Walmart keen to expand in India
Stores, the worldâs largest retailer, is keen to expand in China and
India, chairman S Robson Walton said in Kuala
Lumpur.
“Internationally, weâre focusing on larger markets,” Mr
Walton told delegates at a Forbes Global CEO Conference in the Malaysian capital
on Wednesday. âChina is a big opportunity for us. We’re just getting
started in India, where we see great opportunity over the long term,â he
said, without giving details on its expansion plans.
Walmart, which
competes with Franceâs Carrefour SA in China, is accelerating expansion in
Asia that Walton expects will lead the global economic recovery. Chinaâs
retail sales rose 15.4% in August from a year earlier, the biggest gain this
year after accounting for seasonal distortions, according to the Chinese
statistics bureau on September 11.
Bentonville, Arkansas-based
Walmart operates at about 630 locations in China, India and Japan, according to
its web site. About 24% of Walmartâs net sales came from its international
division in the quarter ended July 31, the company reported last month. Walmart
sees opportunities in the healthcare business, Mr Walton said, without giving
details.
John Lewis puts hundreds of jobs at risk
John Lewis is cutting costs after it revealed a sharp fall in profits two weeks ago Photograph: Darren Staples/Reuters
Hundreds of jobs are at risk at the John Lewis department store chain after the employee-owned business, which has been battered by the recession, revealed plans today to shut its in-store call centres.
The branch centres, which deal with customer service inquiries, are being axed in favour of two big new “contact centres”, which will open next year in Glasgow and either Manchester or Newcastle.
Some 700 staff are employed in the John Lewis branch call centres. The department store said there would be opportunities for staff to transfer to the new centres, which will take on 500 staff, or to be redeployed into shop-floor roles in the stores.
A spokeswoman for the chain said it was not yet known how many staff would move to new jobs and therefore how many were likely to be made redundant.
The cost-cutting move comes just two weeks after the 28-strong chain showed just how hard it is being hit by the economic downturn. Profits crashed more than 50% in the first half of this year. The stores made operating profits of just £21m in the six months to August – down from £43m over the same period in 2008 and £54m in 2008.
Sales of big-ticket home ranges, which are directly linked to the number of people moving home, were down more than 8%. Homewares account for more than a third of John Lewis sales and an even higher proportion of profits.
Andrew Murphy, director of operational development at John Lewis, said the existing branch-based call centres were inefficient and the new centres would offer better service.
“Having 25 separate call centres is not ideal in terms of efficiency and is also not the best way to ensure that customers always receive excellent service,” he said.
“The customer proposition will remain essentially unchanged, but the experience will be enhanced by improved information systems, telephone support over extended opening hours and the ability to bring different strands of best practice together.”
Blacks Leisure staff face 500 job cuts
Blacks Leisure plans to reduce its head office headcount. Photograph: Newscast
Up to 500 jobs could be lost at Blacks Leisure as it shuts another 89 stores and cuts a fifth of its head office staff.
This is the company’s latest attempt to placate its bankers and secure its future. The closures will affect its Millets and Blacks chains across the UK.
Blacks announced this morning that it has opened consultations with staff over the proposed closure of the 89 stores, most of which have been loss-making for several years.
A Blacks’ spokeswoman declined to say how many staff would be affected as the consultation period has just begun, but it is thought that up to 450 jobs could go. Blacks is also planning to reduce its head office workforce in Northampton by around 50 people.
“Whilst it is highly regrettable that the Company is having to take these steps, both actions will ultimately strengthen the business and help ensure that a successful and profitable outdoor retailer emerges from the current restructuring process,” said the company.
Blacks has until the end of October to persuade Lloyds Banking Group that it has a viable future. Last week Blacks announced it is putting its 11 Sandcity stores into administration, but it also warned today that “further restructuring is still required to satisfy” Lloyds.
Marks & Spencer’s less happy returns
Some Marks & Spencer’s customers have bemoaned changes to the store’s policies. Photograph: David Sillitoe
It has long been by far the most generous returns policy on the high street, but was clearly edging towards its sell-by date. Now Marks & Spencer is facing an angry consumer backlash over its decision to quietly reduce the period of time within which shoppers must return their goods – from 90 days to 35.
In recent days, unhappy shoppers have been expressing their frustration on internet forums such as Moneysavingexpert.com. But the interesting thing is that it has taken nearly six months for the change to sink in. The new policy came into force on 12 April and while, understandably, it was not announced in a fanfare of publicity, it is spelled out clearly on the store’s receipts.
Today, M&S announced it has been doing pretty well, despite the economic downturn. But it hasn’t been an easy year for the retailer once considered a national treasure. In May it was forced into a humiliating U-turn over plans to charge women £2 extra for big bras following a rebellion among its customers. Last week its up-market competitor Waitrose announced it was opening 300 convenience stores that will compete head on with M&S Simply Food outlets.
So what is behind the new returns policy, which was agreed after a major review? It is clearly being done on cost-cutting grounds. The three-month window gave lazy returners the opportunity to hang on to their goods until long after some items were still available to buy. Under the old scheme you could buy a winter coat in January and take it back in spring.
M&S insists the vast majority of people returning goods take them back within 28 days, and that two-thirds do so within two weeks. It claims it still has the most generous window for returns on the high street – TK Maxx, for instance, only has a 14-day returns policy.
But people seem to expect more from M&S. Some consumers have expressed concern that the change will hit Christmas shoppers, or at least those organised enough to buy their gifts more than a month before 25 December. But the retailer says that between 1 October and 11 December it is extending its policy so unwanted or ill-fitting Christmas gifts can be returned, with a receipt, until 16 January 2010.
Perhaps the policy as it existed before was too good to last. Surely if you decide you want to change something you have bought yourself, or take back an unwanted present, there is no reason to leave the bag to gather dust for three months. And store managers have a surprising amount of discretion on returns – I have successfully taken items back to M&S even when I have lost the receipt. But have you encountered problems? Has the change put you off shopping at M&S, or do returns policies have no impact on where you choose to shop?
Marks & Spencer sales figures suggest return of consumer confidence
Marks and Spencer sales beat analyst forecasts. Photograph: Daniel Berehulak/Getty Images
There are increasing signs that the worst could be over at Marks & Spencer after the retailer once again unveiled better-than-expected sales figures.
The fashion and food store chain – which is a bellwether for middle-aged, middle-England consumer confidence – said like-for-like sales were down just 0.5%, with clothing and homewares down 0.8% and food sales flat compared with last year.
Analysts had been expecting overall like-for-like sales to be down some 1.5%, with clothing and homewares down 2.7% and food down 0.3%.
Sir Stuart Rose, M&S chairman, said: “Consumer confidence has reached the bottom. People feel better about life.” But he added there was still “pressure on pockets”.
He pointed out that the food halls had now posted better like-for-like sales every quarter for a year and said the improved performance was down to “sharper values, better availability and product innovation”.
M&S said sales at its international stores were up 9.6% on the same quarter a year ago, while online trade up 30%.
In June M&S reported like-for-like sales down 1.4% – far better than City forecasts of 3.5%. The figure was a huge improvement on the previous quarter, when like-for-like sales in the UK fell by 5.9%.
Rose said the improvement in sales showed: “The actions we are taking are working” and said profit margins would now be down only 50-100 basis points on last year’s levels, due to better buying and fewer markdowns. The previous guidance had been for a margin decline of 125-175 basis points.
Matthew McEachran, retail analyst at the broker Singer, said the improved margin and better sales were likely to add £40m to next year’s profits.
But despite Rose’s upbeat tone, shares in M&S slipped by 1.6% this morning to 368.2p, down 6.6p. They have risen by almost a quarter in the last three months, and are still some way short of the 560p at the beginning of 2008.
Who’s next for the M&S hotseat?
The new trading update benefits from being measured against a big downturn last year, when retailers were coping with the reverberations of the banking crisis.
At that time like-for-like sales were down by more than 6%, with general merchandise down 6.4% and food sales- which were getting a boost from rising prices – down by 5.9%.
The new M&S food sales figures are an endorsement of Rose’s decision to appoint the food boss, John Dixon, to the board earlier this month – making him a prime candidate to take over from Rose as chief executive next year.
Dixon has cut prices – 18% of M&S food sales are now labelled Wise Buys. The food halls, however, are still growing at a far slower rate than at its rival Waitrose, and last week the John Lewis-owned grocery chain turned up the heat on M&S as it announced plans to open 300 convenience stores across the country.
Over the past two years, M&S has seen its fortunes take a serious turn for the worse. In May, Rose slashed the retailer’s dividend by a third as he unveiled annual profits of £604m – down from more than £1bn in 2008 – and this year the chain is forecast to turn in only £535m.
Rose has also run into trouble with shareholders over his promotion to the role of executive chairman – contravening corporate governance guidelines. He has pledged to appoint a new chief executive by next summer and is thought to be keen to promote an existing M&S senior executive, probably Dixon or the finance director, Ian Dyson. Rose then hopes to stay on as chairman for about a year.
Next month the candidates, which also include the clothing chief, Kate Bostock, will each make presentations to leading investors. Rose said: “It’ll be a bit like Britain’s Got Talent, or M&S Has Got Talent.”
Shareholders, however, are making it clear they would prefer an external appointment, such as Andy Bond from Asda or Marc Bolland from Morrisons, but fear suitable candidates will not take the job while Rose remains as chairman.
Marks & Spencer sees difficult 2010
Photograph: Rui Vieira/PA.
There’s a mixed bag of retail results this morning, with ASOS soaring ahead, Marks & Spencer struggling along, and Blacks Leisure shutting stores and cutting staff.
M&S first. Sir Stuart Rose said today that M&S is riding the downturn well. It’s true that a 0.5% decline in like-for-like sales in UK is better than some analysts feared, but the company is still lagging behind rivals. Marks’ food division grew its sales by 1.7% in the last 13 weeks – that’s pedestrian compared with Waitrose’s weekly gains of around 11%.
Rose said that M&S also plans to hire 20,000 temporary workers this Christmas, and warned that next year will be difficult:
‘We are pleased to report continuing improvement in our performance. This demonstrates that the actions we are taking are working.
Whilst there is more visibility in the marketplace and consumers appear more confident, we continue to be cautious about the outlook. We expect 2010 to be a tough year and we will continue to run the business accordingly.”
ASOS, meanwhile, grew its sales by an impressive 47% in the last six months. Its web site – which mainly offers affordable versions of celebrity fashions – now has 1.2 million active customers.
The news is gloomier from Blacks, though, which said it is shutting 87 underperforming stores and looking to cut 20% of its head office staff.
In other news…..First Group has said trading is in line with expectations despite the recession, and also reported cutting 4,000 jobs.
And Man Group has estimated it will make a profit of £280m for the last six months, a sharp fall on the previous year’s £622m.
Jessops saves 2,000 jobs with HSBC deal
Jessops has struck a deal with HSBC which will save 2,000 jobs. Photograph: David Sillitoe
The Jessops camera chain has handed control of the business to its bank in a take-it-or-leave-it deal it said would save the business and 2,000 high street jobs.
The 72-year-old chain, the largest photographic retailer in the UK, has agreed to a debt-for-equity swap with HSBC. Shareholders, whose investment in Jessops was worth 155p a share just five years ago, will get just 1p for every 10 shares they own.
Chairman David Adams, who was brought in two years ago to try and save the ailing business, said the deal was “a good result”. The alternative, he said, was immediate insolvency and shutdown.
Jessops is one of a number of firms that have been forced to relinquish their equity to lenders to slash their debts and stay in business. Earlier this year retirement home specialist McCarthy & Stone and housebuilder Crest Nicholson were forced into such swaps. Fashion group Mosaic, which runs the Oasis chain, did a similar deal with its lender Kaupthing and hardware retailer Robert Dyas agreed a swap this month with Lloyds Banking Group and Allied Irish.
The Four Seasons nursing home business and betting group Gala Coral are also known to be considering a swap deal to cut their debts.
Adams said Jessops’ dire financial situation was not the result of the recession but of over-ambitious debt-fuelled growth plans which left the retailer owing HSBC some £60m. The retailer, he said, had pursued a “growth at any cost” business plan that was unrealistic.
Jessops is one of a number of companies held up as an example of the poor outcome of private equity ownership. The private equity arm of ABN Amro floated Jessops in October 2004 for 155p a share and sold its remaining stake in 2006 for 120p.
The following year the wheels came off: Jessops was hit by fierce competition for point-and-shoot compact cameras and increasing use of camera phones. Sales collapsed, the group issued multiple profit warnings and the directors were replaced. One hundred stores were closed, 500 jobs axed and old stock sold off at a loss.
Adams said the swap deal showed “we have demonstrated to the bank that Jessops has a valid place in the market and a valid business plan and that there is good chance of getting a return”.
Under the debt-for-equity swap Jessops will be sold to a new company 47% owned by HSBC and 33% by the retailer’s pension fund, which is in deficit. The remaining 20% stake will pass to an employee benefit trust that will eventually be allocated to the retailer’s management as a long-term incentive. Two key beneficiaries are likely to be Jessops’ new chief executive, Trevor Moore, who joined the business two weeks ago, and David Adams, who is staying on as chairman.
HSBC is providing a £54m loan to the new company to acquire Jessops and will immediately write off £34m – leaving the retailer with a debt of £20m. Shareholders will receive just £100,000. There are just over 100m shares in issue.
The UK Listing Authority, which monitors quoted companies, has granted a waiver to usual rules that would require a circular outlining the deal and a shareholder vote – to allow the refinancing to go ahead immediately. The retailer had said it did not have time to comply with the usual procedures.
Jessops hands over control to HSBC in rescue deal
Sales of conventional cameras at Jessops were hit by the popularity of camera phones. Photograph: Dan Chung
The Jessops camera chain has handed control of the business to its bank in a take-it-or-leave-it deal it said would save the business and 2,000 high street jobs.
The 72-year-old chain, the largest photographic retailer in the UK, has agreed to a debt-for-equity swap with HSBC. Shareholders, whose investment in Jessops was worth 155p a share just five years ago, will get just 1p for every 10 shares they own.
Chairman David Adams, who was brought in two years ago to try and save the ailing business, said the deal was “a good result”. The alternative, he said, was immediate insolvency and shutdown.
Jessops is one of a number of firms that have been forced to relinquish their equity to lenders to slash their debts and stay in business. Earlier this year retirement home specialist McCarthy & Stone and housebuilder Crest Nicholson were forced into such swaps. Fashion group Mosaic, which runs the Oasis chain, did a similar deal with its lender Kaupthing and hardware retailer Robert Dyas agreed a swap this month with Lloyds Banking Group and Allied Irish.
The Four Seasons nursing home business and betting group Gala Coral are also known to be considering a swap deal to cut their debts.
Adams said Jessops’ dire financial situation was not the result of the recession but of over-ambitious debt-fuelled growth plans which left the retailer owing HSBC some £60m. The retailer, he said, had pursued a “growth at any cost” business plan that was unrealistic.
Jessops is one of a number of companies held up as an example of the poor outcome of private equity ownership. The private equity arm of ABN Amro floated Jessops in October 2004 for 155p a share and sold its remaining stake in 2006 for 120p.
The following year the wheels came off: Jessops was hit by fierce competition for point-and-shoot compact cameras and increasing use of camera phones. Sales collapsed, the group issued multiple profit warnings and the directors were replaced. One hundred stores were closed, 500 jobs axed and old stock sold off at a loss.
Adams said the swap deal showed “we have demonstrated to the bank that Jessops has a valid place in the market and a valid business plan and that there is good chance of getting a return”.
Under the debt-for-equity swap Jessops will be sold to a new company 47% owned by HSBC and 33% by the retailer’s pension fund, which is in deficit. The remaining 20% stake will pass to an employee benefit trust that will eventually be allocated to the retailer’s management as a long-term incentive. Two key beneficiaries are likely to be Jessops’ new chief executive, Trevor Moore, who joined the business two weeks ago, and David Adams, who is staying on as chairman.
HSBC is providing a £54m loan to the new company to acquire Jessops and will immediately write off £34m – leaving the retailer with a debt of £20m. Shareholders will receive just £100,000. There are just over 100m shares in issue.
The UK Listing Authority, which monitors quoted companies, has granted a waiver to usual rules that would require a circular outlining the deal and a shareholder vote – to allow the refinancing to go ahead immediately. The retailer had said it did not have time to comply with the usual procedures.
Retail sector enjoys unexpected sales growth in September
Bluewater shopping mall in Kent. Photograph: Corbis
Retail sales rose unexpectedly this month, in a sign that the sector has stabilised following the sharp fall in demand throughout most of this year.
The Confederation of British Industry (CBI) reported this morning that a small majority of retailers enjoyed higher sales in September than a year ago.
“After such a difficult summer, it is encouraging to see signs that conditions in the retail sector are stabilising,” said Andy Clarke, chairman of the CBI Distributive Trades Panel. Clarke, who is also chief operating officer of Asda, added that consumers should be able to look forward to seeing more new products on the shelves after “months of heavy destocking”.
But Clarke also warned that: “With unemployment rising, wage growth low, and consumers building up their savings, spending is likely to remain subdued for some time.”
According to today’s CBI distributive trades survey, 39% of retailers said sales volumes rose in September compared with a year ago, while 36% said they fell. The resulting balance of +3 was significantly better than the -14 which the City was braced for.
The figures show that grocers are enjoying particularly solid trading, with a net balance of +80 reporting higher sales in September. But durable household goodsmakers, chemists and booksellers all reported a net fall in volumes.
With interest rates at a record low of 0.5%, lower mortgage costs means that consumers should have more disposable income. But separate data from the Bank of England this morning showed that a lack of credit availability helped to push remortgaging and unsecured borrowing down last month.
Howard Archer, economist at Global Insight, said the CBI data indicated that the UK economy returned to growth in the current quarter. But he was also cautious over the strength of the recovery.
“Low mortgage payments, reduced utility bills and easing inflation are boosting the purchasing power of a good many people, thereby giving them scope to step up their discretionary spending. Even so, the suspicion remains that the upside for consumer spending will be limited for some time to come as consumers overall still face serious obstacles. These notably include sharply higher and rising unemployment, low earnings growth and heightened debt levels,” Archer said.
The distributive trades survey has only reported a net rise in sales volumes in one other month, April, since the start of 2009. Today’s survey also showed that a net balance of +3 retailers expect them to rise in October.
Worried American Retailers Look to Canada Retail for New Revenue Streams
With the faltering US economy and the resulting drop in consumer spending, many American based online merchants are now scrambling to find new markets to replace income lost as Americans curb their online personal spending. These Web based businesses are looking for new markets that have a “wired” Internet savvy population, with an economy in [...]
