Monthly Archives: December 2016
The world is a very different place after the rollercoaster ride that was 2016, the retail sector is certainly no different.
Here are the top 10 stories that made waves in the retail sector this year — as picked by Retail Gazette’s journalist Ben Stevens and editor Elias Jahshan.
The stories selected, listed in no particular order, are a combination of those that consistently landed in the weekly top 5 most-read stories on Retail Gazette’s website to stories that had far-reaching impacts beyond the retail sector.
The fall of BHS
The demise of BHS has dominated the headlines this year.
Not only did the once mighty British department store chain close all 163 of its stores, but 11,000 staff lost their jobs and 22,000 had their pensions put in jeopardy.
Once the initial shock of the heritage retailer’s disappearance from the high street had faded, what was left was a far more complex story of billionaires and black holes.
Both former owners — Sir Philip Green and the man he infamously sold the chain to for £1, Dominic Chappell — have come under fierce scrutiny from everyone: from MPs to the taxman.
The fallout has been huge, sparking a new government inquiry into corporate governance, earning Green the title of “the unacceptable face of capitalism” and his knighthood questioned, and his mulit-million pound superyacht the name “BHS Destroyer”.
The dispute over the who will plug the £571 million pensions deficit, who was responsible for the loss of so many jobs, and whether any criminal wrongdoing occurred looks set to continue well into 2017.
Sports Direct’s controversy
Another spectacular fall from grace comes from the discount sportswear retailer, owned by the eccentric billionaire Mike Ashley.
In the first of many large workers’ rights scandals of the year, Sports Direct’s main warehouse in Shirebrook gained notoriety after an investigation by The Guardian uncovered “Victorian” working conditions.
Not only did this contribute to the new government inquiry into corporate governance, but sparked a tirade of heated debate around zero hours’ contracts, and over foreign labour.
As the billionaire continued to drag his feet in sorting the controversial issue, the headlines piled up, largely focusing on the blunders of its founder.
These include pulling out a large wad of £50 notes during a press event at the Shirebrook warehouse to demonstrate he was looking after low paid workers; admitting her flew to work by private helicopter because it was more efficient; admitting on live television he was a “PR disaster”; and, most recently, being accused of trying to secretly film a group of MP’s at a surprise inspection.
Sainsbury’s Argos acquisition
The country’s second-largest grocery retailer acquired Home Retail Group — the parent company of Argos and Habitat — in a move which will see the transformation of some of the high street’s most recognisable brands.
In the £1.4 billion takeover, Sainsbury’s will transform itself into what resembles a department store, moving away from its classic grocer roots and sparking a trend which is likely to be mirrored across the entire supermarket sector.
Next year a click-and-collect point will be established in most of Sainsbury’s 601 supermarkets, as well as concessions in its 773 convenience stores, not to mention the 739 Argos outlets it now owns.
The group’s empire now has over 2000 outlets and employs roughly 195,000 staff.
Sainsbury’s or Argos will never be the same after 2016.
High street closures
This year saw the tragic death of many famous people, with David Bowie, Prince, Zsa Zsa Gabor and Gene Wilder to name just a few, but many high street giants have also felt 2016’s icy hand.
Of course BHS was the biggest and perhaps messiest demise of the year, but job losses in the retail sector reached 26,000 — the highest since the peak of the recession.
American Apparel bit the bullet late this year closing all its UK operations.
Staples, Banana Republic and Austin Reed also disappeared from the UK high streets in 2016.
Many more retail jobs were lost from stores that remain open,such as Marks & Spencer announcing 600 head office job cuts along with 2100 international staff cuts.
Travis Perkins, Co-op and plenty of others have also seen job cuts skyrocket – with the latter having 298 of its stores acquired by McColl’s Retail Group.
National Living Wage
The somewhat confusingly-titled National Living Wage, which came into force in April this year, has caused a raft of controversy and anxiety among retailers.
What is essentially a rebranded National Minimum Wage for the over 25s has seen an estimated 33,835 retailers to decline into “financial distress” as they struggle to meet the new pay rates.
The new £7.20 rate has made many headlines, from M&S’ holiday pay cuts, Sports Direct’s warehouse workers and recently, JD Sports reportedly failing to pay its own warehouse workers the minumum wage.
With the incoming and new business rates looking to pile on extra pressure for businesses, and post-Brexit vote financial anxieties squeezing margins as it is, the new wage has been a significant thorn on the side of retailers.
It’s set to ris incrementally to £9 per hour by 2020, and the next few years will be critical for retailers who can no longer absorb the costs of the new rates on top of financial drains.
One of the biggest issues that affected the retail sector this year – let alone every aspect of the UK and globally – was the Brexit vote in June.
While all polls in the lead-up to the referendum pointed to looking like the UK would remain in the European Union – the UK sent shockwaves around the world when the referendum turned out to be in favour of leaving it.
Immediately after, the ramifications were felt on the economy as the sterling took a tumble and consumer confidence plummeted to its lowest since the recession.
While the sterling only managed to claw back a fraction of the value it had pre-Brexit vote, consumer confidence has fluctuated – it recovered in September but then it plummeted again in November, before marginally improving in December, ending the year in a stark contrast to the relatively healthy consumer confidence felt in January.
In addition, the economic ramifications of the Brexit vote sparked fears around the future of EU workers in the retail sector, inflation, higher costs of living and decreasing revenue and sales among retailers.
While experts have consistently said it was too early to assess the impact of the Brexit vote, especially as the UK is still technically part of the EU until it triggers Article 50 and leaves by 2018, many retailers have felt the brunt of it already in their quarterly and annual financial updates.
However, most online retailers bucked the downturn trend that faced high street fashion chains, while the UK welcomed an influx of tourists taking advantage of the weaker pound – which inadvertently led to London to replace Paris as the best place to buy luxury goods.
Tesco’s accounting scandal re-emerges
A scandal from 2014 came back to haunt one of the UK’s biggest retailers this year, with several former senior figures of Tesco being brought to court.
In September, former Tesco UK managing director Christopher Bush, former UK food commercial director John Scouler and former finance director Carl Rogberg pleaded not guilty for the charges pressed against them by the Serious Fraud Office.
The three former senior staff members had been accused of false accounting relating to a scandal in which Tesco was found to overstate its half-year profit by £326 million.
The trio denied the charges of fraud by abuse of position and false accounting, and were released on bail but will return to court next year.
Meanwhile, it was confirmed this month that former commercial director Kevin Grace will not face charges from the Serious Fraud Office, while Philip Clarke, the former chief executive, also had his charges dropped.
News of Grace’s and Clarke’s alleviation from the charges could mean that a charge is no longer brought against the company itself, as they had been identified as the most likely route to group prosecution.
The rise and rise of Amazon
One retailer which consistently grabbed headlines this year was Amazon – and that’s hardly surprising.
This year was a significant year for the online retail behemoth, as it pushed the boundaries and expanded into new territories – shaking up not just the retail sector, but also hospitality, technology and entertainment.
The Seattle-based company expanded its workforce exponentially in the UK with the opening of new distribution centres and offices outside of London, and introduced its ground breaking Echo machine and Dash button.
It also launched AmazonFresh – taking the “go economy” competition in grocery directly to the likes of Ocado – and Amazon Restaurant, a direct challenge to the likes of Deliveroo and Just Eat.
In addition, its Prime Day event continued to rise in popularity this year, and the retailer played a leading role during the Black Friday sales period – stretching its sales over a week or so rather than just the long weekend immediately after Thanksgiving Day in the US.
Back in the US, Amazon also successfully trialled deliveries with drones, and announced its first foray into bricks-and-mortar retail with plans to open up supermarket stores that have no tills whatsoever.
John Lewis’ first female boss
One of the biggest stories on Retail Gazette’s website this year was when Paula Nickolds was named John Lewis’ first-ever female boss.
Effective from January 2017, Nickolds will replace Andy Street, who also grabbed headlines when he stepped down in September to pursue a political career as a Conservative MP.
Once Nickolds moves into the managing director’s office in the new year, she will be the heritage retailer’s first female boss since the department store was founded 1864.
The news rose questions about the lack of female representation in the retail sector’s board rooms, which prompted the Retail Gazette to investigate further and find out why that is. Click here to read the full story.
Missguided ventures into bricks-and-mortar
The most-read story on Retail Gazette’s website this year was a somewhat unexpected one – the opening of Missguided’s first bricks-and-mortar store.
The 20,000sq ft flagship within Westfield Stratford City in east London is the first in a series of store openings for the online fashion retailer, with three others scheduled to open around the UK in early 2017.
News of Missguided’s plans to open a shop was first reported back in April, and that story, along with the updates since, all feature in the Retail Gazette’s top 20 most-read online stories list for the year – with the story of the store opening in November taking the #1 spot.
The Manchester-based etailer – or multichannel retailer as it should probably be called now – has experienced a dramatic rise to success since it was founded in 2009, winning multiple awards and grabbing headlines with multiple celebrity collaborations.
ENOC Retail, Emirates National Oil Company’s retail business segment, announced the opening of the largest ZOOM standalone store spread over an area of 6,731 sq ft.
The eco-friendly store is not only aligned with the sustainable objectives of the Dubai Plan 2021 but also with the goals of The Sustainable City to reduce the development’s energy consumption and carbon footprint.
His Excellency Saif Humaid Al Falasi, Group Chief Executive Officer, ENOC, said: “The new store in The Sustainable City highlights our commitment to further strengthen ZOOM’s footprint in Dubai and the wider region with a focus on providing the highest quality of products matched by superior customer service standards. The expansion also highlights the competencies we have gained in convenience retailing, and the appeal of ZOOM as a retail outlet of choice.”
The store features a number of eco-friendly features including biodegradable plastic bags and waste that are recycled through TADWEER.
All the water used at the site is treated and used for maintenance of common areas such as watering plants while power to the store is provided through the community’s solar panels and the DEWA grid.
To further reduce energy consumption and its carbon footprint, various green technologies are incorporated such as LED lighting inside the store, high performance refrigeration units and the Variable Refrigerant Flow (VRF) units, for the air conditioning (AC) system.
Eng. Faris Saeed, the CEO and Co-Founder of Diamond Developers, said: “We are delighted to welcome ZOOM’s largest stand-alone store to The Sustainable City. The outlet is part of our mixed-use area of the project and with partners such as ENOC, we collectively envision our goals and work effectively towards the Dubai Government’s vision to make Dubai one of the top ten sustainable cities in the world by Expo 2020. With practical eco-friendly practices, this outlet is in line with the DNA of The Sustainable City.”
To meet customer expectations and to prevent them from queuing, the new store offers seven checkout counters with easy access. In addition to phone delivery, ZOOM now offers online and mobile service through INSTASHOP, an app for home delivery that will cater to neighbouring communities like Layan, Mudon and Remraam, through an online platform.
The ZOOM Service Counter, which is a new addition to all stores, will offer customers’ services like DEWA bill payment, Lootah Gas bill payment, iTunes, gift cards, VoIP cards, Du Hello cards, Etisalat/DU recharge, Fly Dubai payment, Salik and laundry services.
With over 200 strategic locations in Dubai, Abu Dhabi, Sharjah, Ras Al Khaimah, Fujairah and Umm Al Quwain, ZOOM has a variety of formats from service station convenience stores to mini marts, metro stores up to large scale supermarkets.
The Adidas Originals flagship store in London has undergone a revamp with a localised twist to make it uniquely relevant to London. StudioXAG designed and implemented two long-term dwell areas within the store, adding authentic elements of familiarity to the store as well as encouraging the local consumer to spend more time in the store.
Taking reference from the iconic housing estates of the city, StudioXAG brought the outside in with reclaimed chimney pots used as planters and even a piece of the London streets in the form of the reclaimed pavement light repurposed as a coffee table.
Sourced mid-century British furniture, phone charging facilities and local magazines offer an inviting retreat from the busy streets of Soho.
Other subtle nods to London include the rubber flooring from the Victoria Line tube used as tabletops outside the fitting rooms, as well as cushions made from the London Underground moquette fabric. The team even had a blue plaque especially produced for the store, referencing the English Heritage plaques commonly found across the city.
Struggling specialty apparel retailer Limited Stores is preparing to file for bankruptcy in the coming weeks and will most likely liquidate its business, Bloomberg reports.
Last month, the retailer hired Guggenheim Partners to explore a sale and said it was entertaining bids, according to The Wall Street Journal.
The company has some $100 million in debt, sources told Debtwire. Private equity firm Sun Capital owns the struggling chain, but private equity firm Cerberus Capital Management is its largest lender, sources told the New York Post last month; that sets up a potential clash of interests as the retailer’s fate unfolds.
News of The Limited Stores’ continued efforts to prepare for restructuring, a sale or ultimately liquidation comes at a time when executives are missing from its CEO and CFO posts. John Buell, elevated from his CFO role to become interim CEO when CEO Diane Ellis left to become president of women’s apparel brand Chico’s in October, also left the company last week. Buell abandoned ship to become the senior vice president and CFO of fashion and home decor brand Altar’d State
At the time, Limited Stores said without a CEO or a CFO its “existing executive team is working collaboratively on management of the company’s operations, and senior financial team personnel are continuing to oversee finances.”
The company also recently notified the Ohio Department of Job and Family Services that it may lay off as many as all 248 employees, including its entire headquarters staff, and close down that Columbus, OH-area office as it struggles with plummeting sales.
The retailer is a shadow of its heyday as a successful speciality mall retailer. Former parent L Brands (owner of Victoria’s Secret and Bath & Body Works) sold a 75% stake in The Limited to private equity firm Sun Capital in 2007; three years later, Sun acquired the remaining 25% stake. But some malls, themselves suffering from falling foot traffic as e-commerce sales rise, aren’t always especially helpful to stores like The Limited, which has 243 stores across the country.
Limited Stores has hired RAS Management Advisors to advise on strategic and financial alternatives, including a potential restructuring, sources familiar with the matter told Debtwire, and the company has also hired Kirkland & Ellis as its legal adviser, according to Bloomberg. The Limited, Guggenheim Partners and RAS Management didn’t respond to requests for comment.
John Buell, named interim CEO of struggling women’s apparel retailer The Limited in October, has left the company to become the senior vice president and CFO of fashion and home decor brand Altar’d State, the Columbus Dispatch reports.
Buell, a 13-year veteran of The Limited, was elevated from his CFO position to the top spot after CEO Diane Ellis left to become president of women’s apparel brand Chico’s. His departure likely signals the end of The Limited, according to Lee Peterson of retail consultancy WD Partners (a Limited veteran himself): “The party’s over,” he told the Dispatch. “[Buell’s exit was] so quick — what does that tell you? But you can’t blame him. After the layoff announcements, I’m sure a lot of people at the headquarters are thinking about doing the same thing — and I’m sure people in the stores have their resumes out there, too.”
Limited Stores said in a statement that, without a CEO or a CFO, its “existing executive team is working collaboratively on management of the company’s operations, and senior financial team personnel are continuing to oversee finances.”
Earlier this month The Limited said it might shutter its headquarters and close all stores permanently amid plummeting sales and crushing debt. The company had previously hired Guggenheim Partners as financial adviser to explore a possible sale or restructuring, with rival retailers or private equity firms as potential suitors.
The New Albany-based retailer, which has 243 stores across the country, was formerly owned by L Brands (owner of Victoria’s Secret and Bath & Body Works), which sold a 75% stake in The Limited to private equity firm Sun Capital in 2007. Sun acquired the remaining stake three years later.
While Sun Capital touts The Limited as a place to buy “upscale” women’s clothing, the retailer is operating as a shadow of its former self, beset by falling mall traffic and styles that can also be found at rivals like Loft and at department stores. The Limited’s appeal may be further muddled by its recent “Backroom” off-price effort.
As online sales of apparel continue to rise, pressure on malls to revive or shutter is increasing, vexing specialty retailers like The Limited that are so dependent on their customer appeal. The U.S. currently has about 1,100 enclosed malls, but Jan Rogers Kniffen, CEO of J. Rogers Kniffen Worldwide Enterprises, said earlier this year that number should be closer to 700.
Committee proposes ‘nuclear deterrent’ to stop companies trying to avoid responsibilities to pension schemes
Sir Philip Green ‘would have sorted’ the BHS pension scheme long ago if he had faced a £1bn fine, said Frank Field MP.
Sir Philip Green ‘would have sorted’ the BHS pension scheme long ago if he had faced a £1bn fine, said Frank Field MP. Photograph: Ian West/PA
Sir Philip Green may have to pay £1bn to resolve the problems facing the BHS pension scheme under proposals tabled by MPs.
The work and pensions committee, which is chaired by Labour MP Frank Field, has called for the government to introduce a “nuclear deterrent” to stop companies or individuals trying to avoid their responsibilities to pension schemes.
This deterrent would be a fine from The Pensions Regulator (TPR) worth three times the amount it believes a company or individual should contribute towards filling the deficit in a pension scheme. Given that the regulator is understood to be seeking £350m from Green for the BHS pensions scheme, this means it could threaten the billionaire tycoon with a charge of about £1bn.
The deterrent is part of a package of measures proposed by the parliamentary committee to avoid another BHS scandal.
BHS collapsed into administration in April, leading to the loss of 11,000 jobs and leaving a £571m deficit. The regulator has started legal proceedings against Green and Dominic Chappell, the former owners of BHS, in an attempt to fill the deficit. They collected millions of pounds from the retailer.
Field said: “It is difficult to imagine [TPR] would still be having to negotiate with Sir Philip Green if he had been facing a bill of £1bn, rather than £350m. He would have sorted the pension scheme long ago.”
As well as threatening punitive fines, the MPs said TPR must become a “nimbler, more proactive regulator”. They said the regulator must consider recovery plans for pension schemes in deficit that last more than 10 years as “exceptional” and that it should approve every major corporate transaction.
These powers would have allowed the regulator to block a 23-year plan drawn up by Green for the BHS pension scheme while he owned it in 2012, and stop the sale of the retailer to Chappell, a three-time bankrupt.
In addition, the committee wants pension trustees to have the power to negotiate a restructuring of struggling schemes that could result in better outcomes than entering the Pension Protection Fund, where benefits are cut by at least 10%. The PPF, a government-backed lifeboat scheme, is funded by a levy on all defined benefit pension schemes. The MPs say that good corporate behaviour could be rewarded in future by paying less into the PPF.
Field added: “The measures we set out in this report are intended to reduce the chance of another scheme going down the BHS route. We hope and expect that we will never again see a company like BHS be able to come up with a 23-year recovery plan for its pension fund, and certainly not that it would take the regulator two years to really begin to do anything about it.
“It is further inconceivable that Sir Philip Green’s deal to dispose of BHS and its giant pension deficit for £1 to a dismally unqualified man, with no plan for the pension schemes and no means of financing one, would have evaded or passed any mandatory clearance scheme.”
Aside from the BHS scandal, the pension problems facing British companies are stark. By the standard measure used by the PPF, 4,272 defined benefit schemes are in deficit and the size of the black hole is £195bn. There are 5,794 defined benefit pension schemes in the UK.
In response to the report, a spokesperson for the Department for Work and Pensions said: “The majority of employers are managing their pension schemes responsibly but a few recent examples have raised some important questions. In the coming months we’ll be publishing a green paper on pension funding and as part of this we’ll be looking at powers of [TPR].”
Lesley Titcomb, chief executive of TPR, said: “We welcome the committee’s report which recognises the importance of robust and proportionate regulation for workplace defined benefit pension schemes and of ensuring that workplace pension savers and the Pension Protection Fund are well-protected. We note its recommendations and will consider them carefully.
“We continue to discuss options with DWP for the legislative and regulatory framework for workplace pensions, and how this might be improved, ahead of the green paper, which will consider the future of pension funding, the regulatory framework and TPR’s powers.”
Department store chain House of Fraser has opened its first standalone shop in China as it begins to build its brand in the Asian powerhouse.
House of Fraser warned in September over high street conditions in the UK as it revealed “very challenging” trading
House of Fraser warned in September over high street conditions in the UK as it revealed “very challenging” trading
The retailer, owned by Chinese conglomerate Sanpower Group, will set up shop in Sanpower Plaza in the commercial zone of Nanjing, capital of Jiangsu province.
The store will span six floors, trade over 425,000 sq ft of retail space and see the introduction of brands such as Cambridge Satchel Company, Peter Werth and Radley into the Chinese market for the first time.
In September the firm warned over high street conditions in the UK as it revealed sales woes amid “very challenging” trading.
House of Fraser chairman Frank Slevin said at the time that the UK retail sector was facing significant change in “structural dynamics as consumers shopping habits and delivery expectations continue to evolve”.
The chain will look to benefit from the strong demand for UK brands among Chinese consumers.
Mr Slevin said: “The opening of the store in Nanjing is a strong way to finish 2016. The store has focused on bringing international brands and a premium shopping experience to China.
“We are confident that our first store will clearly demonstrate the unique status that House of Fraser can achieve in the market, and will be a standout platform for our brand partners.”
TAG Heuer has opened a new boutique on Australia’s iconic Gold Coast at the newly transformed Pacific Fair Mall. The new store which covers 153 sqm and showcases new retail design concept of the brand – a new look and feel for the iconic luxury brand that was first unveiled in Sydney with the relaunch of the iconic Sydney Flagship boutique on the corner of Pitt & Market St.
Inaugurated in September 2009, the Hermes store at Elements in Hong Kong has been relocated and renovated now counting a total retail surface of 234 square meters which will further expand to 326 square meters in late 2017. With this renovation, the store benefits from an open and spacious layout to present the richness of the Parisian house’s 16 metiers
Upon request, the adjacent fitting rooms can be privatized through sliding panels as to become a VIP area. At the back, one can discover the Maison collection. For the opening celebration, a digital installation on window display will be featured
Discounts on clothes, electronics, watches will go up to 75% Staff Report 15:44 December 17, 2016
Dubai: Starting on December 26, Dubai Shopping Festival will see 34 days of deals, prize draws and shows across the emirate.
This year, thousands of retail outlets will offer discounts of up to 75 per cent. The discounts will apply to apparel and fashion, consumer electronics, watches, perfumes, furniture and home appliances.
Organised by an agency of the emirate’s tourism board, Dubai Tourism, the festival hopes to help attract 20 million visitors a year to Dubai by the end of the decade.
“The Dubai Shopping Festival is one of the most important on Dubai’s annual events calendar that will further enhance Dubai’s position,” said Dubai Tourism chief Helal Saeed Al Merri.
The festival will begin with the launch of a new waterfront attraction at Dubai Festival City and a fireworks show.
This year’s retail promotions include a 12-hour period on New Year’s Day when discounts in some malls — including Mall of the Emirates and Mirdif City Centre will reach 90 per cent.
Carmakers Nissan and Infiniti will also be giving away cars as prizes for raffle tickets bought in petrol stations.
The festival will also see daily fireworks displays at 8pm across the city.
Ending on January 28, organisers claim that this year’s festival is one of the longest in its 22-year history.
Here’s a full list of the festival’s events:
12-Hour Exclusive New Year Shopping
Starting 12 pm, January 1 – Mall of the Emirates, City Centre Mirdif, City Centre Deira, City Centre Me’aisem City Centre Al Barsha and City Centre Al Shindagha
Infiniti Mega Raffle
Daily draws from December 26 to February 4. Tickets available at Eppco and Enoc petrol stations.
Nissan Grand Raffle
Daily announcements on SAMA Dubai TV at 10pm from December 26 to January 28. Tickets available at EPPCO and ENOC petrol stations, and Zoom shops in Dubai.
Dubai Gold & Jewellery Group promotion
Gold to be won every day from December 26 to January 28. Promotion open for shoppers spending at least Dh500 at participating gold and jewellery outlets in Dubai.
‘Happy Shopping, Happy Winnings’ promotion
From December 26 to January 28, every Dh200 spent at a participating mall in Dubai is entitled to one raffle coupon to win prizes worth up to Dh600,
Dubai Festival City Mall promotion
During the festival, shoppers spending Dh250 at any outlet in Dubai Festival City Mall will have the chance to win a night’s stay for four at the InterContinental Dubai Festival City.
VISA Impossible Deals
From December 26 to January 28, VISA customers can take advantage of discounts using their VISA credit cards
December 29-31; January 5-7; January 12-14; January 19-21; January 26-28
Market Outside the Box
19-28 January 2017, Burj Park
Carpet and Art Oasis
December 28- January 15, Shaikh Saeed Halls 1 & 2, Dubai World Trade Centre
December 26 – January 28
Beauty and perfume themed events:
January 6-14, The Fashion Catwalk, The Dubai Mall
Apparel and fashion-themed events:
January 12-14, Mall of the Emirates
January 12-14 – Ibn Battuta Mall; January 19-21 – Dubai Festival City Mall; January 26-28 – City Centre Deira
December 29- 3D Office (Dubai Future Foundation);January 5: THE BEACH; January 17: Gold Souq; January 25: CITY WALK
For more details of the festival’s events calendar, visit:
South African retail giants Steinhoff International and supermarket group Shoprite Holding Wednesday said they were in talks to merge their African operations to form a single company worth over $14 billion.
The companies said in a statement they had initiated talks “regarding the potential combination of their respective African retail businesses” with an objective of creating what could be regarded as “the retail champion of Africa”.
The new venture to be called Retail Africa would have annual revenues of about 200 billion rand ($14.6 billion).
The companies said the proposition of this “formidable entity” was supported by their shareholders.
Shoprite is Africa’s largest food retailer with a presence in 14 African countries, including Nigeria, Africa’s largest economy, oil-producing Angola and Zambia.
It is said that the new venture would employ nearly 186,000 people and would give Steinhoff “African exposure”.
Steinhoff’s African businesses include a range of credit-based household goods and the company has vast interests in Europe.
The company recently bought UK discount chain Poundland and US retailer Mattress Firm Holding.
According to the companies, the proposed retailer is geared to become a leading discount retailer for value conscious African consumers.
They stated that Retail Africa would have “the required size and scale to compete with any other international retailer” and lead to job creation in various countries.
Furla has recently opened a new store in London at 71 Brompton Road. This follows the success of its standalone Regent Street store, and continues to strengthen the brand’s presence in the UK.
Located in the heart of the high-end shopping district of Knightsbridge, the new store is set across two floors, occupying 280 sq m. It houses the brand’s women’s bag and leather accessory offering, with its men’s collection on the lower ground floor alongside two areas dedicated entirely to footwear.
To mark the opening, Furla has launched a new custom version of its star Metropolis bag with a print featuring a London Bridge motif, which is exclusive to the store. Each bag is a limited-edition model, accompanied by an “Exclusive for Brompton Road London” tag.
Furla will also offer the option to match the bag with a bright blue fur pompon, adding an extra personalised touch.
Former investment banker, who took on role six years ago, will remain in post until his successor is found
Robert Swannell has overseen a tricky period during his time as chair of M&S. Photograph: AFP/Getty Images
The chairman of Marks & Spencer is to retire next year after six years in the role.
Robert Swannell, a former investment banker, has overseen a tricky time at the high street stalwart, appointing long-term staffer Steve Rowe to take over as chief executive a year ago from former boss Marc Bolland.
Swannell, 66, who was previously an adviser to M&S helping to fend off a bid attempt by the Topshop boss, Sir Philip Green, during his 30 years in banking at Schroders and Citigroup, joined the company’s board as a non-executive in late 2010. He became chairman a few months later, taking over from Sir Stuart Rose.
His departure is another step in the changing of the guard since Bolland stepped down in the spring.
Rowe has since pulled back on some of Bolland’s key initiatives, including international expansion.
Swannell said: “A year ago we chose Steve Rowe as our chief executive. Steve completed a thorough analysis of the business and developed a detailed plan to build a simpler and more relevant M&S.
“This plan is now under way and I feel that it is the right time for the business to look for a new chairman. It is a real privilege to chair this iconic company and I will continue to do so until my successor is in place.”
M&S’s senior independent director, Vindi Banga, will now lead the process to identify and appoint the next M&S chairman.
Mall of Qatar, Doha’s new shopping concept with 500,000 sq m of retail space, officially opened its doors to the public on Saturday, with 220 stores launch on day one of the “soft opening”.
Officials said the mall is 99 percent leased, with 92 percent currently in the fit-out phase.
“We are opening over 220 stores on our first day, which is 60 percent of the gross leasable area,” said Ahmed Al Mulla, CEO.
He added: “After working towards a goal for many years, seeing it come to life is one of the most incredible experiences. Mall of Qatar marks a new era of shopping in Qatar – merging shopping and entertainment at our regional super mall.
“Mall culture plays a large role in Middle Eastern, and especially GCC society. We are pushing the boundaries and elevating the mall experience with our brand new, and innovative offering.”
When fully operational, the sprawling complex will boast over 500 shops including 100 F&B outlets.
As well as shops, the mall will premiere the world’s first resident troupe – offering mall-wide entertainment with 52 weeks of shows on a 360-degree custom developed revolving stage, as well as a multilevel family entertainment complex.
The mall will also feature a 19-screen Cineplex inclusive of IMAX’s revolutionary laser projection and 12 channel immersive sound system on the region’s largest screen. The cinema will also feature the latest 4D projection technology screen, 7 VIP screens, an 8-lane bowling alley, and in-theatre gourmet food services.
Delivery workers at Staffordshire hub to stage three-day strike next week in dispute over holiday pay
The distribution centre is run by logistics firm Wincanton and Argos urged both sides to ‘keep talking’.
The distribution centre is run by logistics firm Wincanton and Argos urged both sides to ‘keep talking’. Photograph: Jonathan Brady/PA
Argos shoppers could face delays to deliveries of their Christmas presents after drivers at its main distribution centre in Staffordshire voted to strike for three days from 20 December.
It comes after Post Office workers voted to stage five days of strikes in the run-up to Christmas in a long-running dispute over jobs and pensions.
The 35 Argos drivers, who all work on big lorries taking goods from the catalogue shop’s central warehouse run by logistics firm Wincanton to regional centres from where they are sent out to stores, are protesting over holiday pay.
Unite, the union acting for the workers based at the depot near Burton upon Trent, said each driver was owed about £700 in holiday pay dating back at least two years. The dispute comes after it was ruled that overtime and additional shift payments should be taken into account when assessing holiday pay.
Unite said a strike would cause “havoc and mayhem” to deliveries in the crucial days running up to Christmas. Its regional officer, Rick Coyle, said the action was a last resort after years of talks.
“The drivers have patiently tried to resolve this matter for over two years. Now they would like the money they are owed in time for Christmas, which is not unreasonable.
“It is very difficult to understand why Wincanton has allowed this saga to get out of hand because this strike by our members will cause havoc and mayhem to deliveries to Argos shops in the run-up to Christmas,” he said.
“There will be a lot of very unhappy Argos customers, if they don’t receive the iPhones, TVs and white goods that they have ordered as presents for relatives this Christmas.”
Argos, which was taken over by supermarket group Sainsbury’s earlier this year, said: “We would encourage both sides to keep talking with the aim of coming to a swift resolution. We also have contingency plans in place and can reassure customers we’re working hard to ensure this will not impact our deliveries this Christmas.”
The Burton on Trent facility handles nearly 2m items a week in the run-up to Christmas, with about 120 trailer loads of goods a day heading out to regional distribution centres and on to Argos’s 800-plus stores.
The action in Staffordshire comes as drivers working at another Argos centre operated by Wincanton in Basildon, Essex, vote on whether to take industrial action over a disciplinary system.
Chief executive’s salary could be boosted by £1.8m in 2019
Marks & Spencer has been slammed by unions over a new bonus scheme for its top bosses, which could add millions of pounds to their pay packets.
Chief executive Steve Rowe stands to earn a maximum of £1.8m on top of his basic salary in 2019, which Retail Week says would take his total pay to £4.2m.
Finance chief Helen Weir could pocket a potential bonus of £1.3m, while Patrick Bousquet-Chavanne, the firm’s customer and marketing director, could receive £1.2m.
Sky News notes that to qualify for the bumper payouts, senior staff would have to hit a series of performance targets “in areas including profitability and efficiency”.
Unions have expressed their outrage, with the trade body for shop workers (Usdaw) saying that M&S is “treating workers with contempt”.
Usdaw is particularly angry about a pay settlement agreed by staff “under duress”. This will up the minimum hourly rate for shop staff to £8.50 per hour from next April – and £9.65 in Greater London.
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The rate is well ahead of the national living wage, but in return the company is scrapping premium pay on Sundays, cutting it for bank holidays and closing its generous defined benefit pension fund.
The union is also challenging the retailer’s plans, announced last month, to close the equivalent of 60 clothing and homewares stores as part of a long-awaited turnaround.
Usdaw deputy general secretary Paddy Lillis said: “Our members in M&S find it difficult to understand how the company can justify such huge rewards for senior management when the staff are facing enforced pay cuts and store closures.”
An M&S spokesman said: “The changes to pay and premiums, which come into effect from April, will reward our people in a fair and consistent way, simplify and modernise our business and make our colleagues amongst the highest paid in UK retail.
“Nobody need be worse off and the vast majority will receive higher total pay.”
Retailer has registered British trademark for concept, which is opening in the US early next year
An Amazon Go store in Seattle, which is currently open only to employees.
An Amazon Go store in Seattle, which is currently open only to employees.
Amazon appears to be preparing to open checkout-free grocery stores in Britain after registering a UK trademark for its Amazon Go format.
The online retailer opened its first bricks and mortar foodstore on 5 December near its headquarters in Seattle. Amazon employees can shop there and it will open to the public early next year.
Customers can walk out without queuing or paying at a checkout. Instead, sensors record the items they pick up and charge them to an Amazon Prime account.
Amazon has remained quiet about whether it plans to launch Amazon Go outside the US. It registered a UK trademark on 5 December, indicating it intends to bring the format to Britain.
Neil Campling, an analyst at Northern Trust Capital Markets, said: “Amazon want to disrupt and take out inefficiencies from retail whatever the format. We’ve seen Amazon try out pretty much every one of its ideas from the US in the UK and I wouldn’t be surprised if next year we see the launch of a very similar service.”
Campling said Amazon used the UK as its first non-US market for new formats because UK consumers have proved themselves open to new ideas such as online shopping and Britain has few trading restrictions to stop Amazon shaking up the market.
What is convenient for shoppers could be bad news for retail employees. The New York Post said Amazon Go would “automate American workers out of existence”. A US analyst estimated Amazon’s technology might eventually wipe out three quarters of US grocery store jobs.
Before the launch of Amazon Go, the British Retail Consortium predicted almost a third of the UK’s 3m shop jobs would disappear by 2025 as companies use technology instead of people. If Amazon Go catches on in the UK, established retailers would probably be forced to match its convenience to keep their customers.
The prospect of rapid automation of the retail industry has added to unease about the use of technology to replace human workers. Capita, the outsourcing company that collects the BBC licence fee, said this week it would cut 2,000 jobs and plough the cost savings into developing robots. The Bank of England’s chief economist Andy Haldane warned earlier this year that 15m UK jobs could eventually be lost to robots.
Amazon has rejected reports that it intends to open more than 2,000 physical grocery stores in the US, including shops as big as 40,000 sq ft – about the same size as an Asda store. Jeff Bezos, its chief executive, said in May more stores were on the way but the company said this week it had no grand plan and was still testing the market.
Amazon has made it clear that it is targeting the UK retail market. In February, it announced it would sell fresh and frozen food to UK consumers in a deal with Morrisons and in July it launched Amazon Fresh to sell fresh food to selected postcodes. It is also developing a clothes range, after helping revolutionise the books, music, home entertainment and consumer electronics sectors over the past decade.
The Seattle Amazon Go store is 1,800 sq ft and sells food staples such as milk, bread and chocolate as well as ready meals. Its opening follows the launch of a physical bookshop in its home town in November 2015. Amazon Books at University Village in Seattle stocks 6,000 titles, with the selection based on reviews and sales data from Amazon.com. The price of books in the store is the same as on the website.
Further bookshops are now also planned for San Diego, New York, Portland and Chicago.
Amazon did not respond to a request for comment about registration of the UK trademark.
Premium coffee brand Nespresso has opened two new boutiques in John Lewis Kingston and Peter Jones in Sloane Square. Now for the first time, John Lewis customers will be able to taste, purchase and learn more about the Grand Cru coffees at the two new boutiques. These openings represent a pilot for Nespresso with the possibility for future boutiques in John Lewis stores across the UK.
‘We are proud to have been partners with John Lewis for many years. This announcement represents the next stage of our partnership, as we bring our coffee expertise to customers at John Lewis in Kingston and Sloane Square,’ says Francisco Nogueira, Nespresso UK & Ireland managing director. ‘To date, John Lewis customers have been able to purchase machines in-store but have not been able to purchase, taste or learn about our 24 Grands Crus. This is all about to change. John Lewis customers will now have the opportunity to enjoy the full Nespresso experience similar to that experienced in our stand-alone boutiques.
Grocery store in Seattle has no checkouts, with purchases automatically billed to customers’ accounts
Amazon has opened a corner store where customers can pick up their groceries and just walk out without having to queue up and pay at the checkout.
The company said shoppers at its Amazon Go store will have the cost of their purchases automatically billed to their Amazon Prime account. Sensors will track customers as they go about the store and record items they pick up.
Amazon employees can already shop at the first store near the company’s headquarters in Seattle, which will be open to the public early next year. Leaked internal documents suggest Amazon could open 2,000 of the stores across the country.
The internet retailer, which has grown into a $359bn (£282bn) company in the 22 years since its founding, claimed the new service was “the world’s most advanced shopping technology”.
“With our Just Walk Out Shopping experience, simply use the Amazon Go app to enter the store, take the products you want, and go! No lines, no checkout. (No, seriously.)”
The Amazon Go store, which is 1,800 sq ft and sells most food staples, follows the Seattle-based company’s launch of a physical bookshop in its home town last year. Bookshops are also slated to open in San Diego, New York, Portland and Chicago.
The company, which has been offering its Fresh service in some densely populated parts of the US since 2007, has been expanding the grocery delivery service rapidly, recently adding new cities across the US. It is now available in Seattle, New York, Washington, Boston, northern New Jersey, Philadelphia, Connecticut, Baltimore and large parts of California.
In June it launched outside of the US for the first time, offering grocery delivery to homes in parts of north and east London.
The British service is offered to Amazon Prime members in 69 postcodes for an additional £6.99 ($8.50) a month.
Amazon posted annual sales of $107bn last year, more than double the amount it generated just four years earlier. Its net income totalled $596m.
Chain’s investment aims to put a store within reach of every shopper and create 400 jobs
Discount retailer Aldi plans to invest €100m in Ireland over the next three years as it seeks to increase its footprint.
The company aims to add around 20 new stores which will create 400 new jobs.
“Our business model is pretty simple. There’s not a hugely complex strategy. We want to make a store available to everybody in Ireland. Our belief is that by doing that we’ll continue to develop our sales and our market share,” Giles Hurley, the head of the company’s Irish operation, told the Sunday Independent.
Aldi has 11.3pc of Ireland’s intensely competitive grocery market, according to the latest figures from researchers Kantar Worldpanel. That makes it the fifth-largest supermarket in Ireland, 0.1 percentage points behind rival Lidl.
After rapid increases in market share between 2008 and 2014, the company’s growth in that metric slowed somewhat – it has the same percentage of the market as it did in the 12 weeks to March 29 of last year, having dipped as low as 10.3pc in the intervening period. “We’re not really focused on market share as a goal or metric, it’s an outcome of developing our sales,” Hurley said. The value of Aldi’s sales grew 6.6pc year-on-year in the 12 weeks to November 6, 2.4 percentage points ahead of the average figure.
It is set to open new stores in Trim, Co Meath, Leixlip, Co Kildare, and Ennistymon, Co Clare and is looking to secure planning for outlets in Dunshaughlin, Co Meath and Graiguenamanagh, Co Kilkenny, Hurley said.
“I’m estimating 20 [new stores] over the next three years which should comfortably mean that we deliver another 400-odd jobs to add to the 3,200 people that we currently employ in the Republic of Ireland.
“There is, I would say, a big opportunity in the big metropolitan areas of Dublin, Limerick, Galway, Cork, where we feel there’s lots of customers who can’t easily access one of our stores.
“Then almost inevitably the question is how big are you going to get, how far are you going to go, and that’s a really difficult one to answer … one of our visions is that every consumer in Ireland can get to an Aldi store within easy reach. So straight off the bat, I’d say comfortably we’d open another 50 stores, and I suspect after that we’ll keep on going.”
Hurley said the company sees itself as a “broad church” retailer that wants to service shoppers seeking value as well as those who want to indulge.
Marina Mall Abu Dhabi, owned by the National Investment Company (NIC), has announced that it will be breaking ground in early 2017 on major mall improvements worth AED300 million, in addition to a new AED3 billion extension.
Marina Mall Abu Dhabi will be undergoing a renovation and growing in size with a 120,000 sq m extension designed by DP Architects, the company behind the design of Dubai Mall.
The new extension plan will be divided into two parts, the north and south side of the mall, which will include the latest retail and F&B brands and new market entry brands exclusive to the mall.
Marina Mall Abu Dhabi will also expand its car parking facilities, a statement said.
Jihad Dirani, head of leasing at Marina Mall Abu Dhabi, said: “We are entering an exciting phase of Marina Mall’s development, as we continue our journey to deliver an excellent visitor experience. We are currently in the process of selecting the right suppliers and contractors; whilst looking to evolve our leasing portfolio.”
In 2006, the mall went through major expansion plans, which included the addition of a revolving restaurant tower, as well as an increase in mall facilities and retail outlets.
Marina Mall is also home to Marina Eye – Abu Dhabi’s first and only observatory wheel.
Woolworths’ shareholders latched on to two of the most controversial issues in corporate governance when substantial numbers voted against the reappointment of the auditors and also against the remuneration policy at Wednesday’s annual general meeting.
In a move that suggests shareholders are becoming more engaged on the matter, 18.6% of shareholders at the Woolworths AGM voted against the reappointment of EY as the group’s auditors.
Woolworths was one of the companies highlighted in the recent report by the Independent Regulatory Board for Auditors (Irba) addressing the need for auditor rotation. According to the report, EY has been auditing Woolworths for 84 years.
The regulator is calling for change and has recommended mandatory rotation of audit firms every 10 years.
The reappointment of auditors happens through an ordinary resolution requiring support from at least 50% of shareholders — the 18.6% is far off achieving any change. But it marks a significant departure from previous years when the resolution was guaranteed support from 99% of shareholders.
Irba CEO Bernard Agulhas said on Thursday the greater public discussion around auditor rotation has raised awareness around independence of auditors “and will go a long way in ensuring that auditor independence is strengthened”.
EY is one of the big four global audit firms which together audit 95% of the world’s 500 largest companies. The others are PwC, Deloitte, and KPMG.
The Irba, which revealed that EY audits 14% of JSE-listed companies, is concerned about a perceived lack of independence. It found that with 25% of listed companies the chairmen of the audit committees had previously worked for the external auditors. At Woolworths, only one of the board members had had a relationship with EY. Zarina Bassa, who is a member of the audit committee, was a partner at EY up to 2002.
On the remuneration front, a hefty 30.1% of shareholders voted against the remuneration policy. This is a record level of opposition from Woolworths’ shareholders and reflects concerns about the steady upward movement in executive remuneration at a time when the share price performance has been weak.
For financial 2016, CEO Ian Moir received total remuneration of R53.7m, up from R49.2m in 2015. The share price has been on a downward trajectory for most of 2016 and is at levels last seen in early 2014.
The remuneration levels also look inappropriately generous in the context of the grim trading update released recently. It showed that no section of the group — food, clothing, Australia, SA — had escaped the effects of the weak trading conditions.
Following the update, few shareholders are expecting to see any real growth in sales or earnings in the interim period.
The weak performance of the Australian operation was particularly disappointing given the steep price paid for it just two years ago.
At Woolworths’ 2013 AGM the remuneration policy got a 25.8% negative vote. In the following two years support surged to more than 90%.
The remuneration vote is nonbinding, but this year’s result could see Woolworths formally engaging with its shareholders to determine the reasons for their dissent and then disclosing details of that engagement.
Such dialogue is a requirement of King IV, which states if 25% or more of shareholders vote against remuneration policy an engagement process must be undertaken.
Limited Stores LLC has notified the Ohio Department of Job and Family Services that it may lay off as many as all 248 employees, including its entire headquarters staff, and close down that Columbus, OH-area office as it struggles with plummeting sales, Columbus Business First reports.
The company’s letter to the state suggested that, while details weren’t final, “this mass layoff is expected to be permanent,” according to Columbus Business First. The company says it’s entertaining bids, but it may cease operations if a buyer can’t be found.
The retailer had hired Guggenheim Partners as financial adviser to explore a possible sale or restructuring, with rival retailers or private equity firms as potential suitors, The Wall Street Journal reported last month.
The New Albany-based retailer, which has 243 stores across the country, was formerly owned by L Brands (owner of Victoria’s Secret and Bath & Body Works), which sold a 75% stake in The Limited to private equity firm Sun Capital in 2007; Sun acquired the remaining stake three years later.
While Sun Capital touts The Limited as a place to buy “upscale” women’s clothing, the women’s apparel retailer is operating as a shadow of its former self, beset by falling traffic to malls and offering styles that can also be found at rivals like Loft and at department stores. The Limited’s appeal may be getting muddled further by its recent “Backroom” off-price effort.
As the struggling company tumbles, top executives are also stepping down. Ex-CEO Diane Ellis, who was at the helm for the last three years and was credited with driving transformation for the brand, left last month to become the president of the Chico’s brand. In a statement in October, Ellis promised to bring innovation to mall-based apparel retailer Chico’s, which has similarly been plagued by layoffs and financial troubles.
As online sales of apparel continue to rise, pressure on malls to revive or shutter is increasing, vexing specialty retailers like The Limited so dependent on them. The U.S. currently has about 1,100 enclosed malls, but Jan Rogers Kniffen, CEO of J. Rogers Kniffen Worldwide Enterprises, said earlier this year that number should be closer to 700.
Things aren’t looking good for Sears.
The company is shutting down dozens of Kmart stores this month and two of its highest-ranking executives left this week in the midst of the key holiday shopping season.
This comes following speculation among Sears and Kmart employees, suppliers, and several banks that the retailer will soon go bankrupt — something Sears has repeatedly dismissed.
Jeff Balagna, formerly Sears’ executive vice president, left the company Wednesday, “in order to focus on his other business interests and pursue other career opportunities,” Sears said in an SEC filing dated November 23.
Balagna did not respond to a request for comment. Sears declined to comment beyond what was stated in the filing.
Sears President and Chief Member Officer Joelle Maher also left the company this week, Sears confirmed to Business Insider. The company declined to give a reason for her departure.
The timing of the departures — so close to Sears’ upcoming third-quarter earnings report and in the middle of the holiday season — is “highly unusual,” according to Mark Cohen, director of retail studies at Columbia Business School and the former CEO of Sears Canada.
Cohen, who was fired from Sears in 2004, is an outspoken critic of the company and its CEO Eddie Lampert. He speculated that the timing of the departures could be indicative of something “catastrophic” in its upcoming earnings report.
The company declined to comment on Cohen’s remarks.
Sears will report its third quarter earnings on Thursday, and Wall Street is predicting a 14% revenue decline to $5 billion compared to the same period last year. Sears’ sales have dropped from $41 billion in 2000 to $15 billion in 2015. Kmart, which merged with Sears in 2005, has seen its sales plunge from $37 billion to $10 billion in the same period.
Hometown a canary?
If business at Sears Hometown and Outlet stores is any indication of Sears Holding’s performance in the most recent quarter, investors have reason to be concerned.
Sears Hometown and Outlet Stores, which was spun off from Sears Holdings in 2012 but continues to sell Sears merchandise, said this week that net losses in the third quarter widened from $5.5 million last year to $93.2 million this year.
The losses were driven in part by a 49% drop in apparel sales. The company blamed Sears Holdings for the precipitous drop in apparel sales, citing the “continuing impact of significantly reduced inventory availability from Sears Holdings, our sole source for this category.”
“We do not expect inventory availability to improve and, as a consequence, we plan to continue to de-emphasize, and eventually exit, this category,” Sears Hometown and Outlets said.
Sears could be tamping down on inventory because “business is terrible,” according to Cohen. “They don’t have the money for the inventory and they’re keeping the markdowns in their own stores,” he said.
The reduced inventory could also be the result of lower shipments from suppliers.
As Business Insider reported last month, at least half a dozen suppliers have “significantly” reduced product shipments to Sears over fears of a bankruptcy, according to Marc Wagman, executive vice president of trade credit and political risk at the insurance brokerage firm Arthur J. Gallagher & Co., which represents the Sears suppliers to insurers.
The companies’ concern over Sears’ financial health has “really accelerated in the last 6 to 12 months,” Wagman told Business Insider.
According to a recent report by The Wall Street Journal, toy maker Jakks Pacific Inc. recently suspended sales of its products to Kmart, which is owned by Sears Holdings, due to worries about the company’s financial health.
Suppliers have grown concerned after warnings from Sears store employees and a number of banks.
Fitch Ratings in October identified Sears as one of seven major retailers at risk of going bankrupt in the next 12 to 24 months and eventually liquidating.
In September, Moody’s analysts downgraded Sears’ liquidity rating, saying Sears and Kmart don’t have enough money — or access to money — to stay in business.
The Moody’s analysts said Sears is bleeding cash and will have to continue to rely on outside funding or the sale of assets, such as real estate, to sustain operations. Kmart in particular is at risk of shutting down, the analysts said.
Sears CEO Lampert responded in early October, saying “there have never been any plans to close the Kmart format.”
But there’s no denying that Sears is running low on cash.
The company said in August that its cash and equivalents have fallen to $276 million from $1.8 billion one year ago.
As a result, the retailer was forced to accept $300 million in financing from Sears CEO Eddie Lampert’s hedge fund, ESL Investments, in the second quarter.
Bankruptcy filing season
Historically, retailers tend to declare bankruptcies in January when their cash holdings and financial payables tend to be at their highest levels of the year. That has led some analysts and industry experts to believe the company could file as soon as next month.
But many analysts believe the company will stay afloat for some time to come.
Lampert has many levers to pull to keep the retailer alive, including more cash infusions from his hedge fund as well as the sale of assets like real estate and it’s appliance and tool brands including Kenmore, Craftsman, and DieHard.
And the company says that it’s still trying to turnaround business at its stores.
“We are absolutely focused on restoring Sears Holdings to profitability,” Sears spokesman Howard Riefs told Business Insider in November. “We are an asset-rich enterprise with multiple resources at our disposal.”
McDonald’s has completed the sale of franchise rights for its restaurants in Singapore and Malaysia to Saudi Arabia’s Lionhorn Pte Ltd as part of a plan to move away from direct ownership in Asia.
The fast-food chain said it transferred its ownership interest in 390 restaurants, more than 80 percent of which were company-owned, on Dec. 1 to Lionhorn.
Lionhorn is led by Sheik Fahd and Abdulrahman Alireza, who are franchisees for nearly 100 McDonald’s restaurants in the western and southern regions of Saudi Arabia.
McDonald’s did not disclose the financial terms of the deal.
Reuters reported in October that McDonald’s was nearing a deal worth up to $400 million to franchise the outlets to Reza group, which also owns and operates McDonald’s outlets in the western and southern regions of Saudi Arabia.
The Lionhorn deal is in line with McDonald’s plans to bring in partners in Asia as it switches to a less capital-intensive franchise model.
The company said it has now franchised about 1,300 outlets as a part of its target to become 95 percent franchised by the end of 2018.
Howard Schultz is leaving his post as CEO of the company he built into a global coffee empire, but he’s not retiring.
Schultz will step down as CEO of Starbucks Corp. on April 3, at which time he will be appointed executive chairman and shift his focus to the company’s new upscale initiatives — the design and development of Starbucks Reserve Roasteries around the world and the expansion of the Starbucks Reserve retail store format — along with its social impact programs.
Schultz will be succeeded as chief executive by Starbucks’ president and COO Kevin Johnson. Johnson, a close friend of Schultz, has a strong technology and operations background.
“As I focus on Starbucks next wave of retail innovation, I am delighted that Kevin Johnson — our current president, COO, a seven-year board member and my partner in running every facet of Starbucks business over the last two years — has agreed to assume the duties of Starbucks chief executive officer,” said Schultz, who will continue to serve as chairman of the board. “This move ideally positions Starbucks to continue profitably growing our core business around the world into the future.”
Schultz is widely regarded as one of the nation’s most politically outspoken and high-profile executives. In recent years, he has taken very public and progressive stands on such issues as gun control, gay rights and student debt.
Although Schultz has denied it in the past, his stepping down as CEO is likely to cause renewed speculation that he will eventually run for public office. He has a close relationship with President Barack Obama and supported Hillary Clinton in the recent election. In his staff letter on Nov. 9, he described himself as “stunned” by the results.
Starbucks’ new incoming CEO, Johnson, joined the Starbucks board in 2009 and the management team in 2015. As president and COO, he led the company’s global operating businesses across all geographies as well as the core support functions of Starbucks’ supply chain, marketing, human resources, technology, and mobile and digital platforms.
Johnson’s pre-Starbucks career includes 16 years at Microsoft and five years as CEO of Juniper Networks. At Microsoft, he led worldwide sales and marketing and became the president of the platforms division.
This will not be the first time Schultz has stepped down as CEO. He had previously served in the role from 1987 to 2000, but he returned to the position in 2008.