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Peacocks In Administration

January 19, 2012 By Leave a Comment

Peacocks In Administration

Peacocks, the budget fashion chain, has fallen into administration, putting 9,600 jobs at risk, after a management buyout deal collapsed at the last minute.

The collapse of Peacocks, which boasts designs by singer-songwriter Pearl Lowe, is the biggest retail failure since Woolworths went bust in 2008 with 27,000 redundancies.

Richard Kirk, chief executive and 30% shareholder, had been attempting a rescue deal with the backing of a mystery figure described as “one of the biggest names in British high street retailing”, but the deal fell apart early on Wednesday morning.

It is understood the deal would have forced Peacocks’ 18 lenders, including the Royal Bank of Scotland, to forgo most of the roughly £600m the retailer owed them. Peacocks had been fighting for survival since talks on a complex debt-for-equity swap broke down at the weekend.

Peacocks

Peacocks stores to remain open

KPMG, which was appointed administrator on Wednesday night, said all Peacocks’ 611 stores and 49 concessions would be kept open while it looks for a buyer. Richard Fleming, joint administrator at KPMG UK, expected “considerable interest” and was “hopeful a big chunk of the business” would be sold. There will be no immediate redundancies, but Fleming said there would “inevitably” be big job losses to come.

“Peacocks is a brand with great heritage, and it is with deep sadness that we have been left with no other option but to place the business into administration. We have worked tirelessly over the past year to agree a new financial structure to take the business forward in the current tough retail environment, including seeking new investment for the business,” he said. “This is a hugely sad development for all of our stakeholders, especially our employees who have shown total commitment to the business over an uncertain and difficult period.”

Peacocks still in talks to sell

RBS and Barclays said they would continue to support Peacocks. A spokesman for RBS said: “We supported the proposed transaction and are disappointed the deal could not be concluded. Since the bid came in on Sunday night, we have worked around the clock to try to achieve a positive outcome.”

Peacocks is still in talks to sell its plus-sized womenswear business Bonmarché, which employs 3,800 people, to private equity firm Sun European via a pre-pack administration. Bonmarché filed a notice of intention to appoint administrators on Monday but this allows 10 working days to secure a deal before the appointment of administrators.

Peacocks

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FDI Allowed In Supermarket Sector

November 24, 2011 By Leave a Comment

FDI Allowed In Supermarket Sector

FDI – India threw open its $450 billion retail market to global supermarket giants on Thursday, approving its biggest reform in years that may boost sorely needed investment in Asia’s third-largest economy.

The world’s largest retail group, Wal-Mart Stores Inc, and its rivals see India’s retail sector as one of the last frontier markets, where a burgeoning middle-class still shops at local, family-owned merchants.

Allowing FDI to foreign retailers to take stakes of up to 51 percent in supermarkets would attract much-needed capital from abroad and ultimately help unclog supply bottlenecks that have kept inflation stubbornly close to a double-digit clip.

FDI opening welcomed by International Retailers

“I think it will have a very deep and long-lasting impact on the Indian landscape,” Raj Jain, CEO of Wal-Mart India, told CNBC TV18. “I think it will redefine the way consumers shop in India, but more importantly the way supply chains in India run.”

Under fire for a slow pace of reform, Prime Minister Manmohan Singh’s embattled government appears to be slowly shaking off a string of corruption scandals to focus on policy changes long desired by investors.

“Opening FDI is a very bold move and the economic reforms process is back on track.” Rajan Mittal, vice chairman of India’s Bharti Enterprises, which is Wal-Mart’s partner, told reporters.

Small traders oppose allowing FDI in multi-brand retailing

Millions of small retail traders vigorously oppose competing with foreign giants, potentially providing a lightning rod for criticism of the ruling Congress party ahead of crucial state elections next year.

Food Minister K.V. Thomas said the government will allow foreign direct investment (FDI) of up to 51 percent in multi-brand retail – as supermarkets are known in India. It will also raise the cap on foreign investment in single-brand retailing to 100 percent from 51 percent, he added.

FDI

The new rules may commit supermarkets to strict local sourcing requirements and minimum investment levels aimed at protecting jobs, according to local media.

A heavyweight member of Singh’s coalition government warned on Thursday it totally opposed opening the sector allowing FDI.

The move is politically risky. Fears of potential job losses could heighten popular anger at the Congress party ahead of key state polls next year that will set the stage for the 2014 general election.

But slowing growth and investment in India, with the rupee currency around historical lows and government finances worsening, may have spurred the government into action.

“Manmohan Singh, after all the scams and the impression of government paralysis, has realized it’s time to take some bold steps. This is a very bold step that will please the middle class,” said political analyst Amulya Ganguli.

Political Opposition to FDI

India previously allowed 51 percent foreign investment (FDI) in single-brand retailers and 100 percent for wholesale operations, a policy Wal-Mart and rival Carrefour, among others, had long lobbied to free up further.

“For international retailers, it will open up a $1.6 trillion market growing at 8-9 percent so it’s a big business opportunity for all of them,” said Thomas Varghese, CEO of Aditya Birla Retail, an Indian supermarket chain.

Indian retailers have operated supermarket chains in India for years, but their expansion has been hampered by a lack of funding and expertise as well as poor infrastructure which makes the cold storage of food transported around the country practically impossible.

FDI – A new tool for ballot wars?

Political opponents of the proposal, with an eye to the ballot box, argue an influx of foreign players – which could include Carrefour and Tesco Plc  - will throw millions of small traders out of work in a sector that is the largest source of employment in India after agriculture.

India’s biggest listed company, Reliance Industries, was forced to backtrack on plans in 2007 to open Western-style supermarkets in the state of Uttar Pradesh after huge protests from small traders and political parties.

The main opposition Bharatiya Janata Party (BJP) opposes allowing FDI in the retail sector, arguing that letting in “foreign players with deep pockets” would bring job losses in both the manufacturing and service sectors.

“Fragmented markets give larger options to the consumers. Consolidated markets make the consumer captive,” the BJP’s leaders of the upper and lower houses of parliament said in a statement before the decision. “International retail does not create additional markets, it merely displaces (the) existing market.”

FDI

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Versace For H&M Fans Queue For Hours

November 18, 2011 By Leave a Comment

Versace For H&M Fans Queue For Hours

Versace For H&M - The significance of a pop-cultural phenomenon can be judged by the length of the queue – and the speed with which the website crashes, which is the online equivalent. In 2007, Greg Packer queued for 110 hours on Fifth Avenue in New York to be the first person to buy an iPhone.

At the height of her popularity last autumn, fans queued for 21 hours for a Cheryl Cole book signing. (The statistics do not always paint an edifying picture. In April, 1,000 people waited for up to two hours for the grand opening of a Krispy Kreme doughnut shop in Cardiff.)

For Versace for H&M, the queue outside the Regent Street flagship in London was almost Beatlemania-esque in length. The first person in the queue staked their spot at 4.45pm on Wednesday, for Thursday morning’s opening of Versace For H&M. The combination of a household-name designer label, a full-throttle hype machine, which included a live performance by Prince at the New York launch party, and cut-price black leather dresses on sale just as party season begins has gifted H&M with a collection selling faster than tickets for Glastonbury.

Versace For H&M had Donatella herself to greet shoppers

Versace for H&M is all about giving the cash-strapped masses a glimpse of luxury and glamour. It was fitting, therefore, that at 8.30am – by which time the first would-be shoppers had been queueing for more than 15 hours – Donatella Versace herself arrived to greet them, alighting from a chauffeur-driven Maserati on to a pink carpet laid for her arrival.

Versace For H&M

Dressed in a pink leather dress from the collection, which retails for £199 – about a tenth of the price a leather dress from the Versace mainline might cost – Donatella laid on a celebrity personal appearance as payback for her fans’ loyalty.

Versace for H&M collection goes on sale in January

The Versace brand, which has had a spike in interest around the H&M launch, this week announced it would be returning to the haute couture schedule in Paris, where the world’s most expensive bespoke dresses are made. Around the same time the second Versace for H&M collection goes on sale in January – dresses priced around £70 – Versace Haute Couture will be taking orders for dresses at about 500 times that price.

The queue at H&M’s flagship store was young – mostly under 25 – but diverse in every other way. Perhaps inspired by Kanye West’s early adoption of Versace for H&M jackets, a good proportion were men shopping for themselves. Some were fashion students and ardent fans of Donatella; others were entrepreneurial spirits planning to cash in on the queue by selling the clothes on eBay. A few had brought laptops to monitor the prices various pieces were fetching, in order to better target their shopping. Strict rules were in place, with 10-minute shopping windows granted and multiple purchases of the same item forbidden.

Those hoping to avoid the crush and take advantage of online shopping were in many cases disappointed, with the website crashing periodically throughout the day. As with many pop-cultural moments, you really had to be there.

Versace For H&M

 

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Argos Profits Down 94%

October 20, 2011 By Leave a Comment

Argos Profits Down 94%

Argos has blamed the squeeze on living standards faced by low-income families for a devastating collapse in trade that almost wiped out its first-half profits. Profits at Argos crashed 94% to £3.4m in the first six months of its financial year, its worst performance since 1998. Like-for-like sales dropped 9.1% in the six months to 27 August, with sales of important products such as TVs down as much as 20%.

The grim figures wiped more than £160m off the market value of its owner, Home Retail, with the shares closing down 20.2p at 99.5p.  ”Core customers at Argos have continued to be under pressure,” said Terry Duddy, chief executive of Home Retail.

Duddy has argued that Argos customers, drawn from the mass market C2 and D socio-economic groups, continue to struggle because they have not benefited from falls in mortgage rates as much as those with higher incomes.

The squeeze on British households was starkly illustrated on Tuesday, when official data showed that inflation hit a three-year high in September, driven by soaring gas and electricity bills.

Duddy called on the chancellor, George Osborne, to use his autumn statement to increase the income tax allowance to £10,000 to give lower income households “more pounds in their pocket”.

Argos

Argos stablemate Homebase also suffers

Argos stablemate Homebase also suffered falling sales and profit margins, which meant group profits for the half were down 70% at £28.3m on sales of £2.6bn. Duddy said: “Market conditions remain weak and in these early weeks of the second half have not seen the improvement in sales that we had anticipated.” He predicted like-for-like sales would remain firmly in negative territory for the rest of the year and that Christmas, when the catalogue chain makes up to 80% of its profits, would be crucial.

Home Retail is yet to replace Argos’s long-serving managing director, Sara Weller, and following her departure in June Duddy led a strategic review to assess whether any of the retailer’s problems were self-inflicted. It concluded, however, that Argos’s multi-channel formula was the right one, as customers increasingly shopped online or using their mobile phone rather than just in person at one of its 754 stores. “We are gaining ground with our customers and not losing out to our competitors,” insisted Duddy.

Argos has launched a series of new ventures

To boost sales Argos has launched a series of new ventures including a home shopping channel, as well as tie-ups to sell books and childrenswear. Despite pulling the plug on an attempt to crack the Indian market, it announced plans to pump £22m into a joint venture with Chinese appliance maker Haier Electronics that will see an Argos branded website launch in the fast-growing retail market next year.

But after four years of declining profitability some analysts argued that Argos had deep-seated problems and needed a radical restructuring. They point to the growth of websites such as Amazon, and aggressive supermarkets, with Asda currently promising to be “cheaper than Argos” on toys – a key battleground at Christmas.

The weak figures saw Panmure Gordon analyst Philip Dorgan cut his profit forecast for the year by 25% to £96m. “Management has stated that it has kicked the tyres, looked under the bonnet, taken the engine to pieces, put it back together and decided that it doesn’t need to change strategy,” he said. “We take a more simple view. If it walks like a duck, quacks like a duck, then it’s a duck,” he said.

Argos Profits down 94%

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Carrefour Sounds The Alarm Over The Economy

October 14, 2011 By Leave a Comment

Carrefour Sounds The Alarm Over The Economy

Carrefour Deepening economic gloom has forced Europe’s biggest retailer, Carrefour, to issue its fifth profit warning this year and Germany’s leading independent forecasters to highlight the risk of a recession in 2012.

As EU policymakers struggle to find a common solution to the sovereign debt crisis within the next two weeks, the real economy is rapidly deteriorating as confidence seeps from consumers and investors. France-based Carrefour blamed “an increasingly uncertain environment” for an expected fall in operating profit this year of up to 20%. Only six weeks ago it said the decline could be 15%, prompting analysts to suggest the group’s guidance was worthless.

Across the Rhine, the eight leading German economics institutes slashed their earlier growth forecast for next year from 2% to just 0.8% and warned of an even deeper downturn if there is a “credit event” in Greece or elsewhere in the eurozone.

Germany grew just 0.1% in the second quarter of 2011 but the full-year result could still be 2.9% after a huge spurt in the first quarter. The IMF is forecasting 1.3% German growth next year.

In France, a Reuters poll of 20 economists resulted in a growth forecast of just 1% in 2012 after 1.6% this year. In its recent budget the government forecast 1.75%.

Carrefour sales down 4.4% in Q3

It was the poor performance of its French hypermarkets, with sales down 4.4% in the third quarter, that drove Carrefour to issue its latest profits warning.

Pierre-Jean Sivignon, Carrefour chief financial officer, said the decline in consumer sentiment had hit “discretionary” (mostly non-food) spending – down almost 10% in France – and economic conditions were likely to remain challenging.

Carrefour is in the middle of revamping its bigger stores under its so-called Reset plan, which is the brainchild of Lars Olofsson. A former senior executive at Nestlé, Olofsson was brought in as chairman and chief executive by the directors of Colony Capital and Arnault Group – the private holding company of French billionaire Bernard Arnault. Together they took a 9.8% stake in Carrefour for €4bn in 2007 but have seen their investment – now increased to 13.8% – lose 60% of its value.

carrefour

Carrefour leadership in question

Many analysts would now like to see the back of Olofsson for his failure to win over wary French consumers – in contrast to rivals such as Casino, which cut prices earlier in order to retain customers.

Germany, meanwhile, may have to change ingrained habits and rely on consumer spending to drag it away from recession, according to the country’s eight leading economic institutes. They see unemployment – down to a 20-year low of 2.79m in September – staying at around that level on average throughout 2012.

The institutes forecast that hourly wages will rise 2.5% compared with just 1.8% this year, suggesting that, with inflation down from current levels of 2.6% to 1.8% in 2012, households should enjoy more spending power.

However, greater uncertainty would depress domestic demand, they added. The debt crisis, if it escalates, would force the forecasters to revise down their expectations and an outright recession could not be ruled out.

But they warned: “The debt crisis in Europe is threatening to become a banking crisis, which is increasingly weighing on the German economy too.

“The strongly increased uncertainty will dampen domestic demand and foreign trade will probably no longer contribute to the expansion due to the difficult situation of important trade partners.”

They also cautioned the European Central Bank over its purchase in the secondary market of government bonds, arguing that it would be much better to cut interest rates in order to tackle the eurozone crisis.

The ECB, which has twice raised borrowing costs this year to 1.5%, is now likely to reverse these increases over the coming months but Mario Draghi, its incoming president, may persuade a majority on the governing council to stay its hand until the new year.

The experts, however, made plain they do not expect a repeat of the economic collapse that followed the bankruptcy of Lehman Brothers in the autumn of 2008. “Contagion on the scale seen after that bankruptcy is unlikely,” they said.

Carrefour

 

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Marks And Spencer Vendors To Pay For Refurbishments

October 5, 2011 By Leave a Comment

 

Marks And Spencer Vendors To Pay Towards Refurbishments

Marks and Spencer has raised eyebrows by asking its clothing suppliers to stump up millions of pounds towards its expensive store refit programme.

 

Last week Marc Bolland, its chief executive, called its suppliers together to request the one-off payment. A spokeswoman said it has asked for a contribution equal to 1.2% of a supplier’s annual turnover with Marks and Spencer. The move is expected to raise more than £10m for Marks and Spencer and has raised concerns that it is struggling to drum up sales amid tough trading conditions.

 

Bolland’s plans to reinvigorate the business involve spending £600m on its stores over the next three years. He has also set a target to increase British sales by up to £1.5bn over the same period and a spokeswoman said that growth would benefit suppliers and it was “right” they played their part.

Marks and Spencer

Marks and Spencer profit forecast trimmed

Several brokers have trimmed their profit forecasts for Marks and Spencer in light of weak sales figures from rivals. Nick Bubb, an Arden Partners analyst, said asking suppliers for money showed “Marks and Spencer is a bit defensive about the accusation that it is spending too much on store revamps, and that it needs some help in preserving gross margins at present”.

Marks And Spencer is one of the UK’s leading retailers

Marks And Spencer is one of the UK’s leading retailers, with over 21 million people visiting their stores each week. Marks And Spencer offer stylish, high quality, great value clothing and home products, as well as outstanding quality foods, responsibly sourced from around 2,000 suppliers globally.

 

Marks And Spencer employ over 75,000 people in the UK and abroad, and have over 600 UK stores, plus an expanding international business.

 

Marks and Spencer

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Play.Com Sold To Rakuten Of Japan For £25m

September 21, 2011 By Leave a Comment

Play.Com Sold To Rakuten Of Japan For £25m

Play.com, The Channel Islands-based music and film website has been sold to Rakuten of Japan in a surprise £25m deal that comes as the sun sets on the VAT loophole that enabled the group to undercut UK high street retailers.

Play.com, founded by three Jersey entrepreneurs, is the UK’s biggest seller of DVDs online, with estimated annual sales of about £500m. Tokyo-listed Rakuten has entered a “definitive agreement” to buy Play.com for 3.3bn yen (£25m) as it expands in Europe.

Play.com founders, Richard Goulding, Simon Perrée and Peter de Bourcier, have prospered by selling CDs and DVDs posted from Jersey to customers on the UK mainland, taking advantage of European VAT rules that exempt transactions of less than £18 from sales tax. This has enabled the company to offer lower prices than UK-based store groups, and its success has contributed to the problems of specialists such as HMV.

Play.com transfers 100% stake

The founding trio, who started play.com in 1998 from the stockroom above a branch of the sportswear chain Athlete’s Foot – which Goulding and Perrée ran as a Jersey franchise – have not retained a stake. Rakuten has said that it is acquiring “100%” of the stock from the current shareholders.

The sale of play.com comes as the DVD market has gone into decline. UK sales dipped 6% last year, while downloading and streaming rose 18%. In the US the slump in DVD sales last year was 20%.

play.com

Play.com was exploiting VAT loophole

In his March budget, George Osborne signalled his intention to close the VAT loophole that Play.com has exploited. The chancellor has already ruled that the VAT-free threshold will be cut from £18 to £15 from next month and has plans to close the loophole entirely within a year.

In an interview with the Guardian in 2009, Play.com managing director, Stuart Rowe, declined to state what proportion of Play’s sales were VAT-free: “Off the top of my head I don’t know. We are not really concerned because [the VAT relief] has less of an effect on the company than it did in times gone by.”

Play.com parent group Zuma Investments, which has its headquarters in Jersey, is not required to publish financial statements but is considered one of Europe’s most successful e-commerce operations. It is not clear how much the founding trio have made from the enterprise but the sale will deliver a substantial windfall.

Rakuten, which now has internet operations in 10 countries, has made a series of European acquisitions, including France’s PriceMinister and the German online shopping mall Tradoria, and is keen to step up its presence. The UK has the highest internet sales penetration in Europe, expected to reach £37bn by 2014.

“The UK market is one of Europe’s largest and most mature e-commerce markets,” Hiroshi Mikitani, Rakuten chief executive, said. Play.com is not only a pioneer in the market, but also one of the UK’s most successful e-commerce businesses. We aim to leverage our e-commerce strength and experience to further expand and develop Play.com’s business model, and channel its loyal user base, merchants and product offerings into Rakuten’s global e-commerce network.”

Play.com

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Wal-Mart To Train And Work More With Women

September 15, 2011 By Leave a Comment

Wal-Mart to train and work more with women

Wal-Mart Stores Inc will double the money it spends with women-owned businesses, train women around the world and push major suppliers to use more women and minorities on work they do for the retailer, its latest steps to promote a brighter corporate image.

The moves unveiled by Chief Executive Mike Duke and others on Wednesday come after the U.S. Supreme Court threw out women’s massive class-action sex-discrimination lawsuit against the world’s largest retailer in June.

That ruling was a major victory for Wal-Mart, which may still be hit with individual lawsuits from women. Now, the company aims to make a major mark on women’s economic empowerment by setting five goals it hopes to meet by 2016. Wal-Mart, around the world, employs 2.1 million people, more than half of whom are women.

“This is not something that they’re doing in response to anything else,” said Alyse Nelson, the co-founder, president and CEO of Vital Voices, an organization that helps women in 127 countries with mentoring and training.

Wal-Mart initiative dubbed a game changer

“It is the game changer, in my opinion. I’ve worked in this space for 16 years and I’ve never seen anything this big,” Nelson said on Wednesday as she headed to the Wal-Mart event in Bentonville, Arkansas.

One goal with the potential for major economic impact is to increase sourcing from women-owned businesses including construction firms, farms and manufacturers.

Wal-Mart

In the United States, Wal-Mart spent about $2.5 billion with women’s businesses last year. It now plans to spend $5 billion annually by 2016 in the United States, and double sourcing from international suppliers run by women.

CEO Duke, speaking to a packed room at Wal-Mart headquarters, noted that about 70 percent of the 1 billion people living in poverty around the world are women. Also, less than 7 percent of venture capital goes to companies started by women.

The presentation was also broadcast over the Internet.

Wal-Mart initiative will encourage others

The U.S. State Department, among others, is backing its new women’s initiatives.

“I don’t know of any other company that’s making that kind of commitment and my hope is that it encourages others to step up,” said Nell Merlino, founder and president of Count Me In for Women’s Economic Independence, a nonprofit that helps women grow their small businesses that has collaborated with Wal-Mart since 2008.

Wal-Mart also plans to help train and educate 400,000 women, including 200,000 U.S. women from low-income homes, in job and financial-related skills. The company is funding its plans with $100 million in grants from the Wal-mart Foundation and its international businesses.

Wal-Mart often comes under fire with groups claiming, among other issues, that its stores put smaller shops out of business and that it does not pay its workers enough. Its attempts to open stores in certain locations, most notably New York City, have been met with opposition from community groups.

The company has been working to promote a more caring image through various initiatives, such as working with U.S. First Lady Michelle Obama to expand access to healthy food and pushing companies to sell more environmentally friendly products.

Some of the efforts are building on work that Wal-Mart has already done. In 2005, it pushed law firms to increase the gender and ethnic diversity among the staff that did business for the retailer. Now it is asking other firms, such as advertising agencies and suppliers who sell more than $1 billion of products to the chain each year, to do the same.

Wal-Mart

 

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Tesco Sausage Ad Chopped

September 14, 2011 By Leave a Comment

Tesco Sausage Ad Chopped

The television advert for Tesco’s Butcher’s Choice sausages (Tesco sausage) showed an idyllic country scene as pigs wandered freely around a field as the farmer went about his harvest.

But the advertising watchdog has banned the supermarket giant from repeating the commercial (Tesco sausage ad), saying it misleadingly implied that the meat used for the tesco sausage came from free-range pigs. Four people complained about the advert after it aired in May this year.

Tesco said it did not believe it was misleading, adding that the pigs had been reared to world-class nationally agreed welfare standards.

The supermarket giant said the Tesco sausage ad, which was filmed on a farm that is a supplier, showed pigs both outdoors and indoors.

But the Advertising Standards Authority said in “all [the] scenes the pigs were shown to be in a spacious and free environment”.

Tesco Sausage Ad claims pigs reared in the open

“The pigs were shown wandering unrestricted outside and, within the indoor barn scene, the barn door was shown to be open and the pigs’ movement unrestricted,” the regulator added.


The ASA said viewers were “likely to interpret the tesco sausage ad to mean that the pigs … were reared in an unrestricted environment and had access to outdoor pasture”. “Since we

understood that was not the case, we concluded that the ad was misleading.”

Tesco said the farm featured in the ad supplied meat from pigs that were born outdoors and reared indoors.

Tesco Sausage Ad breached advertising regulations

The ASA said the ad breached advertising regulations and must not be repeated again in its current form.

The supermarket said it was baffled by the ruling because the farmer featured in the ad was a “genuine” Tesco farmer.

“We’re a bit baffled by this ruling. The farmer featured is a Tesco supplier and produces some of the pork featured in our ad. We genuinely don’t see how the ASA can say an ad showing a genuine Tesco farmer can be misleading.”

Tesco Sausage Ad

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High Street Braces For More Closures

September 5, 2011 By Leave a Comment

High Street Braces For More Closures

High street retailers are braced for another wave of closures following one of the worst summer trading periods in years and growing concern about pressures on consumers in the run-up to Christmas.

Sales figures for August, blighted by riots, volatile stockmarkets and poor weather, slipped 2.2% among mid-market retailers, according to accountancy firm BDO – the worst drop since the depths of recession two years ago.

Widespread disruption, which caused shops on high street to close their doors during trading hours well beyond the riot flash points, has left many retailers facing an uphill struggle in the face of a looming quarterly rent deadline at the end of this month.

High street retailers have difficulty in paying rents

Among those already under financial strain is high street retailer Clinton Cards. It emerged the company had approached landlords requesting more time to meet rent bills – as it did this time last year.

Earlier this year, the rent deadlines at the end of March and June were followed by a string of high street retailers crashing into administration. They included Focus DIY, Habitat, TJ Hughes and fashion chain Jane Norman.

The second quarter of 2011 saw 375 retailers call in administrators, said accountancy firm PricewaterhouseCoopers, a 9% rise on the same period in 2010.

Meanwhile, many surviving mid-sized retailer groups listed on the stock exchange are among those most targeted by short sellers – those investors who effectively bet on the value of shares falling. Recent figures from research firm Data Explorers suggest stocks heavily shorted included Argos’s parent company Home Retail, Dixons, HMV, Ocado, and high street retailers Mothercare, Next and Carpetright.

high street

High street retailers among 9,000 retailers in financial trouble

Accountancy firm RSM Tenon has identified almost 9,000 retailers it believes are now financially vulnerable, an increase of more than 10% in the last six months and this includes many high street retailers.

The Local Data Company and the British Property Federation will this week issue a report expected to show that many towns have seen a sharp rise in the number of boarded-up shops. Previous figures from the British Retail Consortium (BRC) suggest about one in 10 shops are vacant in town-centre shopping districts.

The BRC will publish its sales survey for August on Tuesday, which are expected to confirm the gloomy picture painted by BDO. Its figures for July pointed to comparable sales having risen by 0.6% – a number boosted by inflation.

The next two weeks will see trading updates from high street retailers Next, JD Wetherspoon, Costa Coffee parent Whitbread, Carpetright, Home Retail Group, B&Q parent Kingfisher and Primark parent Associated British Foods. All will be closely watched for hints of stress on the high street.

However, struggling retailers may well be able to put a case to creditors to ease the pressure before the Christmas trading period, traditionally the busiest time of year.

High Street

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