Sunday Retail News Roundup

Sunday May 22nd 2016

M&S boss Rowe beware grand promises, American Account stores dying death of thousand clicks, John Lewis bonus fear if Britain leaves the EU, BHS Administrators under pressure to sell within two weeks, Marks & Spencer shop headaches, Can former M&S Saturday boy fashion revival, Co-operative Group radical overhaul, High-profile bidders Austin Reed carve up, Sky the kingmaker O2 buyout battle, Co-op revival classic 60s look.

Sunday Times.

Steve Rowe, Marks & Spencer’s new chief executive, has the never-ending struggle to fix M&S’s clothing sales. For the past decade the internet and fast fashion have combined to make the chain’s packed racks of sensible outfits look dowdy. The slide has been slow and steady. That’s part of the conundrum; the platform is not burning, but steadily deflating. Rowe doesn’t have the excuse of a looming crash to take drastic action, yet he knows if he doesn’t, the crash will come eventually. He gets his first big chance this week with his maiden set of annual results.

None of the favourable economic developments could reverse the decline of America’s department stores, which saw sales over the past year drop by 1.7%, while shopping on Amazon, rival websites and apps rose 2.4%. Macy’s, Nordstrom and others reported declining sales and profits, store closings and a flight from many shopping malls. Discount fashion chain TJ Maxx, with sales rising and new openings adding to its 1,000 existing shops, is spoiling traditional department stores efforts to attract customers to their new low-price spin-offs, such as Nordstrom Rack and Macy’s Backstage.

 Mail on Sunday.

The famous staff bonuses at John Lewis could be hit if Britain quits the EU. Payouts for its 92,000 staff may fall as Brexit hits confidence. Annual payouts to employees at John Lewis department stores, and its upmarket sister supermarket business Waitrose, have been falling for the last three years. Staff could now face the prospect of further bonus cuts in the event of Brexit vote, which could damage the business and cut earnings.

Administrators for BHS are under pressure to sell the chain within two weeks amid fears the retailer could soon run out of stock. A deal is expected imminently and it could be signed as soon as tomorrow. Administrator Duff & Phelps is weighing up three bids for the whole group. Offers from Poundstretcher, Matalan founder John Hargreaves and a mystery private equity bidder are being considered. A bid from Sports Direct’s Mike Ashley is understood to be out of the running.

Telegraph.

One of Marks & Spencer’s largest shareholders has called on the retailer to shed some of its underused stores, as new boss Steve Rowe prepares to unveil an overhaul of the company. The chain’s vast shop estate is proving one of the biggest “headaches” for senior management. Since Marc Bolland was replaced as chief executive in March, radical ideas such as a carve-up of its store estate, shop closures and the introduction of concessions are being dusted off and analysed.

This week Rowe will set out his highly anticipated plan on how to make the nation shop at M&S again. On Wednesday the 132-year-old retailer is expected to post a 2pc rise in pre-tax profits to ￡673m. The straight-talking retail boss knows he will have to do more than rely on nostalgia and goodwill to have even a chance of reviving the company’s woefully performing clothing arm.

The Co-operative Group has announced a major overhaul of its branding and membership structure as Britain’s largest mutual attempts to restore its battered reputation. The Co-op is bringing back its distinctive blue “cloverleaf” design logo. As part of the “rebuild” phase of its turnaround programme, led by retail veterans Richard Pennycook and Allan Leighton, the company is also retraining its 70,000 strong workforce on a “back to being Co-op programme”. The radical revamp, unveiled at its annual meeting , includes big changes to its membership scheme, which will give 5m members 5pc discounts on own-brand products and service. The new reward is a move to make the Co-op’s convenience stores more competitive and to increase pressure on Tesco and Sainsbury’s. The “Big Four” supermarkets have engaged in intense discounting to fight back against the rising discounters, but their strategy of matching prices on branded products has eroded their profits.

Austin Reed 100 stores and brands likely to be carved up between Sports Direct founder Mike Ashley, Edinburgh Woollen Mill boss Philip Day, and Dragon’s Den star Touker Suleyman, who owns Hawes & Curtis. Retail veteran Harold Tillman made a late entry into the bidding. The century-old Austin Reed brand is expected to survive. Sister brands Viyella and CCare are expected to be offloaded and it is expected a significant proportion of the retailer’s 1,200 employees will keep their jobs. The chain collapsed last month, blaming cashflow difficulties. It closed 30 of its worst performing shops last year. Both Ashley and Day were among a handful of names shortlisted to rescue BHS. Their interest may have waned as they step up bids for Austin Reed.

Sky has emerged as potential kingmaker in a looming ￡9bn bid battle between private equity giants for mobile operator O2. Discussions are in their early stages but involve KKR, TPG, Bain Capital, Apollo, CVC Capital Partners and Apax Partners. Sky’s role in a bid could prove crucial as it plans to launch its own mobile service based on the O2 network later this year. If it backed a buyout, Sky would not seek a stake in the operator, but could put ￡2bn into a strategic partnership that would give it better wholesale terms while helping O2 improve its network.

Guardian.

The Co-operative Group is going back to the future, and its chosen destination is 1968. This week the group will begin a major facelift of its vast business, tearing down the lime-green frontages of its food shops and replacing them with a new blue logo. The cloverleaf-like design will look familiar to loyal members of the Co-op, because it was first launched back in 1968 and abandoned a decade ago when the group decided a more corporate look was needed. The facelift is part of a ￡1.3bn investment to breathe fresh life into the 172-year-old group. It will include refurbishing the food shops and funeral homes and paying for new systems in its insurance business, as well as improving products and services.