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Monday, 11 November 2013

Blockbuster and Barratts enter administration, threatening 3,000 jobs

Film rental chain's brief revival under Gordon Brothers withers, while shoe retailer failed to attract £5m investment needed

More than 3,000 retail jobs are at risk just weeks before Christmas as the film rental chain Blockbuster and shoe shop Barratts announced they were going into administration.

Both retailers have failed before. Blockbuster was among a string of well-known high-street brands to go bust at the beginning of the year, while it is the third time Barratts has fallen into administration in less than five years.

There were also further job losses at regional airline Flybe, which said it was cutting 500 jobs in an attempt to save £26m a year, having struggled in a downturn that disproportionately affected economies outside London.

The retail collapses reflect ongoing troubles in the economy as inflation has continued to outstrip low wage increases, whittling down consumers' spare cash. This year has seen the failure of a string of retail casualties, including music retailer HMV, Jessops camera shops and bed specialist Dreams, all of which were later rescued by buyers who took on at least some of the stores and employees.

But both Barratts and Blockbuster face an uphill struggle to survive after falling out of step with the fast-changing habits of shoppers.

"Consumers and the retail market have moved on," said Maureen Hinton, research director at retail analysis firm Verdict. "The economic downturn has only speeded up the exit of weaker players that would have found it difficult anyway."

She said the Barratts brand and its products were not strong enough to compete with clothing retailers such as Primark, New Look and the supermarkets, which now sell footwear as well as clothing. Blockbuster, meanwhile, is based on an "outdated concept" that has been overtaken by downloads and TV subscription services.

Philip Duffy and David Whitehouse of Duff & Phelps, joint administrators for Barratts, said they hoped to sell the business as a going concern but that store closures and redundancies could not be ruled out.

Barratts, which employs 1,035 people at 75 stores and 23 concessions in the UK and Ireland, had sought additional investment after a period of difficult trading but the offer of a £5m cash injection was withdrawn on 7 November.

"In view of the financial position of the company and withdrawal of that equity offer the directors were left with no choice but to appoint administators," said Duffy.

The appointment of administrators at Blockbuster comes just a month after the retailer's owner, Gordon Brothers, admitted that its turnaround strategy had not worked because of a rapid switch to renting films online or via TV subscription services.

The restructuring specialist bought about half of Blockbuster's original UK chain in March and promised to invest substantial sums in a revival plan to protect around 2,000 jobs. But Gordon Brothers was unable to secure a licensing deal with Blockbuster's parent company in the US, which also recently filed for bankruptcy, to launch an online business.

Nick O'Reilly, a joint administrator, said: "Gordon Brothers found the marketplace had changed quite dramatically. A lot of people want to rent online, while the price of DVDs on places like Amazon is so cheap – why rent for £3?"

Blockbuster's 264 stores will remain open while the administrator, Moorfields Corporate Recovery, looks for a buyer. But O'Reilly admitted it would be a tough job to find a new owner for Blockbuster in its current form given that Gordon Brothers had already spent weeks seeking a buyer.

Joint administrator Simon Thomas said: "This is obviously a difficult and upsetting time for everyone involved at Blockbuster, in particular employees, who have endured a stressful period since January this year."

"We appreciate that staff and customers will want a speedy resolution, however, we must ask people to be patient over the coming weeks."

Flybe had already cut 490 jobs under its previous boss. Its new chief executive, Saad Hammad, said it had been clear the cost savings were necessary, but the company needed to do more and do it immediately.

He said jobs would go "across the ranks: pilots, cabin crew, engineers management. It's unfortunate it needs to be done to be relevant and viable. We've got to secure the business – it's the lesser of two evils."

The Unite union said it would scrutinise the business plan to limit job cuts. National officer Oliver Richardson said: "Cabin crew have already been through one major reorganisation at Flybe only recently and they will be angry that once again they are on the front line of more cuts.

"Over the coming weeks, the union will scrutinise every inch of the company's business plans in order to protect as many jobs as possible and to avoid compulsory redundancies."

Article Source : http://www.guardian.co.uk
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Co-op replaces £8m Christmas dividend with food vouchers

Organisation says half-year payments to members unjustifiable in light of near collapse of banking arm

The Co-op has unveiled a new rewards scheme after being forced to abandon its usual pre-Christmas dividend for seven million members.

The UK's biggest mutual organisation told delegates at a meeting in Manchester on Saturday that £8m in half-year payments to members could not be justified in light of the near-collapse of its banking arm.

The full-year dividend, which last time amounted to more than £100m, is likely to go the same way after the group made a loss of £559m in the first six months of 2013. A final decision will be made early next year.

Chairman Len Wardle said at the group's half-year meeting: "Our decision not to pay an interim dividend was not one that was taken lightly. But it was viewed by the board as a necessary one, given the challenges facing the group at this time."

The Co-op has announced details of a separate rewards scheme that will see members offered 10% vouchers that can be saved and used as a cash equivalent in the group's 2,800 food stores before Christmas Eve.

If a Co-operative member spends £30 they will be given a voucher worth £3. Vouchers can be collected between 18 November and 15 December.
Chief executive Euan Sutherland said: "Technology now allows us to offer these more immediate rewards, which we are confident our members will appreciate in the run-up to festive period."

The Sunday Times said that a review of the Co-op's donations to the Labour party will form part of a strategy rethink being undertaken by Sutherland as he also attempts to reduce the group's £1.3bn debt pile.

He said in an interview with the Sunday Times: "Part of our strategy work, and we will come back with it next May, is to ask, where and how should the Co-op movement be contributing to local society and to community movements?"

He added: "Being a mutual is not an excuse for not making money. My intention is to make decent profit out of the Co-operative Group. What we then do with that profit is different."

The Co-op bank's rescue plan announced last week will see around 50 branches close and bond investors including US hedge funds given 70% of the business, leaving the parent Co-operative Group with a 30% stake.The controversial move comes after a £1.5bngap in finances was discovered following the purchase of the Britannia Building Society and abortive plans to buy hundreds of Lloyds branches.

The Co-op business also includes supermarkets, pharmacies and a chain of funeral parlours.

Thursday, 31 October 2013

Bill Adderley unmasked as Marks & Spencer's biggest private shareholder

Billionaire founder of homeware chain Dunelm built £250m stake in M&S during 18-month period in which shares rose by 40%

Bill Adderley, the billionaire founder of the homeware chain Dunelm, has secretly built a near £250m stake in Marks & Spencer, it has emerged.

The entrepreneur acquired the shares during the past 18 months, a period in which the M&S share price has risen by almost 40%.

The disclosure, triggered by stock market rules that unmask shareholders who own more than 3% of a company, revealed Adderley as M&S's largest private shareholder. He will receive dividends on his stake of more than £8m a year.

An M&S insider said: "We do know him and have met him, being as he has been our largest private shareholder for some time. It was a small purchase [that took Adderley over the 3% disclosure threshold] so this has not come out of the blue."

Adderley founded Dunelm on a Leicester market stall with his wife Jean in 1979 after leaving his job as manager of Woolworths in the city, eventually floating the business on the stock exchange.

The business is now worth about £1.8bn and boasts more than 100 stores making sales of £677m and profits of £108m. It is still majority owned by the Adderley family, who live near Uppingham, Rutland, and are collectively worth £1.1bn, according to the 2013 Sunday Times Rich List. Shares in Dunelm have more than doubled since the financial crisis and risen by about 30% during 2013.

Adderley, who has avoided the public spotlight, was not available to comment but sources close to the family suggested he had merely spotted an investment opportunity and taken it. When asked if he was planning to lead a consortium to bid for control of M&S, the source said: "This would be an extraordinarily clumsy way of going about it."

The news that M&S has attracted such a large private shareholder comes at a propitious time for the retailer, which has struggled to impress the City under the leadership of chief executive Marc Bolland.

The Dutchman is in the final year of a three-year, £2.3bn plan designed to address decades of under-investment. His efforts were insufficient to prevent clothing sales falling for eight straight quarters, although this week it emerged that M&S has stemmed the erosion of its share of the clothing market – albeit while suffering continued declines in its share of the women's clothing market. It is due to report its half-year figures next week.

Efforts to repair flagging clothing sales and pull in younger shoppers have also been knocked by the imminent departure of Gillian Ridley Whittle, development and buying director for womenswear, which was announced last week.

Next week M&S is expected to report a 1.5% fall in underlying sales of general merchandise – a category mainly made up of clothing – for the six months to the end of September. That would be on a par with the 1.6% slide reported in the three months to the end of June. Some analysts have downgraded their sales expectations amid unseasonably warm autumn weather.

The retailer is also launching its Alice in Wonderland-inspired Christmas adverts, featuring actor Helena Bonham Carter and models David Gandy and Rosie Huntington-Whiteley.

M&S shares added 2.09% yesterday to close at 503.5p. Adderley's 48.5m shares are therefore worth £244m.

City analysts have a mixed view on the shares. Of the 23 following the company, 11 rate the shares as a buy, seven as a sell, while five are neutral, according to the financial website Digital Look.

Nick Bubb, an independent retail analyst in London, told Bloomberg: "He's brave to take such a big punt on an M&S recovery."

Recent M&S successes have included its food business - Bolland's area of expertise, having joined from the grocer Morrisons - that has enjoyed 17 consecutive quarters of underlying sales growth and contributes 54% of group sales. Meanwhile, online sales growth is running ahead of the market and solid progress has been made overseas.

UK discount supermarkets aim Christmas campaigns at middle-class

Lidl runs first-ever nationwide British TV adverts, while Aldi doubles size of Christmas range, including fresh lobster

Britain's two biggest discount stores will be taking their battle to attract middle-class shoppers on to the small screen this Christmas as Lidl launches its first ever national TV advertising campaign on Thursday.

Lidl's ad for its Deluxe range, featuring whole cooked lobster and mini Stollen, will run on several channels including ITV, Channel 4 and Sky. The company is increasing the number of products in its luxury selection by two-thirds in an effort to lift sales by 50% to nearly £64m.

Aldi will launch its festive campaign on Monday having doubled the size of its Christmas range this year to include fresh lobster tails and a fresh version of its three-bird roast, which has been a popular frozen item in recent years.

Lidl originally introduced its Deluxe range as a speciality for Christmas but rapidly expanded it last year when sales nearly doubled to £40.2m compared with £19.5m in 2011. This year Lidl is adding 200 new products to its Deluxe range including Serrano ham and a British fresh bronze turkey. They will sit alongside 300 existing luxury favourites including reindeer and caviar.

Lidl managing director Ronny Gottschlich said: "Our Deluxe products have proven to be our best selling, along with our Comte de Brismand champagne, which speaks volumes for what our customers want. We feel now is the time to fully showcase the quality of these products."

The move comes as Lidl and its fellow German discounter are stealing market share from major supermarkets including Asda, Tesco and Morrisons as shoppers search for a way to save cash.

The retailers now control nearly 7% of the UK grocery market, up from just under 6% a year ago according to data from Kantar Worldpanel.

Aldi, which has been promoting its luxury foods in press and television advertising campaigns for several years, has been outgrowing its closest rival. The retailer, which opens its 500th store on Thursday, increased sales by 31.7% in the 12 weeks to 14 October while Lidl's sales rose by 13.1%, according to Kantar.

Meanwhile, the number of shoppers using Aldi for their main weekly shop has soared 31.7% in the past year, according to the research firm Verdict. It also suggests that the proportion of well-off shoppers visiting Aldi has more than doubled to 4% year on year as nearly a third, 32.3% of the shoppers using Aldi for their main shop this year have switched from shopping at rival grocers in 2012.

Andrew Stevens, food and grocery specialist at Verdict, said: "Aldi has been the biggest winner in terms of switching and shopper number growth in 2013. This has been largely driven by shoppers switching to Aldi from the likes of Tesco and Asda."

The largest proportion of Aldi's new fans came from Tesco, which is not surprising given that it is by far the UK's biggest supermarket. The biggest switch, relative to its share of the market, came from Asda, at 19.7%.