK sales as “considerably better than in the preceding periods, with the benefits of internal self help, its 125th anniversary campaign, seasonal weather and the timing of Easter all coming into play against a weak comparative from last year”.
Shares in the company were up 7p to 313p in early trading.
Rose, one of the UK’s best known businessmen, has faced renewed calls to share his power in recent weeks. The company’s annual meeting next week is expected to see an investor revolt with about 20% of shareholders planning to back a resolution that could block Rose from occupying the retailer’s chair. The M&S board infuriated City corporate governance experts last year when it promoted Rose to executive chairman.
But Rose said today that there would be no change to the company’s plan to appoint a chief executive next year and a new chairman by 2011.
“The only date we have given is … I am leaving come hell or high water by 31 July 2011,” he said.
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Supermarkets seize land grab chance
June 28th, 2009 |
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Property crash is boon for ‘big four’ food giants
Britain’s supermarkets are using the property crash to seize sites for new stores in a land grab that could redefine the retail sector for years to come.
The move will consolidate the supermarkets’ stranglehold over the retail sector and alarm MPs, small businesses and green groups.
Tesco and Asda, the biggest retailers, are committed to opening 2.5m sq ft of new space this year, while Sainsbury’s wants to add 2.5m sq ft – 15% of its floorspace – by March 2011. Morrisons is on track to open 1m sq ft by January 2011.
But the Observer has learned that all the major supermarkets are scouring retail parks where tenants have gone out of business, and buying empty high-street shops and pubs for new stores. Sainsbury’s said recently it was raising £450m to buy distressed development sites.
Senior property executives believe local authorities might soon relax objections to new superstores as rising unemployment and lower yields from business rates become major concerns. Property companies say they are in a dilemma over whether to allow supermarkets to buy or lease land on retail parks for fear of antagonising existing tenants.
Property insiders say Tesco, in particular, is using intermediaries to buy boarded-up pubs that already have planning consents before passing them on to the supermarket giant. The big four supermarkets account for 75% of the UK’s £120bn grocery spend.
“There seems to be a renewed space race,” said one leading retail property executive. “There’s a lot of testing of different small- and medium-sized formats. There’s an increased investment online and, in some cases, on retail parks.”
Labour MP Jim Dowd, whose parliamentary small shops group’s report led to a Competition Commission investigation of supermarkets two years ago, said: “This is a matter of concern because it strengthens the position of supermarkets, making it harder for medium-sized stores to enter the market. And it is a matter of concern that local authorities, when confronted with derelict sites in these straitened times, are more likely to grant consent which, normally, would have faced more scrutiny.”
Gideon Amos, chief executive of the Town & Country Planning Association, said: “We must be wary of allowing the downturn to be used as an excuse to abandon the urgent priorities of sustainability – climate-friendly development, and good quality planning and design.”
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