Category: United States

Source: WSJ

For decades, Toys “R” Us was not only one of the top toy retailers in the United States, it was one of the top retailers period. Until it suddenly wasn’t. Toys “R” filed for bankruptcy in 2017 and liquidated six months later. This is the story of how Toys “R” Us went bankrupt.

(qlmbusinessnews.com via theguardian.com – -Fri, 15th 2019) London, Uk – –

UK-based Chilango in discussions about long-term planning, options and strategy

A UK-based Mexican restaurant chain that raised millions of pounds from small investors this year via a “burrito bond” scheme is in talks with restructuring experts about options for the business.

Chilango, which has 12 UK outlets, most in London, made headlines around the world in 2014 when it launched its quirkily named bond, and earlier this year announced that it had pulled in £3.7m from hundreds of small investors who had signed up for “burrito bond 2”.

The Guardian was told that Damian Webb, a partner at accountancy firm RSM who specialises in restructuring and who has been involved with several high-profile companies in recent months, had been brought in by Chilango. Options could include administration or a company voluntary arrangement, a form of insolvency that is deal with creditors.

A statement sent to the Guardian by Webb at RSM restructuring advisory said: “Chilango has engaged RSM to assist on working on long-term planning, options and strategy. All further inquiries should be directed to the company.”

In October last year, Chilango launched the burrito bond 2, which promised returns of 8% a year. It said the money would be used to refinance existing debt and open new outlets.

Chilango’s parent company, the London-based Mucho Mas, made a loss of £1.4m in the year to 25 March 2018, the latest period for which accounts are available, and a loss of just under £3.2m the year before.

As of Wednesday, its finance arm, Chilango Bonds, was six weeks late filing its accounts at Companies House.

Chilago’s chosen form of fundraising, known as a mini bond, allows a company to raise capital by borrowing directly from the public, and has proved popular with small investors desperate for better returns. Individuals receive a fixed interest rate and, when the bond matures, their capital is returned to them.

Many companies have issued them, but this year the Financial Conduct Authority said mini bonds could be high risk, and there is no Financial Services compensation scheme protection if the company issuing the mini-bond fails.

In April Chilango said the burrito bond 2 had raised more than £3.7m, making it “one of the most popular alternative investment offers of recent times”. Nearly 800 investors put money in – including 194 who qualified for a Chilango “black card” entitling them to a free burrito every week for the lifetime of the bond after committing at least £10,000 each.

The company said the latest sum raised comfortably surpassed the £2.1m brought in by the original burrito bond in 2014, which was snapped up by more than 700 individuals and covered by publications such as the Wall Street Journal.

The latest investment is an unlisted corporate bond with a four-year term paying a fixed 8% a year interest.

At the time of the burrito bond 2 offer, Chilango’s website highlighted the risks – it said that in the event that Chilango Bonds or a member of its group became insolvent, “you may lose some or all of your investment … If you suffer a loss, you are not entitled to compensation from the Financial Services compensation scheme.”

Chilango, which opened its first restaurant in north London in 2007, has 10 outlets in the capital, plus one in Manchester and another in Birmingham.

Eric Partaker, Chilango’s chief executive and co-founder, said there was “nothing to report … We are working with RSM on some long-term business planning.”

By Rupert Jones

(qlmbusinessnews.com via news.sky.com– Thur, 7th Nov 2019) London, Uk – –

The company says it is making progress in boosting its fortunes in the wake of its failed bid to merge with Asda.

Sainsbury's has reported a slump in pre-tax profits, with sales falling despite price cuts and new value ranges.

The supermarket chain, which also owns Argos, said it had achieved “positive momentum in grocery market share” in highly competitive times.

But it reported a 0.2% decline in group sales to £16.8bn over the 28 weeks to 21 September – its first half – with like-for-like sales, a comparable measure, falling 1%.

Trading pre-tax profits fell 15% to £238m. Sainsbury's blamed the phasing out of cost savings and tough weather comparisons.

On a statutory basis, pre-tax profits which include one-off costs came in at £9m. The figure covering the same period last year was £107m.

The company said this was mainly explained by a previously-flagged £203m writedown in the value of its estate that was mainly non-cash and reflected store closures.

Sainsbury's said its grocery and clothing offerings had a better performance in the second quarter than in the first.

Its chief executive, Mike Coupe, is under pressure to grow revenue after being accused of taking his eye off the ball as he fought for a £12bn merger with Asda.

The deal was blocked on competition grounds in April.

Mr Coupe said of the first half performance: “We have created positive momentum across the business through strategic investments in our customer offer.

“We have lowered prices on every day food and groceries, launched a range of value brands and are more competitive on price than we have ever been.

“We are investing in hundreds of Sainsbury's and Argos stores, introducing new products and services and continually improving service and availability. As a result, customer satisfaction has increased significantly year on year.”

The company guided that the retail sector remains “highly competitive” – a consequence of the price war that has been raging for years as discounters Aldi and Lidl capture market share from the ‘big four' chains.

Sainsbury's raised its interim dividend by 6% and shares, down 22% in the year to date, opened 1% higher.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said of the results: “The supermarket landscape has become more competitive and Sainsbury is fighting to keep sales moving in the right direction.

“We've had good news from M&S' food business this week, and its deal with Ocado will just add more pressure into the mix.

“It begs the question: what can Sainsbury's do to differentiate itself? The integration of Argos has been a step in a new direction, but despite the cross-selling potential, it hasn't been enough to boost overall sales.”

By James Sillars

(qlmbusinessnews.com via bbc.co.uk – – Wed, 6th Nov 2019) London, Uk – –

Troubled baby goods retailer Mothercare has called in administrators, putting 2,500 UK jobs at risk.

There will be a phased closure of all of its 79 UK stores, administrators from PwC said.

The UK firm “has been loss-making for a number of years”, but international franchises are profitable, PwC said.

On Monday the baby goods firm said it was “not capable” of being sufficiently profitable and that it had failed to find a buyer.

Joint administrator Zelf Hussain said: “This is a sad moment for a well-known High Street name,” adding that Mothercare “has been hit hard by increasing cost pressures and changes in consumer spending.”

“It's with real regret that we have to implement a phased closure of all UK stores. Our focus will be to help employees and keep the stores trading for as long as possible,” Mr Hussain said.

Pensions move

Mothercare chairman Clive Whiley said there was “deep regret and sadness that we have been unable to avoid the administration of Mothercare” and that the board “fully understand the significant impact on those UK colleagues and business partners who are affected”.

He added: “However, the board concluded that the administration processes serve the wider interests of ensuring a sustainable future for the company, including the wider group's global colleagues, its pension fund, lenders and other stakeholders.”

Mothercare said it was in continuing talks over possible UK concession stores and about using the brand to sell goods online.

It said it would move its pensions scheme across to its international business.

‘The only baby shop on the island'

Former Mothercare store manager Michelle Smith lost her job in October 2018 when her Isle of Wight store was one of 51 to close.

She said she felt sorry for the people who will lose their jobs due to the administration.

When her store closed, it was “devastating” for the Isle of Wight, she said.

“My store was the only child and baby shop on the island,” she said.

While branded baby products can be cheaper online, a lot of people like to see, touch and feel products before buying them, she added.

However, online retailers don't have the same overheads, she said.

Michelle is now a store manager for Co-op.

The administration will be “disappointing for all the employees but it's not unexpected”, said Diane Wehrle, marketing and insights director at Springboard.

Since the firm negotiated a rescue deal with lenders last year, “they haven't changed anything fundamentally”, she said.

“The levels of investment needed to future-proof the business would have been so significant and they couldn't make that leap,” she added.

Ultimately, supermarkets and department stores ate into their market, plus cheaper online competitors, she said.