Monthly Archives: February 2018
Department store group Debenhams is planning to cut 320 store management jobs as it tries to drive down costs.
The retailer said last month it was stepping up cost-cutting plans after it issued a profit warning following disappointing trading over Christmas.
Many traditional retailers are struggling to cope the challenge of the shift towards shopping online.
Debenhams said a review had identified “significant cost savings” by reducing the complexity of management roles.
The 320 posts affected account for a quarter of Debenhams’ store management jobs.
“We are currently consulting with individuals affected and will seek redeployment opportunities where possible,” Debenhams said in a statement. “We envisage our new structure being fully in place by the end of March.”
The news comes shortly after three of the UK’s biggest supermarket chains – Tesco, Sainsbury’s and Morrisons – announced plans to cut thousands of jobs, including stripping out layers of middle management.
Analysis: Emma Simpson, BBC business correspondent
Who’d want to be a manager on the shop floor in retail right now? Judging by the spate of announcements from some of our biggest retailers in the last few weeks, these posts are now on the chopping block.
First it was the supermarkets, with all the big established grocers restructuring their businesses as the old supermarket model is under strain, from rising costs, increased competition and the relentless shift to online.
Now it’s the turn of Debenhams. It’s not surprising given the pressures on its department store business. It already said it would have to find £10m of savings this year. In the world of retail, there’s much more change to come.
‘Year of distress’
Shares in Debenhams fell sharply in January after it said its UK like-for-like sales – which strip out the impact of store openings and closures – fell 2.6% in the 17 weeks to 30 December amid a “volatile and competitive” market.
As a result, it cut its full-year profit forecast to between £55m and £65m this year, against analysts’ expectations of about £83m.
Debenhams – which operates out of more than 240 stories in 27 countries – is by no means the only High Street retailer to have struggled recently.
The whole retail sector is undergoing huge change as traditional stores seek ways of coping with the rapid rise of online shopping.
Marks and Spencer, House of Fraser and Mothercare were among other retailers to report disappointing sales in the run-up to Christmas, whereas online specialists such as Asos and BooHoo saw rapid growth in revenues.
Richard Lim from research consultancy Retail Economics said: “2018 is looking like a year of distress for the UK retail industry.
“The major challenge facing bricks-and-mortar retailers is the continued pincer movement of rising operating and sourcing costs against a backdrop of shifting shopper behaviour.
“Many retail business models are incompatible with the relentless shift towards online spending and the emergence of the experience economy. Put simply, department stores are incredibly expensive to operate while they are also burdened with inflexible leases, high rents and too many properties.”
Mr Price store at the Junction in Nairobi. file PHOTO | NMG
South Africa-based Mr Price Group has taken direct control of its Kenya business after reclaiming its franchise from fashion apparel retailer Deacons East Africa.
The two firms on Thursday announced that Mr Price will from April 1 assume the operations of its 11 Mr Price stores in Kenya. Deacons had held the Mr Price Kenya franchise for a decade.
The Nairobi Securities Exchange-listed firm mid last month agreed to sell the Mr Price Home and Mr Price apparel brands, which have been operating in Kenya since 2007, effectively ending Deacons’ 10-year franchise deal with the Johannesburg Stock Exchange-listed company.
“Notice is given under the Transfer of Businesses Act that the Mr Price franchised business carried on by Deacons (East Africa) Plc will be transferred on or about April 1, 2018, (subject to the fulfillment of conditions precedent) to Mr Price Retail Kenya Limited which will carry on the business,” said the firms yesterday in a regulatory notice.
The firms added Mr Price would now assume all financial obligations related to the business.
“All money debts or liabilities due and owing the transferor in respect of the business up to the date of transfer shall be received and paid by the transferor,” they said.
“The transferee is not assuming nor is it intended to assume any liabilities incurred by the transferor in the business up to the date of transfer.”
The Deacons board approved plans to sell its flagship Mr Price franchise in Kenya last October. The proposed deal came amid a 12 per cent drop in earnings for the Johannesburg-based firm, marking its first decline in annual profit since 2001 as South African consumers slowed purchases in a struggling economy.
Deacons, which operates several branded stores in Kenya including Truworths, Angelo, 4u2, Reebok and Babyshop, has indicated that its earnings for the full-year through December will drop by at least a quarter, citing a tough operating environment.
Deacons’ exclusive franchise deal with another South Africa’s luxury fashion brand Woolworths ended in 2013 after the multinational took full ownership of its Kenyan subsidiary.
Deacons posted a half-year net loss last year of Sh180 million.
Deacons’ principal business is to operate retail establishments including franchise and department stores selling ladies, men’s and children’s clothing, footwear and accessories among other items in East Africa.
The supermarket giant said the shake-up is part of a restructure which would see more customer service staff and fewer managers
Morrisons is to axe 1,500 shop floor workers as it becomes the latest supermarket to announce large-scale job cuts.
The supermarket giant said the shake-up is part of a restructure which would see more customer service staff and fewer managers.
Gary Mills, Morrisons retail director, said: “Our aim is to serve customers better with more frontline colleagues in stores improving product availability and helping customers at the checkouts.
“Very regrettably, there will be a period of uncertainty for some managers affected by these proposals and we’ll be supporting them through this important process.
“Our commitment is to redeploy as many affected colleagues as possible.”
Simultaneously Morrisons said it will create 1,700 junior jobs.
It comes just one day after retailer Marks & Spencer announced it is to shut one of its West Midlands shops as part of a closure programme affecting 13 stores.
The outlet in the Kingfisher Centre, Redditch, will close in April with all 66 staff set to transfer to neighbouring stores.
The company has also announced today the planned closure of five other stores by the end of April – Birkenhead, Bournemouth, Durham, Fforestfach near Swansea and Putney in London.
The last time H&M was this low global financial markets were in crisis, Angelina Jolie was popularizing the maxi dress, and Zara didn’t even sell clothing online.
Shares fell as much as 9.1 percent to a nine-year low Wednesday in Stockholm. Hennes & Mauritz AB have lost more than a quarter of its value in the past three months. The slump brings H&M’s market value to 235 billion kronor ($29.9 billion), equivalent to about a quarter of what Zara owner Inditex SA is worth.
“There is little in the statement to suggest that H&M can reignite its top line anytime soon,” wrote Richard Chamberlain, an analyst at RBC Capital Markets.
A 1 percent increase in December and January sales implied a “mid-single digit” drop in like-for-like revenue, according to RBC analysts, bearing out comments by chief executive officer Karl-Johan Persson that the first quarter started weaker than expected. That follows the biggest drop in quarterly sales in at least a decade.
The Swedish company plans to shut 170 stores this year, even as its adds a format called Afound, which joins the main H&M chain and other recent additions like Arket. The retailer said it would invest more in online sales and digital inventory-tracking technology, while adding shops in markets that are still growing.
As online shopping has soared, fewer people are visiting H&M’s vast network of physical stores. The company has struggled to cut inventory, which ended the year higher than planned, and H&M said it will increase markdowns by as much as 2 percent in the first quarter to clear that out.
The sales woes have forced Persson to retract a target of 10 percent to 15 percent annual sales growth for this year after setting that long-term target 12 months ago. The goal still stands for the future, but could take several years to reach, he said in an interview.
“We’re working toward it, we believe in what we’re doing, but since we haven’t reached the goal we set this year I don’t want to say we’ll reach them for 2019, 2020,” Persson said.
Some investors have sold shares amid fears the company is being too slow in responding to the industry’s digital shift. Didner & Gerge Fonder AB, one of H&M’s top shareholders, has called for a management shake-up. At a news conference Wednesday, Persson said he believes he has the board’s confidence as CEO and declined to comment further on calls for new management.
The company plans 390 new stores. About a quarter of the new shops will be formats other than the flagship H&M, such as COS, Monki, and Afound. The latter, the company’s ninth format overall, will consist of stores and websites that offer deals on the company’s own goods as well as merchandise from third parties.
The first Afound store will be in Stockholm, and the site will go online in Sweden this year. H&M is building a format where it can funnel off excess inventory and is entering part of the market that discount retailers such as Primark and supermarkets have proven can be successful. Afound is a shift in strategy following the last new format, Arket, which sells higher-priced general merchandise, including houseware, purses, and coffee.
There’s a risk the new chain may cannibalize H&M’s existing business, according to Michelle Wilson, an analyst at Berenberg. But Afound may not be the end of the new formats from H&M.
“We’re looking at two new business models that really aren’t like anything else we have,” Persson said in the interview.
The Stockholm-based company’s image was also tarnished by accusations of racism after an advertisement featuring a black child wearing a hoodie with the text “coolest monkey in the jungle” sparked a social-media storm and protests in South Africa earlier this month. H&M has apologized for the ad.
Despite speculation among some analysts that H&M would be forced to cut its dividend for the first time since it was listed in 1974, the company kept its payout for 2017 unchanged at 9.75 kronor ($1.24) a share. The company plans to offer shareholders the option to reinvest in new H&M shares instead of receiving the dividend in cash, which analysts said would dilute the stock. Members of the Persson family, collectively H&M’s biggest shareholders, plan to follow that option.
Top Italian beauty brand Korff Milano enters UAE
Korff Milano, a leading Italian company known for its upmarket beauty solutions in the pharmaceutical industry, has announced its foray into the UAE market in partnership with BinSina Pharmacies.
The premier European make-up brand marked its UAE debut with an exclusive gala dinner at Address Hotel, Dubai Mall, which witnessed the presence of a large group of dignitaries, high-profile beauty influencers and other senior officials.
As per the deal, the producst of the Italian fashion brand will be available exclusively at BinSina Pharmacies across the UAE.
Combining make-up with pleasure and scientific technology with glamour, Korff Milano aims to be the first choice for women with high standards for skin health and well-being, said a top official.
“We are excited to launch in the UAE, a place known for its up-market beauty trends and high quality products. Our innovative revolutionary formulas are ahead of time, which offer the perfect make-up solutions, making it an unmissable addition to the growing beauty market in the region,” remarked Dr Mohammad Al Rammal, the general manager of Korff Milano in the GCC.
Foreign beauty product firms are increasing their presence in this country as the sector offers an expanding market that is also giving local firms a platform for growth.
According to Euromonitor International, consumers in the UAE spent US$247 per capita on cosmetics and personal care, more than any other country in the Middle East, and ninth worldwide. This is forecast to grow to $294 in 2020.
“Dermatological know-how applied to make-up, trusted active ingredients and extremely close attention to purity of raw materials form the basis of every single product we make. We are optimistic that the brand will be an instant hit with women looking for beauty combined with safety and efficacy,” said Laura May, the commercial drector of Korff Milano.
According to May, the initial product offerings from Korff Milano will include, make-up which will come in high-tech, highly concentrated formulas.
The premium brand is hoping to use its experience and expertise in dermatological innovation and cosmetic pleasure to provide targeted solutions to women in the UAE, he added.
Dr Saleema Shurrab, the general manager of BinSina Pharmacy Group, said: “We are very excited to introduce the Korff Milano collection across our stores in the UAE. It is an internationally recognised brand and the on-going scientific research, new technology and safety and efficiency that the brand offers is in line with our core values.”
“With its holistic approach to strengthen, empower and regenerate skin, the brand is certain to make a statement in the UAE,” she stated.
Featuring evoking ingredients, gentle textures and research oriented products, Korff Milano offers rare and active ingredients that not only delight the senses, but turn a beauty routine in a moment of pure pampering. Korff Milano has grown to become one of the biggest brands for make up in retail pharmacy channels, and is distributed in more than 15 countries globally.-TradeArabia News Service