QLM Business News Digital Media Channel

(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.

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‘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.

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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.

(qlmbusinessnews.com via bbc.co.uk – – Mon, 4th Nov 2019) London, Uk – –

Baby goods retailer Mothercare has said it plans to call in administrators to the troubled firm's UK business, putting 2,500 jobs at risk.

Mothercare said its 79 UK stores were “not capable of returning to a level of structural profitability and returns that are sustainable for the group”.

“Furthermore, the company is unable to continue to satisfy the ongoing cash needs of Mothercare UK,” it added.

It said stores would continue to trade as normal for the time being.

Also affected is Mothercare Business Services Limited (MBS), which provides certain services to Mothercare UK.

‘Necessary step'

Mothercare has already gone through a company voluntary arrangement (CVA), which allowed it to shut 55 shops.

“These notices of intent to appoint administrators in respect of Mothercare UK and MBS are a necessary step in the restructuring and refinancing of the Group,” Mothercare said.

“Plans are well advanced and being finalised for execution imminently. A further announcement will be made in due course.”

Only 500 of the jobs at risk are full-time posts, including head office roles, with 2,000 part-time.

Mothercare has been looking for a buyer for the UK stores, but with no success so far.

The company also operates in more than 40 overseas territories, which are not subject to administration.

Mothercare said that in the financial year to March 2019, its international business generated profits of £28.3m, whereas the UK retail operations lost £36.3m.

Online woes

The move comes as High Street retailers continue to face tough times amid a squeeze on consumers' income, the growth of online shopping and the rising costs of staff, rents and business rates.

Retail analyst Steve Dresser told the BBC that like collapsed travel firm Thomas Cook, Mothercare had failed to adapt to the world of online retail.

“They got very used to fat margins and a way of trading that's store-based,” he said.

However, the firm had also lost its way on the High Street, with poor store environments that deterred customers.

Ultimately, he said, people did not think of Mothercare first when it came to buying baby goods: “I think you would be hard-pressed to know what the brand stands for.”

Julie Palmer, partner at Begbies Traynor, said Mothercare had become “a byword for trouble on the High Street”, demonstrating “the failure of well-established brands to stay afloat”.

She added: “Other retailers, particularly those who have also previously filed for CVAs, will be concerned that these restructuring plans haven't succeeded and a more radical approach may be required in order to survive.”

(qlmbusinessnews.com via bbc.co.uk – – Friday, 1st Nov 2019) London, Uk – –

Asda staff have spoken of being “terrified” for their jobs as a Saturday night deadline approaches to sign new contracts or be sacked.

Runcorn store employee Cath Sutton, who has yet to sign, said Asda should be ashamed of the stress it is causing.

The contracts mean unpaid breaks, changes to night shift payments and being called to work at shorter notice.

Asda said it brings it into line with rivals and most of the 100,000 staff affected will be better off.

It is thought about 2,000 staff have yet to sign, but possibly many more. Asda said reports of 12,000 ‘hold-outs' were “inaccurate”, but declined to disclose the latest figure.

The GMB union said many staff felt they could not sign the “inflexible” terms because of disruption to domestic life, and the impact would fall heavily on female employees.

“If I sign it, it will affect me because they can move me into any department,” Ms Sutton, 76, who has worked for Asda for 45 years, told the Today programme.

“They can move me on to the shop floor, carrying heavy boxes, filling the shelves.”

“They could change my hours any time from five in the morning to 12 at night.”

“I think at my age, why would I be able to start going to different departments and doing different jobs?”

There are plenty of Asda workers who are similarly worried, she says, but are feeling pressured into agreeing the new terms.

“I think the company should be thoroughly, thoroughly ashamed of themselves. It's caused a hell of a lot of stress for people.”

“They are having to sign out of desperation because they are terrified of losing their jobs.”

Shorter notice

Under the changes, paid breaks will be scrapped, working bank holidays will become compulsory – although festive holidays will be voluntary – and there will be changes to night shift payments.

Neil Derrick, GMB regional officer for Yorkshire and North Derbyshire, said staff would also be forced to attend work at shorter notice, disrupting the life of carers or people doing the school run.

Leeds-based Asda is increasing hourly pay rates. However, Mr Derrick said it was not the money that mattered for many staff, but the inflexibility of the new working patterns.

“Many staff cannot sign because of upheaval to their domestic life. Others have signed just to get them through Christmas or until they can find new jobs,” he said.

“I've not met anyone who thinks they will be better off in terms of working life. There will be a disproportionate impact on women.”

Mr Derrick said the union would support sacked employees in any legal battle against Asda. Labour's leader Jeremy Corbyn has said he “stands in solidarity” with Asda workers.

‘Understand concerns'

This week, Asda announced it would increase employees' basic hourly pay from April, a move that the GMB said shows the supermarket is desperate to woo over disgruntled staff before the deadline.

The supermarket said it would raise its basic rate for its hourly-paid retail employees to £9.18 from 1 April next year, following an increase to £9 from 3 November.

In London, which has an additional allowance to reflect the higher cost of living, basic pay will increase to £10.31 per hour.

The retailer, owned by Walmart, acknowledged this week's annual pay announcement for April rises had come earlier that usual.

An Asda spokesman said the new contract “represents an investment of over £80m and an increase in real pay for over 100,000 of our hourly paid colleagues”.

He added: “We have been clear that we don't want any of our colleagues to leave us and whilst the vast majority of colleagues have chosen to sign the new contract, we continue to have conversations with those who have chosen not to, to try and understand their concerns.”

While Asda accepted that change was “never easy”, it was important that the company adapted to changes in the market and competition, he said.

The company has won backing from former Sainsbury's chief executive Justin King, who used to work at Asda.

He told the BBC that the new retail environment, where the working practices of some online retailers were “almost Victorian”, had made life extremely competitive for traditional firms.

“All legacy retailers – and Asda are one – have some legacy arrangements with their workforce which simply don't reflect the modern world that we're in.

“Many online retailers don't pay their workers anywhere near as well as the mainstream retailers,” he said.

To compete, it was necessary to take tough decisions. “Sometimes you have to do the right thing for the whole business.”

By Russell Hotten BBC News

(qlmbusinessnews.com via theguardian.com – – Thur, 31st Oct 2019) London, Uk – –

 Lloyds Banking Group  has put aside a further £1.8bn to cover a surge in payment protection insurance (PPI) complaints before the August claims deadline, which nearly wiped out its quarterly profit.

Including the PPI charge, the bank’s profit before tax slumped to £50m for the three months to 30 September, from a profit of £1.8bn in the third quarter last year. The result was weaker than expected.

The latest charge is at the top end of estimates, and takes the group’s total bill to £21.8bn. PPI has become the banking industry’s biggest mis-selling scandal and Lloyds accounts for the lion’s share of the total bill, which has risen to £48bn and is expected to top £50bn.

Lloyds shares were the biggest faller on the FTSE 100 index in early trading, dropping 2.7% to 56p.

The City regulator had set a 29 August deadline to make a claim for compensation for mis-sold PPI, which sparked a surge in complaints in the final weeks, prompting Lloyds to suspend a share buyback programme. PPI was sold alongside loans and mortgages to cover repayments if customers fell ill or lost their jobs, but the insurance was often sold to people who did not want or need it.

António Horta-Osório, the chief executive, said: “I am disappointed that our statutory result was significantly impacted by the additional PPI charge in the third quarter, driven by an unprecedented level of PPI information requests received in August.”

William Chalmers, the bank’s new chief financial officer, said the charge reflected its “best estimate of what PPI might come out as” but he could not rule out further provisions. “When George walked out the door he said: ‘Never say never’ on the issue,” he quipped about his predecessor, George Culmer.

Royal Bank of Scotland took a £900m PPI charge last week, which pushed the 62%-state-owned bank into a quarterly loss of £8m. Barclays set aside a further £1.4bn and reported an 80% plunge in profits.

Lloyds also said its chairman, Lord Blackwell, would retire at or before next year’s annual meeting, after serving nine years on the board, including seven as chairman. The firm’s chief operating officer, Juan Colombás, will step down in July after four years in the job.

Richard Hunter, head of markets at investment platform interactive investor, said: “The shares have had the benefit of a ‘Brexit bounce’ of late, rising 9% in the last three months as perception switched to ruling out the likelihood of a no-deal Brexit. That particular cloud will not be lifted in the immediate future, and on balance the third quarter numbers were largely uninspiring.”

(qlmbusinessnews.com via theguardian.com – – Tue, 29th Oct 2019) London, Uk – –

Twin brothers own diverse array of faltering firms, from luxury Ritz hotel to budget retailer Shop Direct

The decision by the billionaire Barclay brothers to put the Daily and Sunday Telegraph up for sale could herald the breakup of a vast but faltering business empire that ranges from luxury hotels to budget retail.

Bidders are already circling the newspaper group after the identical twin brothers, who were 85 on Sunday, launched a sale process expected to recoup less than a third of the £665m they paid for it in 2004.

Potential buyers include the publisher of the Daily Mail, foreign media groups and even the world’s richest man – Amazon tycoon Jeff Bezos.

The sale also comes in the context of a wider review of the Barclays’ business interests, which include the loss-making online retailer Shop Direct and the Ritz hotel in London.Advertisement

Sir David and Sir Frederick Barclay boast a combined wealth of £8bn, putting them 17th on the Sunday Times Rich List, but the financial performance of their sprawling network of businesses has proven patchy of late.

The largest companies in their investment portfolio – Telegraph Media Group; the Spectator magazine; delivery firm Yodel; Shop Direct; the Ritz and the Beaumont hotel – are managed by Sir David’s son Aidan and reported combined losses of £290m on revenues of £2.8bn, in the latest year for which financial records are available.

As losses have mounted, the brothers were reported this month to have put the Ritz up for sale at £800m, more than 10 times the £75m they paid for it in 1995.

Telegraph Media Group is expected to have a price tag of about £200m, according to media industry sources. That would be less than a third of the £665m they paid in 2004, although that purchase included the Spectator, which is not part of the current sale process.

One reason for any fall in the value of the Telegraph group is whether it is still perceived as a “trophy” asset worth more than the sum of its parts, given a decline of profits and sales in recent years.

“It may have been a trophy asset when the Barclays bought it but you would struggle to say that now,” said one City source.

Potential suitors include DMGT, owner of the Mail titles, Mail Online and Metro, which is understood to have previously expressed an interest, although it would likely face regulatory scrutiny.

Sources also pointed to Belgian group Mediahuis, which earlier this year paid €145.6m (£125.2m) to buy Independent News & Media, publisher of the Irish Independent and Sunday Independent. INM is chaired by Murdoch MacLennan, a former chief executive of Telegraph Media Group who is rumoured to have encouraged a bid for his former employer.

Interest is also expected from publishing investment vehicle National World, run by David Montgomery, the former chief executive of the publisher of the Mirror titles. Montgomery advised venture capital firm 3i in a bid to buy the Telegraph in 2004, in a bidding war that ultimately saw the Barclays triumph.

Amazon founder Jeff Bezos, who paid $250m to buy the Washington Post in 2013, was linked to a potential bid for the Telegraph last year. Selling both the Telegraph and the Ritz could raise up to £1bn for the Barclay brothers, who live in a castle on the Channel island of Brecqhou. They have insisted they do so for health reasons, rather than for tax purposes.

Neither business has been a huge money-spinner of late, with profits at Telegraph Media Group down from £14m to £900,000 last year, while the Ritz reported earnings of £7m, a slowdown from £12m. But both are at least profitable, which is more than can be said for some of the larger cornerstones of the Barclay edifice.

Their biggest business by revenue is online retailer Shop Direct, which includes Very and the bones of Littlewoods, the department store chain for which they shelled out £750m in 2002 but which no longer has a bricks and mortar presence.

Liverpool-based Shop Direct racked up revenues of just under £2bn last year, an increase of nearly 2% on the previous year. But accounts released last week showed that it slumped £185.5m into the red, a loss seven times greater than that reported last year, due to £310m in exceptional costs.

The bulk of those relate to a surge in claims from customers who said they were mis-sold payment protection insurance (PPI). The company said it had been forced to set aside cash to cover “customer redress payments for historical shopping insurance sales” and was looking at funding alternatives to cope with the liability. The poor performance for 2018 came a year after the Barclays lost a £1.25bn lawsuit against HM Revenues & Customs, after the supreme court ruled that Littlewoods had not overpaid its taxes.Advertisement

Parcels and courier business Yodel, built on the foundations of Shop Direct’s delivery network, has fared no better than Shop Direct of late. It suffered a pre-tax loss of £116.4m last year on revenues of £481.5m, as customers deserted a business that struggled to shake off a reputation as one of the UK’s most complained-about companies. Directors insisted it had turned a corner thanks to improve service and IT upgrades.

The Barclays’ recent travails come in the context of a decades-long saga that has made billionaires of the twins, born in humble circumstances in west London to Scottish parents who had six other children. They began making money by converting boarding houses into hotels according to a glowing piece written by a Telegraph writer when the brothers bought the newspaper.

In 1983 they bought shipping and brewing company Ellerman for £45m and later made more than £240m by breaking it up and selling it, using the money to invest in hotels. Other money-spinners included the sale of Handbag.com for £22m and the sale of the Scotsman group of newspapers in 2005 for £160m, having paid £85m 10 years earlier.

Their success brought them high-profile friends including former prime minister Margaret Thatcher, who lived out her final months at the Ritz. The brothers were knighted in 2000 for their services to charity. Now, they are preparing to sell a piece of the British media establishment.

By Mark Sweney and Rob Davies