Monthly Archives: February 2013
Major retailers have been closing stores at an average of more than 600 a month over the past year, according to new research. That’s ten times faster than in 2011.
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City centres across the UK are becoming ghost towns as high street retailers close yet more outlets due to falling sales, the plummeting pound, and spiralling overheads.
According to a survey carried out by PwC and the Local Data Company, which monitored store closures across 500 town centres across the UK, there are 1,779 fewer stores on the high streets than there were, compared with just 174 fewer in 2011. That’s 7,337 store closures less 5,558 store openings – the equivalent of losing 131 football pitches of active retail estate. The South East, West Midlands and North West were worst hit, with 376, 265 and 215 more closures than openings respectively.
Worst hit on the high street are jewellers, health food shops, travel agents, and sports goods shops. Jewellery sales have suffered as consumers’ real pay has fallen. Travel agents have found their business eroded by online competition, and health food shops have found that consumers are no longer willing to experiment with their overpriced linseed and £50.99 mystical supplements. Card and poster shops are also dropping like flies.
Bank branches, computer game stores and clothing stores are suffering too. The former is hardy shocking, giving the vast pay-outs over the Libor and PPI scandals. Only today, RBS announced losses of £5.2bn. The UK’s leading videogame retailer, Game, went bust only last year, and its shops have all but disappeared from British streets.
But there are a few winners on the high street: pound shops, pawnbrokers, charity shops, cheque cashing and payday loan companies, and betting shops, as well as supermarkets and coffee shops are on the rise.
Things are going to get much, much worse before they get better too. The number of store closures is predicted to rise to up to 28 a day, as so-called zombie firms – the unproductive firms that have stayed in business only because of low interest rates over the past couple of years – give up the ghost.
Matthew Hopkinson, director of The Local Data Company, says: ‘The end of 2012 and the beginning of 2013 has seen the most dramatic period on record as companies controlling more than 1,400 shops went into administration. We can expect to see this trend continue and indeed accelerate in 2013 as more leases come up for renewal.’
All in all, the research paints a fairly grisly picture of the future of the UK high street, packed with pawnbrokers promising a ‘fair’ price for the family jewels, payday loans companies charging extortionate sums to tide you over will the end of the month, and pound shops, with billboards screaming, ‘Bargain!’ while charging you £1 for 16p paracetamol.
Still, it could be worse. All these empty shops could provide an opportunity for smaller local enterprises to move in – if (and it’s a big if) landlords see sense over rental prices. And at least the charities will be raking in record sums from our cast-offs. MT predicts that the Nora Batty look will be the ‘recession chic’ of 2013….
Yousif Abdulghani, Managing Director, McDonald’s Middle East and Africa.
Consumers in the GCC are spending US$2m a day eating at fast food giant McDonald’s, as the company experiences record growth in the region.
According to Yousif Abdulghani, managing director at McDonald’s Middle East Development Company, which oversees its Middle East and Africa franchises, the six GCC countries are now seeing 900,000 customers a day at its 369 outlets.
“A record year in terms of sales. In general, we have been growing at the rate of 15 to 20 percent on revenues year-on-year,” he said, in an interview to be published in Arabian Business on Sunday.
The company, which operates seven-fully owned franchises in the GCC, saw revenues of US$750m last year, and is now undertaking a huge expansion plan that will see 585 outlets by 2015.
“Saudi Arabia is another big market for us so we look at both, the eastern and central region, as well as western region and combined we ended 2012 with 136 restaurants across Saudi Arabia and we intend to reach as high as 240, so we really are doubling up in Saudi Arabia,” Adbulghani added.
The UAE – which currently has 108 McDonald’s outlets – will also see huge growth with 150 outlets by 2015.
Speaking at the Gulfood conference in Dubai on Tuesday, Abdulghani also highlighted the growing use of social media platforms by customers. Abdulghani was discussing major trends affecting the Middle East food industry in a lively panel debate session entitled ‘Who is Shaping the Future of Food? Big Business, Consumer or Public Policy?’
“What is exciting and also challenging to see is how lifestyle shifts, technology and social media are changing the way that people interact with brands in our industry. Customers no longer want just to be broadcast to, they expect to be able to have personalised conversations and interact one-on-one with brands,” Abdulghani said.
“For example, consumers are more active in seeking nutritional information of the food they consume – whether this means checking the packaging for the ingredients or nutritional content. McDonald’s are leaders in making sure nutritional information of our products is conveniently available on our website, tray mats and flyers and will continue to innovate here to make sure our consumers make informed choices of the food they eat.”
M&S plans new food outlet for retail park
8:10am Wednesday 27th February 2013 in News By Katie Bond
REVAMP Mannington Retail Park
IT’S not just a new store on the horizon for Swindon – it’s a Marks and Spencer Simply Food Store.
If plans submitted to Swindon Council are given the go-ahead, the store could be the latest addition at the Mannington Retail Park, which has undergone a redevelopment programme over the past three years.
It could join some big names already on the site, which include John Lewis at Home, Next Home and Oak Furniture Land.
In a letter submitted alongside the plans, Simply Food UK acquisitions manager Chris Smith said the store would bring approximately 70 jobs to the town.
“The store will generate substantial additional employment in the local area, providing about 70 jobs, with a flexible mix of full and part time positions, with training provided and a defined career route available to all new starters,” he said.
“Our Simply Food concept has been developed since 2001 to bring the M&S brand of high quality food and drink products to a wider range of customers.”
Chris said if the new store goes ahead, it would not in any way affect the town centre store, or the M&S in North Swindon.
“Our interest in Mannington Retail Park reflects our analysis and confidence that there is an unsatisfied demand for our food range in the south western part of the town and the immediate surrounding area, in addition to the demand met by the town centre store and the Orbital Retail Park to the north of Swindon,” he said.
“While the town centre store will continue to provide an opportunity for our customers in that centre, and the Orbital Retail Park will provide for the northern parts of the town, we believe the store at Mannington will complement this, providing a more local convenience offer.”
A spokesman for Peter Brett Associates LLP, which acts on behalf of Scottish Widows Invest-ment Partnership, said: “Mannington Retail Park has been subject to two phases of redevelopment over the last three years. We have been working with the council over the last two years to deliver the second phase to deliver high profile retailers to Swindon, delivering much needed investment and jobs to the borough.
“We have worked closely with the council to ensure the tenant mix complements rather than competes with the town centre.”
A decision on the application is expected to be made by May.
Centra achieved growth of 1.6% in 2012. The retail chain owned by Musgrave opened 18 new stores last year and increased its ‘food-to-go’ sales by almost €5 million
Feb 25 2013
Centra has announced that it recorded retail sales of €1.435 billion in 2012. The brand believes the performance underpins Centra’s position as Ireland’s number one local convenience brand, serving over three million customers per week, and growing by 1.6% last year.
Speaking at Centra’s National Retailer Conference in Killarney, Martin Kelleher, managing director of Centra, also announced that through a €20 million investment programme by retailers, the brand will add approximately 400 jobs, as 20 new stores are added to its network in 2013. Of these, 100 will be new jobs created by the opening of a number of new greenfield sites, with the balance created by store extensions and other independent stores joining the Centra network.
Martin Kelleher said, “Centra’s success, despite the challenging economic environment, can be attributed to our continued focus on delivering value and providing innovative convenience solutions for shoppers. In 2012, we increased value to our customers by 15% or almost €90 million, through price reductions and continued to evolve our range to stay in tune with consumer trends. This is illustrated by an increase of almost €5 million in our ‘food-to-go’ sales, while our new ‘Table for Two’ range of convenience dinners, delivering sales of over €1.2m.
“We opened 18 new stores last year, demonstrating the continuing preference of Irish shoppers to shop local, saving time and petrol, particularly when they can avail of good value and an innovative range. Together with our retail partners we employ almost 10,000 people, making us one of the biggest employers in the country. As our stores are all locally owned, we also invest back into the community by sourcing from local producers and making a real difference by contributing to local sports clubs and charities. For example, in 2012 our retailers spent €40 million directly with local suppliers and also donated €2.1 million to community organisations.
“In 2013 we will continue to adapt to the budget conscious customer by investing in further price reductions, launching new products to cater for specific segments and leveraging our innovation agenda to connect with the modern consumer,” Kelleher added.
Centra remains committed to local employment and sourcing from Irish producers, purchasing over €1 billion of Irish goods, with 75% of all products sold in store produced or sourced in Ireland. This included €130 million of Irish fresh food in addition to over €40million spent by Centra store owners on products sourced from suppliers within their local community.
EXCLUSIVE: UAE economy to grow 3.8% in 2013 – Sheikh Ahmed
Sheikh Ahmed bin Saeed Al Maktoum.
The economies of the UAE and Dubai, in particular, will continue to expand on the back of services, trade and tourism, HH Sheikh Ahmed bin Saeed Al Maktoum has said.
“All indications show that UAE and Dubai economy will continue growing in 2013 by 3.8 percent,” Sheikh Ahmed told Arabian Business. “Tourism, hospitality and trade will continue to play a major role in the growth.”
Sheikh Ahmed is chairman and CEO of Emirates Group, chairman of Emirates NBD, and chairman of Dubai World. He is also deputy chairman of the Dubai Executive Council.
The UAE’s economy was projected to have grown 4 percent last year and is estimated to slow down to 2.6 percent according to the International Monetary Fund.
A partial rebound in the property market, a resurgence in consumer confidence and improved bank performance has helped the Dubai stock market reach a 39-month high.
The publicly listed Dubai Financial Market (DFM) posted a AED35.2m (US$9.6m) profit in 2012 after recording a loss of AED6.9m the year before.
“The performance of the economy has recorded a remarkable and rapid improvement, with the majority of its sectors growing at high growth rates,” said the bourse’s chairman Abdul Jalil Yousuf Darwish. Last year was “the beginning of recovery by the real estate sector, as well as the constant improvement in the performance of the banking sector. These two sectors represent the key pillars for DFM.”
After a plunge of nearly 60 percent in prices when Dubai was hit by a financial crisis, the pace of the real estate market’s recovery and that of the economy is increasing. Emaar Properties has seen its share price surge to a 51-month high this month.
The property developer’s profit increased 18 percent last year. In its latest report, real estate advisory firm Jones Lang LaSalle said there were “promising signs of recovery from the end of last year in Abu Dhabi and Dubai, with upward prices in the residential, retail and hotel sectors”. Apartment sale prices increased about 7 percent in 2012, according to the property consultants.
The UAE attracted about US$7.7bn in foreign direct investment in 2011 compared with US$5.5bn in 2010, according to the United Nations Conference on Trade and Development.
Tourism and logistics have also helped the economy improve.
Emirates, Dubai’s flagship carrier, doubled its first-half profit of its financial year, with net income rising to about US$463m. The airline carried 18.7m passengers since April 1, an increase of 15.4 percent from the same period a year earlier.
“We expect businesses to do good in 2013… we expect the economy to do very well in all aspects especially in real estate which was suffering and is expected to recover even better,” DP World chairman Sultan Ahmed Bin Sulayem told Arabian Business.
“I think this is due to many economies in the world coming out of recession or experiencing growth. China and the Far East in general is seeing growth, Latin America is seeing growth, Africa is experiencing growth. The only place not seeing growth is Europe,” added Bin Sulayem. “In general we expect business to be better. Dubai has really performed better than what is expected, Dubai has this ability, whatever everybody expected with the crisis that its going to paralyse Dubai – it didn’t.”
Emerging markets and developing economies are projected to grow about 5.6 percent this year, up from 5.3 percent last year, while Europe contracted 0.4 percent last year, and the US economy increased 2.2 percent, according to International Monetary Fund (IMF) estimates.
“I have no doubt that a recovery is under way; it began as much as twelve months ago and it’s still building momentum,” said Simon Williams, the Middle East chief economist for HSBC. “Its driven by the export oriented service sector principally that’s been lifted by strong regional demand and international demand. The real challenge will be to manage the pace of growth and its direction.”
HSBC’s forecasts the UAE’s economy is set to expand by 4 percent. Dubai will probably grow by the same pace, Williams said.
“Part of the reason that Dubai has been able to turn its fortunes around as quickly as it has is not only to due to its excellent service sector but that sector being able to compete effectively,” Williams added.
Aramex, the largest courier company in the Middle East and North Africa, has benefited from the resurgence in business activity.
“On the logistics side there is definitely a massive comeback from the recession days,” Aramex CEO Hussein Hachem told Arabian Business. The company is growing locally and internationally, he said.
The company reported a fourth quarter net profit increase of 15 percent, climbing to AED65.7m (US$17.9m) as revenue grew on the back of ecommerce and buoyant economies in the Gulf states and Asia.
“What’s fuelling it on the local side is a retail boom, there is more demand on logistics and – the Jebel Ali free zone and the port and the new Dubai World Central Airport – all integrated together, is attracting new companies who are positioning their operations out of Dubai.”
“We’re very happy with the economic climate in Dubai,” said Hachem, adding: “We’re definitely on the right track”.
Macy’s Inc. (M), the second-largest U.S. department-store chain, rose after forecasting annual profit that was higher than analysts’ estimates amid a surge in online sales.
The shares advanced 2.8 percent to $39.59 at the close in New York. They’ve gained 1.5 percent this year, compared with a 6 percent gain for the Standard & Poor’s 500 Retailing Index.
Earnings per share for the fiscal year ending January 2014 will advance to as much as $3.95, the Cincinnati-based retailer said in a statement today. Analysts projected $3.84, the average of 18 estimates compiled by Bloomberg.
Chief Executive Officer Terry Lundgren has focused on tailoring merchandise to suit local tastes and benefited from exclusive Tommy Hilfiger, Sean John and Madonna products. Fourth-quarter revenue climbed 7.2 percent to $9.35 billion while online sales soared 48 percent, Macy’s said today.
Net income in the quarter ended Feb. 2 fell 2 percent to $730 million, or $1.83 a share, from $745 million, or $1.74, a year earlier, when it booked one-time gains from the sale of store leases, Macy’s said.
Gross margin, or the percentage of sales left after the cost of goods sold, narrowed to 40.6 percent from 41 percent a year earlier.
Dixons Retail Plc (DXNS), the U.K.’s largest electronics retailer, said it has closed all of its Pixmania stores and reduced its online markets to 14 from 26 as it seeks to turn around the unprofitable unit.
Pixmania has closed about 30 outlets, including stores in Spain, Portugal and Belgium last month and 10 shops in France last weekend, spokesman Mark Webb confirmed by phone. Online Pixmania operations will continue in those countries. The company has exited 12 online markets across Austria, Switzerland and eastern Europe, he added.
Dixons bought most of the outstanding minority of Pixmania in August after the division reported a loss of 20 million pounds ($30 million) in the year ended April 28. The retailer is reducing its operating markets and scaling back the product offering to electronics such as tablet computers and cameras and dropping beds, jewelry and baby clothes.
Le Figaro newspaper reported today the retailer closed 10 French stores and fired 150 employees, citing Pixmania’s chief Phil Birbeck.
Mike Ashley, Newcastle United football club owner, has sold 4% of his stake in the Sports Direct retailer for £100m. Mike Ashley sold 25 million shares, which means that the Newcastle United owner is left with a 64% majority stake in the Sports Direct retailer. The retailer was founded by Mike Ashley, with the Sports Direct sale surprising traders. Subsequent to news of the sale emerging, the Sports Direct shares plunged 7%. There has been conjecture that Mike Ashley may be interested in acquiring the collapsed retailer, Republic, or the House of Fraser.
In December 2012, Sports Direct documented a pre-tax profit of £125m for the six months to 28 October. This statistic represented a new high for the retailer, up from £100m a year earlier. Sports Direct, which possesses nearly 400 UK outlets, has witnessed an increase of more than 40% in its shares over the past year.
Sports Direct owns Lillywhites stores as well as brands like Slazenger, Dunlop and Lonsdale. In October 2012, the retailer purchased 20 stores and all stock from the administrators of erstwhile competitor, JJB Sports.
As per retail analyst, Nick Bubb, the Newcastle United owner, Mike Ashley, doesn’t need the cash. If he was planning to bid for retail assets, he would do that via Sports Direct. The analyst has remarked that Mike Ashley sold a partial stake in Sports Direct to enhance liquidity in the stock. The intention is to ensure more shares in broader circulation to make buying and vending them easier.
Sports Direct has asserted that it is certain to satisfy its earnings target for the year to April of £270 million. This statistic is the latest yardstick on a staff bonus scheme, which recently delivered a £15,000 shares windfall to 1750 workers.
Nonetheless, Sports Direct’s desire to revive a bonus scheme for Mike Ashley is producing some ruptures, given that it could ensure a multimillion pound payout for him. A previous bonus scheme, which would have awarded him a £26 million windfall, was annulled in a shareholder vote last summer.
FASHION retailer Penneys has continued to defy the economic slump, with sales at the business soaring 23pc in the past six months as the chain rolls out more stores in Europe.
Headquartered in Dublin, Penneys trades as Primark in other countries.
Its owner, UK-based Associated British Foods (ABF), said yesterday that sales at the chain were boosted by extra selling space as new stores and extensions to existing ones opened.
ABF told investors that the profits generated between September and this week will be higher than expected.
Like-for-like sales (sales at Primark and Penneys stores that have been open at least a year) also rose, climbing 7pc in the period. Cooler weather last autumn also helped to propel sales.
The Primark business, which now employs 50,000 people at 257 stores across Europe, had been spearheaded since the 1960s by legendary retail figure Arthur Ryan.
He grew the Penneys and Primark brands from their base in Dublin’s Mary Street. He stepped down as managing director in 2009.
The chain has been the star performer for ABF in recent years. It accounted for 29pc of ABF’s £12bn (€13.7bn) revenue during the last financial year.
But the pace of growth seen in the last six months isn’t likely to be sustained this year, according to the group. That sent shares in ABF lower during trading in London yesterday.
It opened 15 new stores in the last six months, including a second on London’s Oxford Street.
ABF is controlled by the Weston family, which also owns Selfridges and Brown Thomas in Ireland.
The Moo Shop, which features the full array of Moo products and accessories, reflects Moo’s online presence but adds the physical interaction that is lacking from an online-only business.
Moo.com founder and chief executive Richard Moross said: “We’ve built a big and successful business so far with retailing exclusively online. We’ve managed to engage lots of customers around the world, but there are limits to what a website can do.
“What we’ve found at things like trade shows and conferences is that actually people seeing the physical product itself can be amazing marketing and really instrumental in getting them excited about what Moo’s about and what we can do for them.”
This led the firm to “dip a toe in the retail waters” by opening its first high-street store, for which all printed collateral has been produced in-house on HP Indigo’s at Moo’s nearby east London headquarters and production facility.
The irony of a successful online retailer opening a shop on the UK high street, which has been decimated by – among other things – the rise of internet shoping, is not lost on Moross; however, asked why the firm had decided to take the plunge, he responded: “Why not?”
“I think the challenge for people in retail today is when they have lots of high fixed costs, lots of inventory and a sprawling retail property empire with multiple stores and lots of complexity,” he added.
“Whereas we’re a business with very low inventory, if any, we’ve got our business model well worked out and if we can use our stores in a kind of hybrid way, paralleling our online efforts, we think it’s a great exercise for customers to get to know us better, to have a three-dimensional Moo experience.
“We think the two things should complement each other very well. People still use shops, they’re still around, they still have a fantastic purpose and facility, so we wanted to do something and test it out and see what people thought of it.”
Given the small footprint and proximity to Moo’s Scrutton Street HQ of its retail debut, there will be no printing carried out on-site at the Moo Shop; however, Moross did not rule out the possibility of on-site printing in future, should the store prove a success.
“We won’t have Indigos on-site, it will be more about learning about print. You couldn’t get Indigo quality within the space we have, but that’s not to say that potentially if this goes well that’s something that we could look at,” he said.
“Digital is so quick you could envisage a future where it’s almost instant turnaround from design to proof to actual finished product. But what we’re hoping to do is show what a finished product might look like; perhaps it won’t be your completely personalised design, but I think people can make that link with their imagination.”
Visitors to the Moo Shop will be able to handle the different paper stocks the company uses for its array of business cards and to see printed samples. Moross said that he believed this would help customers to distinguish between Moo and its online rivals, such as Vistaprint.
“I think the store really gives them that opportunity to check that out for themselves and get that hands-on comparison,” he added.
The Moo Shop also makes full use of QR codes and Near Field Communication (NFC) to allow customers to capture products in-store to transact on the website later, while giftcards will also be available to purchase in-store with credit that can be used on the Moo.com website. Customers will also be able to order products online for collection in-store, which will help cut delivery costs and time.
Moross was coy on roll-out plans, adding that the firm had moved very quickly in opening the Boxpark store – going from initial idea to launch in around two months – but said that the firm should have an idea of whether the store is working as planned within six months.
If all goes well, a second Moo Shop – located somewhere in the US – is a likelihood. “I would think [a second store would] almost certainly be in the US – as a test,” said Moross. “If the UK store goes well at Boxpark we would [also] look to move into more permanent premises elsewhere in London.
“We’re definitely interested in the US and we have early thoughts about where that might be and how we might do it. The US market is obviously very different, there are other complexities with that, and we don’t have quite the strength of team in the US yet in terms of size that we do in the UK, so we’ve got a lot more resource that we can focus on the UK right now but we are very interested in doing the US as well in good time.”
Supermarket group sheds 800 jobs at Harlow, 650 at Weybridge, 400 at Chesterfield and 150 at Magor – but will create 2,000 jobs at new Reading and Dagenham ‘super hubs’
Tesco says it will attempt to relocate workers to the new ‘super hubs’ in Reading and Dagenham. Photograph: Rui Vieira/PA
Up to 2,000 jobs are under threat at Tesco distribution centres as the supermarket shuts down sites across the country.
The company is shedding up to 800 jobs at its Harlow site, 650 at Weybridge, 400 at Chesterfield and 150 at Magor in south Wales.
Tesco has 32 distribution centres but wants to slim down its operations by shifting work to two new sites in Reading and Dagenham in an attempt to reduce costs and its carbon footprint.
Bosses told staff of the job losses on Monday afternoon but said they will attempt to relocate workers to the new super hubs.
Chesterfield, Weybridge and Harlow will be closed down entirely, while Magor will remain open but with fewer staff. The announcement starts a 90-day consultation, with the sites due to close by September.
A spokeswoman for Tesco said: “We’ve been reviewing our distribution network, and have confirmed plans to close some of our current distribution centres and open new ones that will give our customers a better service and improve working conditions for our colleagues.
“Colleagues who are affected will be offered jobs at other Tesco sites, including at the two new distribution sites we have confirmed we will be opening, in Reading and Dagenham. Two thousand jobs will be created at those sites.”
First Géant hypermarket set to open in Qatar
Qatari retail group Al Meera has announced that its first Géant hypermarket will open on Sunday as part of an agreement signed with France’s Casino in 2011.
Al Meera Consumer Goods Company said the first hypermarket would open at Hyatt plaza in Doha.
The opening follows an agreement signed between Al Meera and French retailer Casino to develop a network of hypermarkets and supermarkets under the Géant banners in selected Middle East countries.
Casino, Al Meera and Retail Arabia had earlier signed a sub-franchise agreement allowing Al Meera Holding to develop and operate hypermarkets and supermarkets under the Géant banner in Qatar and Oman.
The first Qatar opening will reinforce the presence of the Géant in GCC countries – where it has more than 10 stores in operation in the UAE, Kuwait and Bahrain.
Last month Al Meera announced a rights issue to double its paid-up capital.
The firm said it would raise QR950m ($260.9m) from the offering of 10 million new shares.
As well as being a franchise for Géant, Al Meera operates more than 20 supermarkets under its own banner in the gas-rich state of Qatar.
Waitrose is to launch a drive-through ‘click & collect’ service as part of a multimillion pound investment.
The first drive-through will open at Waitrose Cheltenham in March, followed by services in branches in Southend, Salisbury, Wolverhampton and Lincoln.
The new service will enable shoppers who order groceries online to pick them up from a collection area in the Waitrose branch car park in designated time slots.
Waitrose said the free service will complement its established in-store grocery collection service and will be rolled out to further branches based on customer feedback.
In a further move, the supermarket will also trial self-service collection pods in an undisclosed number of locations by the end of the year.
The pods will have chambers at different temperatures which shoppers can drive up to and unlock with a code supplied to them at the time of placing their online order.
Waitrose e-commerce director, Robin Phillips, said: “This investment marks a turning point in our ambitions to become a truly omni-channel retailer.
“The introduction of drive-throughs and, later this year, collection pods gives time-pressed customers even greater choice about how to receive orders made through Waitrose.com.
“The free service will appeal to busy parents with kids in tow as well as young professionals and anyone who wants to collect pre-picked and packaged orders when it suits them.”
Barnes & Noble Inc. (BKS) gained after Chairman Leonard Riggio said he will offer to buy the stores and website of the chain he founded more than 40 years ago as it struggles to navigate the rising popularity of digital books.
Barnes & Noble jumped 9.3 percent to $14.76 at 10:28 a.m. in New York, after advancing 11 percent for the biggest intraday gain since Oct. 31. The shares had increased 9.1 percent in the 12 months through Feb. 22, compared with a 12 percent increase for the Standard & Poor’s 500 Index.
The price would be negotiated with the board, and the buyout would be funded primarily with cash, Riggio said today in a filing with the U.S. Securities and Exchange Commission. The proposal would exclude Barnes & Noble’s Nook and college businesses, he said. Riggio, the company’s largest holder with about 30 percent of the stock, declined to comment beyond the filing, according to a company spokeswoman.
If successful, Riggio would leave a public company composed of a college unit that runs bookstores for universities and a digital division that sells tablets and digital content. In October, the company placed the units in a subsidiary called Nook Media. Even with the college division’s profit, that combination had an operating loss of about $138 million in the three quarters through Oct. 27 because of the high costs of building Nook devices.
Lowered Nook Forecast
The company also lowered expectations for its new subsidiary earlier this month when it said operating losses will be wider for Nook Media in the fiscal year ending in April and sales wouldn’t reach a previous forecast of $3 billion. Barnes & Noble is scheduled to report third-quarter results on Feb. 28.
Meanwhile, Barnes & Noble has been fighting to reverse two years of net losses as readers spend less at stores and transition to digital books. The company has been sacrificing profits to invest in building e-readers and tablets to gain a foothold in the e-book market.
While it has made headway on the digital front, revenue from the Nook division, which includes devices, accessories and content, fell 13 percent to $311 million during the holiday shopping season amid increased competition from devices from Amazon.com Inc. (AMZN) and Apple Inc. (AAPL) Sales slid at its stores during that period too.
Barnes & Noble confirmed it had received notice of Riggio’s intentions and said in a statement today that a committee of independent directors David G. Golden, David A. Wilson and Patricia L. Higgins will oversee the evaluation of the proposal and the negotiation of any transaction.
Peter J. Solomon
Riggio, 71, told the board of his interest without starting a formal process, a person familiar with the matter told Bloomberg yesterday. Riggio is working with boutique investment bank Peter J. Solomon Co., said the person, who asked not to be identified because the matter was private.
“He knows the book business like the back of his hand,” David Strasser, an analyst with Janney Montgomery Scott LLC in New York, said in an e-mail today. Barnes & Noble “could be a private company with cash flows. Turns out lots of people like books still. Nook is tougher and needs funding. E-readers have also hit a kind of wall at current penetration.”
Strasser recommends buying the shares.
The move comes after the company said in January 2012 that it would explore ways to unlock the value of the Nook. In March, the company hired Michael Huseby, who had experience spinning off companies at Cablevision Systems Corp. (CVC), as chief financial officer.
In April, Microsoft Corp. (MSFT) announced a $300 million investment in a new subsidiary, later dubbed Nook Media, that combined the tablet and digital content unit with a chain of college bookstores.
Microsoft’s 18 percent stake valued Nook Media at $1.7 billion. Publisher Pearson Plc (PSON) then announced an investment of $89.5 million on Dec. 28 in the unit, which gave Nook Media a valuation of $1.79 billion.
Barnes & Noble’s 689 consumer bookstores generated $996 million in sales during the quarter ended in Oct. 27. The collegiate unit had $773 million in sales during the quarter, while the Nook-making technology unit posted $160 million in revenue.
The bookstore business may be valued at about $484.5 million, David Schick, an analyst with Stifel Financial Corp. in Baltimore, estimated in a note to clients today. The entire company may be worth roughly $2.3 billion, he said.
Barnes & Noble is scheduled to report fiscal third-quarter results on Feb. 28.
Riggio opened the Student Book Exchange in Manhattan’s Greenwich Village in 1965 and acquired Barnes & Noble’s name and flagship bookstore in the 1970s, according to the company’s website.
Evercore Partners Inc. (EVR) is serving as the board committee’s financial adviser, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is providing legal advice, Barnes & Noble said.
New John Lewis plan for Northern Ireland customers
John Lewis has unveiled plans to allow customers to return and collect online shopping at a network of 5,000 local shops and petrol stations across the UK including Northern Ireland.
It comes just weeks, after the firm withdrew plans for it plans for a store in Lisburn.
Environment Minister faced demands for his resignation for the restrictions placed on the scale of the £150m scheme, which was expected to create around 1,500 jobs.
This week, it was revealed that under a deal with delivery and returns business CollectPlus, John Lewis customers will be able to take back clothes, shoes and other fashion items to convenience stores and newsagents for free.
The department store will also trial a £3 click and collect service from the autumn at the shops and petrol stations in Scotland, Northern Ireland and the South-West of England.
CollectPlus, which was set up as a joint venture between delivery company Yodel and PayPoint in 2009, already works with big retail names including Amazon, House of Fraser, Littlewoods, Very.co.uk and ASOS.
John Lewis has agreed the deal after the success of collection points in 234 department stores and Waitrose supermarkets.
Karen Dracou, head of omnichannel development at John Lewis, said customers were looking for ever-more convenient ways of shopping and the group has already seen click and collect orders double over the past year, with the service accounting for 35% of online sales over Christmas.
The plans were unveiled as John Lewis revealed a 30.4% jump in online sales last week, driven by demand for electricals and home technology. It contributed to an overall 8.3% increase in sales to £63.2 million, in the week to February 16.
It was much slower than the 22.4% leap in sales in the same week last year as the snow returned to many parts of Britain and half term was also later.
Sales at Waitrose were £116.9 million in the same period and were 12.4% higher, excluding petrol, than the same week the previous year.
Qatar Investment Authority (QIA), the sovereign wealth fund that bought London’s Harrods department store in 2010 for US$2.22bn, has snapped up a second luxury property unit on Paris’s Champs-Elysées boulevard, according to reports in Europe.
French private equity fund LBO France has sold a luxury housing complex on the Parisian shopping avenue and QIA is believed to be the undisclosed buyer, according to Property Investor Europe.
The art deco building at 116 bis avenue des Champs-Elysées was built in 1931 and LBO France bought it in 2005. Following a refurbishment in 2007, the current sale is believed to include a UGC cinema, 5,000 sqm of office space and the famous French-style Lido cabaret.
The deal is the second reported Champs-Elysées purchase by QIA this year. QIA bought a flagship retail complex in the heart of Paris from French insurance firm Groupama for around €500m (US$622m), according to a report in June by French newspaper Le Figaro.
The retail complex, number 52, was built in the 1930s and is currently home to a Virgin Megastore, a branch of French retail chain Monoprix, a shopping arcade and offices.
Groupama, real estate brokers Jones Lang LaSalle and QIA all declined to comment on the sale.
QIA current portfolio includes stakes in Royal Dutch Shell, LVMH Moët Hennessy Louis Vuitton, Tiffany & Co and Paris St Germain football team.
The shares fell 7.4 percent to $45.41 at 12:37 p.m. in New York, the biggest intraday decline since Aug. 2, when the stock plunged after the company cut its annual forecast. The company’s trading performance today is the worst in the Standard & Poor’s 500 Index.
The retailer has been working to improve its fashion assortment and close underperforming U.S. stores while expanding overseas. Abercrombie said it anticipates a “slight” loss in earnings per share in the first quarter compared with a 25-cent loss last year, citing a tough economy and difficulty tied to cold-weather inventory. It also forecast full-year comparable sales that will be little changed from the previous 12 months.
Abercrombie was “very concerned around the macroeconomic situation coming into the first quarter,” Chief Executive Officer Michael Jeffries said on a conference call today, after the company reported fourth-quarter results. The retailer will “see a resumption of healthier sales” in the second quarter, he said.
For the fiscal year, Abercrombie anticipates profit of about $3.35 to $3.45 a share, excluding the effect of share buybacks. Analysts project adjusted earnings per share for the year of $3.67.
Fourth-quarter net income, calculated using a new system for valuing inventory, advanced to $157.2 million, or $1.95 a share, from a restated $45.8 million, or 52 cents, a year earlier, New Albany, Ohio-based Abercrombie said today in a statement.
Under the previous method of accounting, fourth-quarter net income rose to $173.2 million, or $2.15 a share, from $19.6 million, or 22 cents, a year earlier.
Sales for the fourth quarter ended Feb. 2 rose 11 percent to $1.47 billion. The average estimate of analysts surveyed by Bloomberg was $1.49 billion. International sales rose 34 percent to $492.2 million and direct-to-consumer sales jumped 26 percent to $266.4 million.
Abercrombie changed its method of accounting for inventory in the quarter. Under the old method, the company valued inventory based on its weighted average cost and initial retail selling price, then recorded charges to the cost of goods sold when the selling price was reduced. In the new system, the company doesn’t reduce the value of inventory unless it expects to sell the merchandise below its original cost.
The company, which saw comparable sales decline 1 percent for the year through Feb. 2, has been making strides toward regaining shoppers and boosting profitability. Abercrombie has hired a consulting firm to help it reduce costs and is conducting its first global market research study to “better understand our customers’ perceptions of us, as well as our key competitors,” Jeffries said on today’s call.
Abercrombie, which has said it plans to close 180 U.S. locations through 2015, said to day it is shuttering 40 to 50 stores domestically this year, while opening Abercrombie flagships in Seoul and Shanghai. The company said it will also open 20 international Hollister stores.
Activist investor Ralph Whitworth, who last year pressed Abercrombie to cut back on store openings overseas and reduce spending, sold his stake in the teen retailer during the fourth quarter.
Whitworth’s Relational Investors LLC, which held 5.1 percent of Abercrombie’s shares as of Sept. 30, no longer owns the stock, according to a regulatory filing on Feb. 14.
Whitworth had told the company it could be worth $50 a share if spending came in line with its rivals, a person familiar with the matter told Bloomberg News last year.
The retailer’s top two stakeholders are FMR LLC, the parent of Fidelity Investments, with 15 percent of shares, and Citadel Advisors LLC, with 5.9 percent, according to data compiled by Bloomberg.
The retailer also boosted its quarterly dividend by 14 percent to 20 cents a share, from 17.5 cents. It’s payable March 19 to shareholders of record as of March 4.
Abercrombie, which operates more than 800 namesake and Hollister stores, had added 2.3 percent this year through yesterday.
The retailer’s shares soared by 34 percent, the most since its initial public offering in 1996, on Nov. 14, when it boosted its full-year profit forecast and reported third-quarter results that beat analysts’ expectations. Abercrombie slid 1.8 percent last year and 16 percent in 2011.
John Lewis has announced that it will give its customers the choice to return online purchases of clothes, shoes and fashion accessories for free via a network of over 5,000 local convenience stores, newsagents and petrol stations.
The returns option will be offered in partnership with CollectPlus, the largest store-based parcel service in the UK, making it easier and more convenient than ever before for customers to return items.
With over 5,000 stores in the CollectPlus network, all of which are open early until late, seven days a week, customers will be able to return items at a time and place that suits them, as well as accurately track their package every step of the way back to John Lewis.
From early autumn 2013, John Lewis will also trial a ‘Click&Collect+’ service from CollectPlus in Scotland, Northern Ireland and parts of South-West England. This will give customers the ability to pick up their John Lewis online purchases from their local CollectPlus parcel store. The service will cost £3 and will typically take three days to fulfil.
The announcement follows a successful roll-out of John Lewis’ ‘click and collect’ service, to 234 collection points within its department stores, ‘at homes’ shops, and Waitrose branches.
Karen Dracou, head of omnichannel development at John Lewis, says:
“Orders using Click & Collect have nearly doubled over the past year, and accounted for an impressive 35% of online sales over the Christmas period, so we know that customers are looking for ever-more convenient ways of shopping with us. By partnering with CollectPlus, we can extend our existing reach of John Lewis and Waitrose collection points to a wider geographical base, providing an even more convenient way for our customers to shop.”
Neil Ashworth, CEO of CollectPlus, says:
“We’ve designed the CollectPlus service to ensure that customers find collecting and returning items as easy and as painless as possible. The extended opening hours associated with all CollectPlus stores allow customers to drop off or return items outside of the traditional trading day. With this in mind, the CollectPlus service will fit perfectly around the busy lives of John Lewis customers, making it easy for customers to fit collecting and returning purchases into the rest of their day.
“We are delighted that John Lewis has chosen to partner with CollectPlus and are looking forward to working closely with them to make their customers’ online shopping experience even more easy and convenient.”
A recent IMRG Home Delivery report indicates that almost three quarters (72%) of online shoppers would not be willing to travel more than five miles to collect goods ordered online, demonstrating the value of the CollectPlus network as it brings retailers that much closer to their customers. With over 85% of people in towns in the UK within a mile of a CollectPlus store, CollectPlus is answering this growing consumer need.
CollectPlus is a delivery and returns service giving online shoppers’ the choice to collect and drop off parcels at local convenience stores. Founded in 2009, it answers a clear need for a modern alternative to the Post Office that is convenient and easy to use.
The success of the innovative model is reflected in the 160 retail brands that CollectPlus provides returns solutions for, with nearly 100 added over the past year. Delivery to local store, “Click&Collect+”, is provided to a rising number of retailers from Amazon to House of Fraser and ASOS to Very.co.uk. This complements the returns offer that CollectPlus provides to retailers, offering a complete delivery and returns service. CollectPlus also offers the option for UK residents to drop off eBay items to buyers, or presents to friends and family at their local CollectPlus stores for delivery to any UK address.
With a network of 5,000 shops open early ’till late seven days a week; 87% of the UK population already live within a mile of a CollectPlus shop in urban areas and 88% within five miles in rural areas. The store network has grown by over a quarter in the last 12 months and continues to expand.
PayPoint is a leading international provider of convenient payments and value added services to major consumer service organisations in the utility, housing, water, telecoms, media, financial services, transport, retail, e-commerce, gaming and public sectors.
PayPoint delivers payments and services through a uniquely strong combination of local shops, internet and mobile distribution channels and handles over £12 billion from almost 660 million transactions annually for more than 6,000 clients and merchants.
PayPoint is widely recognised for its leadership in payment systems, smart technology and consumer service.
The PayPoint branded retail network across the UK numbers over 24,000 local shops (including Co-op, Spar, McColls, Costcutter, Sainsbury’s Local, One Stop, Asda, Londis and thousands of independents), where it processes energy meter pre-payments, cash bill payments, mobile phone top-ups, transport tickets, BBC TV licences and a wide variety of other payment types. In Romania, the branded retail network numbers over 7,000 terminals located in local shops, processing cash bill payments for utilities and mobile phone top-ups. In the Republic of Ireland, over 500 terminals in shops and credit unions process mobile top-ups and bill payments.
CollectPlus, a joint venture with Yodel, provides a parcel collection and drop off service at more than 5,000 PayPoint retailers. PayPoint’s ATM network numbers more than 2,500 ‘LINK’ branded machines across the UK, mainly in the same sites as PayPoint terminals.
PayPoint.net is an internet payment service provider linking into 16 major acquiring banks in the UK, Europe and North America to deliver secure online credit and debit card payments for over 5,600 web merchants. It offers a comprehensive set of products ranging from a bureau service to a transaction gateway, and FraudGuard, an advanced service to mitigate the risk of fraud.
PayByPhone is a leading international provider of services to parking authorities allowing consumers to use their mobile phones to pay for their parking by credit or debit card. It has contracts in the UK, France, Canada and the USA.
Home Delivery Network Ltd on 1 March 2010 purchased through its subsidiary company, Parcelpoint Ltd, the domestic B2B and B2C businesses of DHL Express (UK) Ltd and rebranded as Yodel in May 2010. The company delivers more than 150 million parcels per year with annual revenues of £535 million and is the second-largest parcel delivery business in the UK after the Post Office.
Yodel operates from a national network of sort and service centres and has a fleet of over 5,000 vans.
The company is headquartered in Hatfield.
About the John Lewis Partnership
The John Lewis Partnership – The John Lewis Partnership operates 39 John Lewis shops across the UK (30 department stores and nine John Lewis at home), johnlewis.com and 288 Waitrose supermarkets. The business has annual gross sales of over £8.7bn. It is the UK’s largest example of worker co-ownership where all 81,000 staff are Partners in the business.
John Lewis – John Lewis, ‘Britain’s favourite electricals retailer 2012’* and ‘Best Multichannel Retailer 2012’ **, typically stocks more than 350,000 separate lines in its department stores. The website stocks over 200,000 products focused on the best of fashion, beauty, home and giftware and electrical items including online exclusives. johnlewis.com is consistently ranked one of the top online shopping destinations in the UK. (http://www.johnlewis.com). John Lewis Insurance offers a range of comprehensive insurance products – home, car, wedding and event, travel and pet insurance and life cover – delivering the usual values of expertise, trust and customer service expected from the John Lewis brand.
A resurgence in demand for retail space in Dubai will “firmly” push up rents this year for the first time since mid-2008, according to a survey of 700 industry experts.
The Royal Institute of Chartered Surveyors’ (RICS) Global Commercial Property Survey found the gradual recovery in commercial real estate sentiment across the United Arab Emirates continued during Q4 2012 in both the occupier and investment markets.
Tenant demand in retail and industrial spaces increased at its fastest pace since the onset of the global financial crisis in mid-2008. However, there was “relative weakness” in demand for offices, including Grade A offerings.
“This compares to relative strength in the retail and, to a lesser extent, the industrial sectors, where rents are expected to pick up firmly and the trend in inducements, whilst not negative, is somewhat softer than in the office sector,” the RICS report said.
The improved sentiment led 10 percent more chartered surveyors to expect average commercial rents in the UAE to increase in the second quarter than those who expect them to fall.
That was a significant increase compared to the previous survey, when the difference was 5 percent.
Numerous new buildings are expected to be completed in Dubai and Abu Dhabi this year, but the chartered surveyors did not expect it to be enough to prevent rents from rising.
“Although there is a strong flow of space coming to the market, rents are still expected to increase, if modestly, also for the first since mid-2008,” the report said.
Capital values also are expected to rise, albeit modestly, in the retail sector, as the supply of new properties coming onto the market slows.
However, capital values are expected to remain stable in the industrial and office sectors, partly due to an influx of new developments becoming available, many of which had been stalled during the economic downturn, and an acceleration in new construction.
“Dubai has… seen renewed energy and interest from tenants, both in newly released opportunities as well as highly sought after landmark buildings and locations,” RICS spokeswoman Elaine Jones said.
“The sale of office premises as individual units is yet to see significant changes, although investor interest in buildings is greater now than six months ago. Business activity generally seems to be increasing which will no doubt show positive influence on the real estate market over the coming months.”
Jones said the recent completion of high quality office premises in good locations in Abu Dhabi meant tenants there had greater selection and were able to negotiate incentives.
“Due to the increase in supply and a choice by landlords to offer structured incentives to attract large Government organisations as well as private sector business, there has been a positive growth in lease transactions,” she said.
Globally, the UAE ranked the 10th most positive, according to the proportion of surveyors expecting rental increases.
It also was the sixth most positive for anticipated development starts.
“In the UAE, the mood is improving in a tangible way after the most calamitous of downturns, and the US also now seems to be firmly in recovery mode,” RICS chief economist Simon Rubinsohn said. “However, Asia remains a particularly attractive location for investors seeking out commercial real estate assets with sentiment still strongly positive.
“Of course, the global economy continues to face significant risks but the numbers suggest that property continues to be viewed in a generally positive light away from Europe where the flow for real estate still remains particularly challenging.”
John Lewis is to extend the reach of its online empire via a network of thousands of corner shops.
The department store is joining the Collect+ scheme, which allows shoppers to pick up and return items bought on the internet at up to 5,000 independent retailers. John Lewis customers will be able to collect items at about 1,000 of those outlets in Scotland, Northern Ireland and south-west England from this autumn for a charge of £3. They can return goods via the entire network of Collect+ stores for free from this month, in a move that will give John Lewis its first physical presence in Northern Ireland.
The deal comes ahead of the arrival of Mark Lewis, the former boss of Collect+, as head of online for John Lewis next month. He helped build up the business, which is co-owned by in-store bill payment service PayPoint and distribution company Yodel, winning deals with the likes of Amazon and fashion e-tailer Asos, as well as John Lewis’s rival House of Fraser.
Andrew Layton, manager of omni-channel development at John Lewis, said its tie-up with Collect+ was intended to make shopping online easier because shoppers would not have to wait at home for goods to be delivered. “We know from research that if it’s not convenient, shoppers will look elsewhere,” he said.
So-called “click and collect” orders have doubled at John Lewis in the past year, accounting for 35% of online sales, after the department store allowed shoppers to pick up goods from its sister supermarket chain Waitrose last summer. Layton said he expected growth to continue strongly as click and collect encouraged existing customers to shop more frequently and attracted new customers.
About a quarter of John Lewis’s sales were taken online over Christmas, when online sales rose 44%.
FASHION retailer Truworths on Wednesday reported a 19% rise in first-half profit but said it expected the credit environment to deteriorate owing to rising levels of consumer indebtedness.
“This is likely to affect both the group’s delinquency and active account growth, as we will continue to apply strict credit granting and risk policies,” CEO Michael Mark said.
Diluted headline earnings per share were at 324.8c for the 26 weeks to December 30. Operating profit for the six months rose 13% to R1.9bn, while retail sales rose 14.8% to R5.5bn. Its cash balance rose to R2.6bn at period end.
The Truworths ladies-wear brand, which accounted for 34% of retail sales, increased turnover by 13% to R1.9bn, Truworths menswear by 16% to R1.0bn, Daniel Hechter by 15% to R681m, LTD by 21% to R260m, and Identity by 18% to R876m.
Daniel Isaacs, a 36ONE Asset Management analyst, said although Truworths’ results looked good, “especially bottom-line growth”, its outlook statement dampened sentiment, “indicating a possibility of a weaker second half”.
Truworths said retail sales for the first seven weeks of this year had increased by 9.3%.
For the 26-week period, its debtors book grew by 15.8% to R4.5bn and the active customer account base rose 7% to more than 2.6-million accounts.
Net bad debt as a percentage of the debtors book rose from 8% to 9.3%, Cape Town-based Truworths said.
Iconix Brand Group, which acquired the Lee Cooper denim brand, beat Wall Street’s expectations for the fourth quarter by 3 cents, even though net income fell by 3.9 percent.
Iconix acquired Lee Cooper for $72 million in cash, buying the denim brand from Sun Capital Partners affiliate Sun European Partners. The Lee Cooper brand, which is expected to generate $14 million in royalty income for 2013, has annual global retail sales of $500 million, Iconix said.
The acquisition comes nearly three weeks after Iconix picked up a 51 percent controlling stake in Montreal-based denim brand Buffalo David Bitton for $76.5 million. In October, the firm acquired Umbro for $225 million from Nike Inc.
Neil Cole, chairman and chief executive officer, said in a telephone interview that even though Iconix has done three deals in a couple of months, the company is on the prowl for more acquisitions, with many deals focused on international growth opportunities.
“The emerging markets are where the growth is: China, Brazil and India. We have great partners around the world where we can [build] our strong iconic brands into the network that we’ve built around the world,” Cole said.
He said the international businesses currently comprise about one-third of Iconix’s portfolio.
Another area where it is looking to expand is the entertainment sector. The company in October signed a deal for a Peanuts animated feature film in 2015. According to Cole, Iconix is also working on more agreements for brands similar to Peanuts where entertainment deals are an avenue for growth. Iconix acquired an 80 percent stake in the Peanuts brand in 2010 for $175 million.
For the three months ended Dec. 31, net income was $26.1 million, or 37 cents a diluted share, from $27.2 million, or 36 cents, last year. Excluding one-time items, adjusted profit was 41 cents a share, which beat analysts’ consensus estimate of 38 cents for the quarter. Licensing and other revenue fell by 10.9 percent to $85.1 million from $95.5 million, hurt in part by declines in its men’s businesses.
SHOPRITE will fight hard to maintain its “number one” position amid persisting intense price competition among South Africa’s major chains and pressures such as electricity and fuel price escalations, CEO Whitey Basson said on Tuesday.
“Although we don’t foresee buoyant trading conditions, we expect to at least maintain the performance of the first half,” he said at the retailer’s interim results presentation.
The company, which is Africa’s biggest grocer, reported a 12.5% rise in first-half profit, amid sluggish consumer spending by its core lower living standards measure (LSM) target group.
Headline earnings per share were at 316c in the six months to end-December compared with 280.8c a year earlier.
Shoprite, which has a market cap of nearly R100bn, said total turnover increased by 13.8% for the period to R46.72bn.
Simon Anderssen, an equity analyst at Kagiso Asset Management said earnings growth was boosted by a lower tax rate.
“Operationally, Shoprite is still outperforming its peers in South Africa and continues to gain market share through its aggressive expansion, marketing and pricing strategies. This is evident in the slight increase in operating margin for the South African food retail business — from 5.6% to 5.8%,” he said.
Sales growth of 8.9% in Shoprite, the biggest chain in the group with 353 supermarkets in South Africa, was hurt by the country’s 25% unemployment rate, high levels of unsecured debt and labour unrest.
“For the first time ever in December, I saw loan sharks coming into the front of the stores to get their money from people before they could spend their grants or pay packets,” Mr Basson said.
Sales increased 28.2% in rand terms in the group’s non-South African supermarkets, and were 13.4% higher on a like-for-like basis, assisted by the weakening of the rand against the dollar and a number of African currencies.
The company’s furniture division saw sales growth slow to 4.8% for the six-month period.
“Profitability from supermarkets outside South Africa declined over the period and only contributed 10% to group profits. Yet the market price implies a similar value for these 144 stores as it does to the 1,000 plus stores in South Africa.
“In our view, this is extreme and only considers the potential demand for supermarkets north of South Africa, not the practicalities and time involved in setting up the stores and infrastructure to trade profitably,” Mr Anderssen said.
Office Depot Inc. agreed to buy OfficeMax Inc. for $1.17 billion in a bid to revive a retailer that has been losing sales to online rivals and Staples Inc., the largest U.S. office-supplies chain.
The combined company will generate revenue of almost $18 billion compared with $25 billion in sales last year for Staples.
Office Depot will issue 2.69 new shares for each outstanding OfficeMax common share, the companies said today in a statement. Based on Office Depot’s closing price yesterday, that values OfficeMax at $13.50 a share, 26 percent higher than it closed at on Feb. 15, before reports the companies were in talks to combine.
The merger will combine companies with revenue of about $18 billion, compared with Staples’ more than $24 billion in sales last year. The company may accelerate the closing or selling of hundreds of stores after Starboard Value LP, an activist fund that became Office Depot’s largest shareholder in September, pushed for expense reductions.
“Consolidation is needed in an overstored and secularly declining industry,” Greg Melich, an analyst at International Strategy & Investment Group LLC in New York, wrote in a note Feb. 19. “We see two fundamental shifts that continue to hurt demand: digitization of the workplace (that is reducing the demand for traditional office products) and a shift to e- commerce.”
Office Depot, based in Boca Raton, Florida, fell 9.2 percent to $4.56 at 11:16 a.m. in New York. Naperville, Illinois-based OfficeMax dropped 0.3 percent to $12.96.
The new company’s board will include an equal number of directors designated by Office Depot and OfficeMax, the companies said. The board will conduct a search for a chief executive officer. Both incumbent CEOs, Neil Austrian at Office Depot and OfficeMax’s Ravi Saligram, will be considered.
Under the terms of the deal, OfficeMax will have the right to pay a cash dividend of as much as $1.50 a share before the transaction is completed, the companies said.
The merger may generate as much as $600 million in annual cost savings in three years, the companies said. The new company also would have more than $1 billion in cash on hand and another $1 billion available in a credit revolver. The deal is expected to close by the end of the year.
JPMorgan Chase & Co. advised OfficeMax. Peter J. Solomon Co. and Morgan Stanley served those roles for Office Depot.
Some confusion was created before the market opened when the deal was prematurely announced on Office Depot’s website. Both companies then issued statements announcing the deal shortly after the market opened.
Starboard Chief Executive Officer Jeffrey Smith pushed for changes at Office Depot in a letter to Austrian on Sept. 17 arguing that the retailer’s “poor operating performance” has hurt the stock. Smith, whose firm owns more than 14 percent of the chain, recommended smaller stores carrying fewer items. It also should cut general expenses and lower advertising costs, he said.
Both chains have been closing locations and that trend would accelerate with a merger as about 50 percent of their store territories overlap, Daniel Binder, an analyst for Jefferies & Co. in New York, wrote in a note to clients.
The combined OfficeMax and Office Depot may close or sell as many as 600 locations, giving Staples an opportunity to increase sales in those areas, Gary Balter, an analyst for Credit Suisse Group AG in New York, wrote in a note to clients.
Staples had 2,295 stores worldwide as of Jan. 28, 2012. In statements earlier this month, Office Depot said it had about 1,675 global locations and OfficeMax said it had about 900 stores in the U.S. and Mexico.
“It makes sense to close a lot of stores and fulfill orders out of facilities that specialize in packing and delivering, using less-expensive real estate,” Erik Gordon, a business and law professor at the University of Michigan in Ann Arbor, said in an e-mail Feb. 19. “It’s become a cost-driven, commodity business. Everyone sells Bic pens and Swingline staplers. The competitive advantage is to sell them cheaper and get them delivered quickly.”
The deal may be challenged by the Federal Trade Commission, according to David Balto, an antitrust attorney in Washington who was the FTC’s director of policy for six years ending in 2001. He worked on the FTC’s lawsuit that stopped Staples from acquiring Office Depot in 1997.
Balto said reducing the number of big-box office retailers from three to two may be viewed as anti-competitive, just as it was back then. In addition, the Obama administration has been tough about enforcing antitrust laws, he said.
“They are facing a stiff wind,” Balto said in a phone interview. “You have three players right now and they want to reduce it by one. That rivalry results in better pricing and services for consumers.”
The industry has “dramatically changed” since 1997 with consumers having more choices since the emergence of online competitors such as Amazon.com Inc., Binder said in the same note. It is these competitors and the digitization of the office that can no longer support three national office-supply chains, he said.
As small businesses, the main customer of all three chains, shifted to using fewer pens and filing cabinets, the companies have broadened their selection into technology products such as software, tablets and smartphones. The chains have also branched out into offering more services such as copy printing and computer repair.
There has been speculation of a merger between the two smaller office retailers since last year. A combination of Office Depot and OfficeMax would be “natural,” Staples Chairman and CEO Ronald Sargent said last year at a conference. The FTC is more likely to allow such a combination than if Framingham, Massachusetts-based Staples were to buy either company, he said.
A Dh2 billion (US$544 million) project to double the retail space at Dubai’s oldest mall and add an entertainment centre featuring an indoor roller coaster and ice rink will be completed in the summer.
The expansion of the Al Ghurair Centre in Deira, which opened in 1981, is expected to open during Ramadan.
The mall currently features a retail area of 480,000 square feet, with about 200 stores, 20 food and beverage outlets and an eight-screen cinema.
The extension will add 375,000 sq ft of total leasable retail space. Al Ghurair would not reveal the names of any new tenants or the number of new units it had leased.
“The Al Ghurair Centre was first opened in the early 1980s and revamped sometime in the 2000s with a major renovation,” said Ibrahim Al Ghurair, the managing director of Al Ghurair Properties.
But that renovation did not increase the leasable area, he added, which spurred the company’s decision to expand.
The mall does not compete with “destination” shopping centres like Dubai Mall or Mall of the Emirates, he said.
“The way we see Al Ghurair Centre is catering to its primary trade area, which is quite a significant area. Deira itself trades at around Dh12bn.
“We are not a destination, but we are more of a community and a neighbourhood so we have continuous footfall coming from our immediate area.”
Mr Al Ghurair noted that there were many hotels in the area, accounting for about 77 per cent of rooms in Dubai.
The project includes a five-star hotel, the Al Ghurair Rayhaan by Rotana, and a luxury serviced apartments tower, which opened in December.
The remaining part of the extension includes an additional 150 stores and food outlets, in addition to a Sparky’s entertainment centre. It will also include a climbing wall, bumper cars and a state of the art cinema.
David Thurling, the vice president of the mall at Al Ghurair Centre, said the opening of the extension will coincide with Eid, when visitor numbers typically increase by between 15 per cent to 20 per cent.
“Deira remains a key economic and commercial hub with multiple tourist attractions, a high population density and almost 80 per cent of Dubai’s hotels and hotel apartments,” said Mr Thurling.
“Although Dubai’s retail market is increasingly competitive, we feel that there remains a huge opportunity considering the retail potential of Al Ghurair Centre’s primary trade area.”
Meanwhile, the rival mall Deira City Centre is undergoing an upgrade of its own. Its newly completed City Court dining area features three new restaurants – PF Chang’s, Texas Roadhouse and Gazebo – and is part of a redevelopment project that has so far introduced 55 new brands and 33,000 sq ft of new retail space in the past two years.
Declan Ronayne has left his role as managing director of the Dixons retail operation in Ireland.
His departure comes after the UK group, which trades under the PC World and Currys brands in the UK and Ireland, decided to take the Irish business under its direct day-to-day control in a move that it hopes will further reduce costs.
Well-regarded in the retail industry, Mr Ronayne led the Dixons arm in Ireland for eight years and was commercial director in Ireland with the group for two years prior to that. He has held a number of roles in the past, including being country manager for Mars in the Baltic states and a business development manager with Johnson & Johnson.
Mr Ronayne told the Irish Independent that he left his position last week on the “best of terms” with Dixons and wishes the group and its staff and outlets here well. He said he had already received offers of new employment, but was considering his options before taking the plunge. He is currently on six months’ gardening leave.
Dixons has 30 outlets in Ireland, which employ about 600 staff. In the financial year to the end of last April, DSG Retail Ireland reported revenue of €147.1m, up from €142.2m, and an operating loss of just under €4m compared to a loss of €7.1m a year earlier.
The Dixons Group, which has interests across Europe, has been paring costs and revamping outlets in the UK in the face of the economic slowdown.
It is also likely to benefit from the collapse last year of rival Comet in the UK and the difficulties at HMV.
Development is underway at the V&A Waterfront for a new generation, flagship Pick n Pay store, expected to open in December 2013.
The new store – at over 6 000m² – will be significantly larger than the current one – 2 600m² – and will offer vastly improved access to parking.
“Enhancing and expanding our retail offering is crucial to our overall business strategy,” says David Green, CEO of the V&A Waterfront. “This new and improved Pick n Pay meets our customers’ needs for wider choice, easier accessibility and an overall improved shopping experience.”
Pick n Pay spokesman Tamra Veley said: “This development has been well-researched – efficient best-practice planning is going into the store layout – and we are confident that when the store opens it will exceed the expectations of Capetonians at one of South Africa’s premier shopping and entertainment destinations.
“The additional space allowed us to design a store that is centred on the needs, convenience, and comfort of our customers,” said Veley.
Alex Kabalin, Retail Executive at the V&A Waterfront explained, “The biggest challenge we face is managing the changes needed for this new store, while minimising disruption for our customers and tenants. Our construction work has been scheduled with a view to making this as hassle free as possible. We have no doubt that once completed, the new Pick n Pay will be a welcome addition to our offering.”
Aurora Fashion is considering a spin off of its formalwear fashion brand Coast in preparation for a potential sale, it is understood.
Coast, which has 41 standalone stores and over 150 concessions in the UK and a strong overseas presence, would follow womens fashion retailer Karen Millen which separated from the rest of the group in 2011 as the devolvement of brands continues.
According to The Independent, Aurora CEO Mike Shearwood is said to be mulling a management buy-out of Karen Millen though this is expected to be postponed until next year.
In 2009, Aurora, then operating as Mosaic Fashions, was bought out of administration and is now majority owned by Icelandic bank Kaupthing.
Last June, Coast opened a £1 million flagship store on London’s Oxford Street as it considered expansion in the hopes of showcasing the brand to tourists during the Olympic Games.
However, the group, which also owns retailers Warehouse and Oasis, reported a profit decline of 15.3 per cent to £12.7 million in the year to February 2012 and the recent announcement of the exit of Warehouse Managing Director Meg Lustman has increased concerns over the group’s future.
Aurora Fashions was unavailable for comment.
Sainsbury’s has announced that annual sales of its general merchandise range have reached £1bn for the first time. The retailer said the milestone follows its best ever Christmas when general merchandise sales grew by a third compared to the previous year.
Sainsbury’s said its general merchandise range, which covers areas such as homeware, cookware and domestic appliances, has gone from strength to strength, growing at up to three times the rate of food. It said its general merchandise business has huge potential to carry on growing within the store portfolio as new products and ranges are introduced to meet consumer demand.
The retailer said that Sainsbury’s colleagues will have their colleague discount increased to 20% from 21 to 24 February as a thank you for all their hard work in reaching the landmark.
Roger Burnley, Sainsbury’s managing director general merchandise, clothing and logistics, said: “We’ve invested in getting our general merchandise offer right for customers over the past few years and reaching £1 billion in annual sales shows this has been worth it. Rather than just add line after line to the range we’ve been careful to ensure that our famous brand values of quality and great value have shone through in everything we sell and we have been very successful in identifying and adapting to changing shopping habits.
“We’ve also put real focus on areas that complement our unrivalled heritage in fresh food such as cookware and homewares. This gives our customers confidence when they shop with us. We know that customers who buy from our non-food range spend more with us overall and the fact that we are still able to expand the range to even more stores shows the huge potential for Sainsbury’s.”
BRITAIN’S battered retail sector gained no respite this week as the latest research showed vacancy rates remained stubbornly above 14 per cent last year as retailers continue to shut up shop across the country.
The Local Data Company’s (LDC) latest report published today shows vacancy levels fell slightly from 14.3 per cent to 14.2 per cent last year, although this does not include the latest spate of collapses seen on the high street this year.
LDC warned last month that more than 1,400 stores are now at risk of closure after Comet, HMV, Blockbuster and Jessops among others entered into administration.
The retail specialist, which surveyed 278,915 retail and leisure sites across the country, said shopping centres suffered the highest average vacancy rate at 15.6 per cent.
Town centres had the second highest average vacancy rate (14.2 per cent) followed by retail parks, which have proved more robust at 8.8 per cent.
Wales was the worst performing country, with 18 per cent of its stores lying vacant at the end of 2012 followed by Scotland (15.5 per cent) and England, which was the best performer at 13.8 per cent.
London, east Midlands and Yorkshire & the Humber were the only regions to report a decline in the number of empty stores. All other regions suffered a rise in vacancies, with the west Midlands hit the hardest.
“The picture is one of increasing polarisation of performance between town centres, shopping centres and retail parks in every part of the country,” Matthew Hopkinson, LDC director said. “Online is driving growth for a majority of retailers and so 2013 is all about the supporting role that shops will have as ‘customer experience’ centres and showrooms as much as transactions through their tills”.
He added: “Inevitably this means fewer shops will be required… and as such one can expect this divergence in performance to grow.”
New York — Ralph Lauren Corp. will debut its Denim & Supply retail banner in the United States, opening a store in New York City this spring, according to WWD.com. It will be the first freestanding U.S. location for the brand, which features affordable price points.
Denim & Supply will be located at University Place in the city’s Greenwich Village area, in a space previously occupied by Ralph Lauren’s Rugby brand, which the company discontinued in late 2012. Ralph Lauren has already opened a number of Denim & Supply stores in Europe and Asia.
Accounts for the holding company of the Weston family, Wittington Investments, show it recorded a sharp rise in revenues and profits last year thanks to the success of its sugar business and Primark
This prompted Wittington to pay out £82m in dividends, compared with £21m in 2011, the majority of which went to the Garfield Weston Foundation, which owns 79.2pc of the group.
The charitable trust was established in 1958 by Garfield Weston. It supports arts and education charities as well as the British Museum in Holborn and the Royal Opera House.
The Weston family business began with a bakery in Toronto in Canada, and its retail empire now spreads across the UK and Canada, where it controls supermarket chain Loblaws.
In the 12 months to September 15 last year, Wittington, which represents the family’s UK assets, said profits rose from £303m to £321m.
This was on the back of revenues in the companies it owns increasing from £11.2bn to £12.4bn.
About 97pc of Wittington’s profits come from its 54.5pc shareholding in Associated British Foods, the FTSE 100 conglomerate that owns Primark, Silver Spoon sugar, Twinings tea and Kingsmill bread. George Weston, one of Wittington’s directors, is the chief executive of ABF.
During the period, ABF’s profits soared due to record profits for AB Sugar, which has factories and cane mills in the UK, Spain, China and Africa, and Primark sales hitting £3.5bn, more than double its sales five years ago.
In the accounts, Wittington said: “The diversity of [ABF’s] operations, its commitment to new product development, an exciting new store-opening programme for Primark, the strength of the group’s balance sheet and a strong cash flow give every confidence that the group can meet the challenges ahead .”
However, while profits rose for ABF, profits at Fortnum & Mason declined after it was forced to compensate customers for delays to Christmas hamper deliveries, and Heal’s losses increased from £2.1m to £2.5m due to sales being impacted by the depressed housing market.
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More high street shops shut, says British Retail Consortium
18 February 2013 Last updated at 11:29 The Welsh government said it was trying to improve conditions to “allow the private sector to grow”
High street shop vacancy rates have risen to 17% in Wales while the UK saw a slight reduction.
The figures also show a 10% decline in footfall in Wales in January blamed on the increase in closed stores.
The Welsh Conservatives said the figures showed high streets in Wales “are faring far worse than those in other parts of the UK”.
The Welsh government said it was trying to improve conditions to “allow the private sector to grow”.
The Federation of Small Business in Wales (FSB ) called on ministers and local authorities to do more “to bring life back to our town centres”.
The research published on Monday jointly by the British Retail Consortium (BRC) and research group Springboard shows footfall in January was 4.6% lower than a year ago in the UK.
And the national town centre vacancy rate in the UK was 10.9% in January 2013, down from 11.3% in October 2012.
But Wales saw an increase of 1.9% from 15.1% to 17.0%.
In Mold, Flintshire, there were no empty shops in the run up to Christmas.
However, the latest report to the town council said that four have shut their doors in recent weeks.
Monmouth Conservative AM Nick Ramsay, shadow minister for business, said: “These figures are concerning and confirm the need for a bold and ambitious strategy from the Welsh government to revitalise the Welsh high street to improve the shopping experience.
“Vacant and boarded up shops can make our high streets look drab and neglected, so we need to use business rates imaginatively to help bring empty premises back into use.”
A Welsh government spokesman said: “We will consider the report’s findings as part of our ongoing efforts to improve the conditions necessary to allow the private sector to grow and create jobs.”
It has been holding reviews into business rates and the difficulties faced by small businesses in Wales when they try to borrow from banks.
Meanwhile, a Welsh Assembly inquiry was set up to look at ways to regenerate Welsh town centres while local authorities have been trying to take their own action.
Springboard research director Diane Wehrle blamed the increase in vacancy rates in Wales on the recent closure key high street names like HMV.
“The premise that high vacancy rates tend to perpetuate low footfall appears to hold true with a decline in footfall of -10.1% in Wales alongside an increase in a vacancy rate of 1.9% from October,” she said.
A FSB Wales spokesperson said a recent survey of members – aside from economic conditions – showed business rates, out-of-town developments and the cost of car parking were the “biggest challenges facing small businesses on the high street”.
She said: “FSB Wales has already welcomed the extension of the small business rate relief by the Welsh government but believes that allowing local authorities to retain a proportion of the business rates they collect would enable them to boost their local economies.”
The Welsh Local Government Association (WLGA), which represents councils, has been asked to comment.
DUNNES Stores has launched a Supreme Court appeal in a legal row with UK fashion company Karen Millen over the protection of fashion designs.
A five-judge court today reserved judgment in the case where Dunnes has appealed a High Court ruling against the Irish retail giant that it had breach EU regulations by copying a woman’s shirt and top.
The landmark case centres on the interpretation of a regulation relating to the protection of fashion designs.
At the heart of the case is a black knit top and a striped shirt in blue and brown versions. The decision of the Supreme Court could have ramifications for all high-street retail chains.
Karen Millen’s UK parent company, Mosaic Fashions, had claimed in the High Court that Dunnes produced almost identical women’s clothing to items it produced, thereby infringing design rights as protected by a new EU regulation of 2002 on Unregistered Community Designs.
Karen Millen launched the top and shirt in December 2005 and Dunnes put similar items on sale in the Savida range at their stores in 2006.
The Dunnes Stores top was made in China and shipped through Korea to Ireland, while the Dunnes Stores shirt was manufactured in Turkey.
High Court judge, Ms Justice Finlay Geoghegan ruled that Dunnes, in offering for sale the black knit top and blue and brown shirts, infringed Karen Millen’s rights to unregistered Community design under Council Regulation (EC) No6/2002 in each of the three designs.
The primary issue in the case was whether Karen Millen held the right to an unregistered community design in the Karen Millen designs. An unregistered design confers on its holder the right to prevent others selling the design only if the contested use results from copying the protected design.
Having examined the garments and having heard the evidence and submissions, Ms Justice Finlay Geoghegan found the right to the community design in the three Karen Millen designs was vested in Mosaic.
Ms Justice Geoghegan ordered Dunnes Stores to stop copying designs for women’s clothing which Karen Millen claimed it originated and to deliver up any of the items of clothing still in its possession at the time.
Despite making fewer cars than some of its rivals last year, Ferrari is the world’s most powerful brand, according to Brand Finance. Higher profit margins and customer loyalty helped the luxury carmaker accelerate into top spot.
German clothier Gerry Weber International AG plans to open as many as 80 new stores, mainly in Europe, Turkey and the U.S., this year, Die Welt said in a pre-release, citing owner Gerry Weber.
Sales growth this year will mainly come from the new openings, the newspaper cited Weber as saying.
“We can’t detect a crisis and continue to have a very large potential for growth,” said Weber, according to Die Welt.
PricewaterhouseCoopers, the administrators to Jessops, said that Mr Jones is among a “number of buyers” to have purchased assets from the retailer, including its remaining stock and intellectual property.
Rob Hunt, joint administrator, said: “We can confirm that we have sold the brand and certain other assets to a number of buyers including entrepreneur Peter Jones.”
It is not clear how much Mr Jones, who is also chairman and chief executive of Phones International Group, has paid for the Jessops brand.
It is understood that Hilco, the turnaround group, has also bought assets from Jessops. Hilco has already taken control of HMV by buying its debt and had been exploring the possibility of installing Jessops concessions in HMV stores.
All of Jessops’ stores closed last month with the loss of 2,000 jobs. The stores are not part of the deal.
Apple and Microsoft both have their own, dedicated retail stores. Can Google be far behind? If the rumors are true, the answer is “not at all,” with the first Google stores due to open by the end of this year.
Citing “an extremely reliable source,” the gossipmongers at 9to5Google report that the Chocolate Factory is hard at work on plans to open its own flagship stores in “major metropolitan areas” in time for this year’s holiday season.
The stores will reportedly highlight Google’s Nexus devices, the Chrome browser, Chromebooks, and other new products to come, with an emphasis on giving prospective customers the chance to get hands-on with Googly kit before they buy.
About those aforementioned new products: according to 9to5Google’s source, foremost among them will be Glass, the Chocolate Factory’s much-ballyhooed experiment in wearable computing – which makes some sense, considering that few customers are likely to be willing to drop $1,500 on one of those based on looks alone.
If your Reg hack were to speculate, however, he’d reckon Google would have an easier time moving a glitzy, high-end Chromebook if it had a few retail locations in which to show them off, as well.
Besides consumer electronics, Google is also said to be planning to use the stores to showcase some of its other, more far-reaching technologies, such as its self-driving cars and various projects from its Google X labs.
Admittedly, the idea of a Google retail empire does sound a little far-fetched, given that Google still derives the vast majority of its income from online advertising rather than selling products. But all of Google’s products – in addition to those of its OEM partners for Android and Chrome OS – help drive more traffic to the web, so promoting them more heavily would be in keeping with the company’s broader goals.
The new stores wouldn’t be the online ad-slinger’s first foray into bricks and mortar. Google already operates a few hundred pop-up stores within Best Buy locations in the US and in PCWorld/Dixon’s stores in the UK, which are mostly geared toward acquainting customers with Chromebooks.
And then, of course, there’s always the feel-good factor to consider. Earlier this week, Apple CEO Tim Cook compared Cupertino’s retail stores to “Prozac” and said that he likes to visit them whenever he’s feeling blue.
Given how often Apple and Google butt heads these days, Larry Page and Sergey Brin are sure to have some down days of their own. Why shouldn’t they get to have some retail therapy as well? ®
Puma SE, Europe’s second-largest sporting-goods maker, shifted away from its goal to reach 4 billion euros ($5.35 billion) of revenue by 2015 and made improving profit a priority after earnings slid.
Reaching the target within the timescale is no longer a priority, and it remains an “ambitious” aim, Chief Executive Officer Franz Koch said today at a press conference at the company’s Herzogenaurach, Germany headquarters. Puma will continue to implement measures to improve its profitability this year, including eliminating 450 jobs, while sales will be at a similar level to 2012, he said.
“It is not our priority to push for sales growth at any cost, but instead focus on improving desirability for the Puma brand,” said the CEO, who is scheduled to leave at the end of March after only two years in the job. “It will be difficult to reach the 4 billion-euro goal by 2015.”
Puma, which set the revenue target in 2010, said today it expects low-to-mid-single digit earnings growth in 2013. The company is closing stores and cutting product ranges as owner PPR SA seeks to boost the brand’s performance-wear credentials. One-time expenses reached 177.5 million euros last year, exceeding previous guidance of 100 million euros.
“Puma is in a deeper-than-expected restructuring process,” said Volker Bosse, an analyst at Baader Bank AG, who recommends holding the shares. Koch’s comments on sales versus profitability suggest “changing priorities going forward.”
Puma rose 0.8 percent to 233.45 euros as of 2:07 p.m. in Frankfurt trading, after a drop of as much as 2.8 percent earlier in the day..
Earnings before interest and tax before special items fell 13 percent to 290.7 million euros last year. That beat the 285.6 million-euro average estimate of 13 analysts compiled by Bloomberg. Sales rose 8.7 percent to 3.27 billion euros.
“Top-line and results momentum continue to be very volatile,” said Michael Kuhn, an analyst at Deutsche Bank AG, who recommends holding the stock. The outlook for 2013 “is cautious and somewhat disappointing.”
Puma, which is introducing new products for running, training, fitness and golf, said it will cease making sailing products from 2014. Performance-wear will account for about 60 percent of revenue by 2015, Koch said.
The company expects to operate 540 outlets at the end of 2013, down from 590 at the end of last year.
A new CEO will be announced in the “coming weeks,” Koch said at a presentation at the company’s headquarters. The sporting-goods maker will be led by Chief Financial Officer Michael Laemmermann and Chief Commercial Officer Stefano Caroti from April 1 until a successor assumes the role, he said.
“It didn’t pan out unfortunately,” Koch said of his departure. “In sporting terms, you would say that it was a foul. But as a sportsman, I know that the best thing to do is just to get back up on your feet again and get going again.”
Sales climbed 12 percent in the fourth quarter, boosted by Asia and North America and the performance of Cobra Puma Golf, the company said. Excluding currency swings, sales climbed 8.7 percent in the period.
Revenue advanced 16 percent in the Asia-Pacific region, 12 percent in the Americas and 7 percent in EMEA, Puma said. All product segments grew in the quarter, led by a 15 percent gain in apparel sales. Accessories sales advanced 12 percent, while footwear gained 8.6 percent, Puma said.
Online marketplace Ebay is to create 450 jobs in Ireland, it announced today.
The jobs will be located at an operations centre in Dundalk, Co Louth. The total number currently employed by Ebay and its payments division Paypal in Ireland is 2,300. The latest jobs boost combined with a recent Paypal announcement will bring the total number employed by the group in Ireland to 3,550.
The expansion is being supported by IDA Ireland.
The new positions will support Ebay’s growing European customer base for Ebay Marketplaces and PayPal.
The announcement was made this morning by Taoiseach Enda Kenny, who described it as “exceptional news” for the area.
Johannesburg – Retailer Woolworths Holdings [JSE:WHL] reported a 21% rise in first-half profit chiefly as a result of contributions from its recent acquisition in Australia.
Woolworths, which sells food and clothes, said headline earnings per share totalled 164.2 cents in the six months to end-December compared with 135.7 a year earlier.
The results were boosted Woolworths’ purchase last August of Australian fashion retailer Witchery Group in a $181m deal to expand into the Asia-Pacific region.
Woolworths, similar in style and products to Britain’s Marks & Spencer Group said total sales rose 18% to R16.7bn with its Australian business delivering a 55.6% surge in sales.
South African retailers have been popular among investors for more than a year due to the credit-led shopping spree, but their shares have tumbled in recent weeks on growing worries consumers are too heavily indebted to sustain recent levels of sales growth.
Woolworths is expected to fare better than rivals such as Truworths International [JSE:TRU] and Shoprite Holdings [JSE:SHP] as it serves the more resilient high-income consumers.
“We expect sales growth to be broadly in line with the first half,” the company said in a statement.
Shares in Woolworths are down about 7% so far this year, largely in line with the broad sell-off of local retailers but underperforming a near 5% gain on the blue-chip JSE Top 40 – (Tradeable) [JSE:J200] index.