Connect with us

Business

COVID-19: Primark reveals £430m lockdown sales hit as it refuses to go online | Business News

Published

on

Shoppers queuing for Primark in Cardiff, as restrictions are relaxed following a two-week "firebreak" lockdown across Wales.

Primark’s owner says autumn COVID-19 lockdowns have resulted in an estimated £430m hit to sales but insists the fashion chain remains on track to deliver improved profits.

Associated British Foods (ABF) said in an update ahead of its AGM that only 34 of its stores across Europe remained closed amid continued coronavirus disruption to trading since the start of its current financial year.

The company had revealed last month a £2bn revenue hole for the year to 12 September – a consequence of its store-only operation being forced to shut down in the face of pandemic restrictions.

Image:
Shoppers queuing for Primark in Cardiff following the two-week ‘firebreak’ lockdown in Wales

ABF has repeatedly ruled out trading online.

It had previously forecast a £375m hit to sales during the autumn in the face of a second wave of infections Europe-wide.

But its statement suggested Christmas shopper behaviour since had mirrored the pent-up demand witnessed in June, when the first wave of coronavirus restrictions was eased.

It told the market on Friday: Stores in our major markets of the Republic of Ireland, England, France and Belgium reopened in the last week.

“Sales in the days since reopening in each of these markets have once again been very strong, reflecting the excitement and appeal of the Primark offering.

“We have extended the opening hours during this festive season in most of our stores in the Republic of Ireland and England to cater for the anticipated higher customer demand and to help ensure a safer environment by spreading shopping hours over a longer period.”

The statement added: “Notwithstanding the currently announced periods of restriction, we continue to expect Primark sales and profit to be higher this financial year compared to last. We will continue to expand retail selling space.”

Primark’s performance, as a physical-only retailer, is worthy of admiration – especially in the face of a rising tide of failures.

This week has seen the collapse of Sir Philip Green’s Topshop empire, Debenhams and Bonmarche – all heavily exposed to the high street.

Each is continuing to trade while buyers are sought but 26,500 jobs are hanging in the balance.

ABF said its grocery, sugar, ingredients and agriculture divisions were trading above expectations, saying it had contingency plans in case the conclusion of the Brexit transition period disrupted supplies at the year’s end.

Shares, down 11% in the year to date, opened almost 1% up.

Analysts at Jefferies Equity Research said of the higher than anticipated £430m sales hit: “This gross loss of sales will be reduced by the very strong trading both ahead of lockdowns and on reopenings.

“One highlight of reopenings has been ‘very encouraging’ LFLs (like-for-likes) in the US reinforcing ‘confidence in the acceleration of the US store openings programme’.

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Boohoo Group set to acquire collapsed Debenhams department store chain | Business News

Published

on

Boohoo Group set to acquire collapsed Debenhams department store chain | Business News

Online fashion retailer Boohoo Group is set to acquire troubled department store chain Debenhams.

The cut-price deal will result in the closure of Debenhams’ remaining stores, according to a report in the Financial Times which has been confirmed by Sky News.

The purchase price is expected to be about £50m, the newspaper said.

Both companies declined to comment.

It comes just days after Debenhams administrators FRP Advisory said they were still in talks with “a number of third parties regarding the sale of all or parts of the business”.

At the time, they announced that six stores would not reopen, including the flagship Oxford Street shop in central London.

The 242-year-old department store started a liquidation process last month after failing to secure a last-minute rescue sale.

Debenhams has been in administration since April last year but its problems pre-date the coronavirus crisis that has hurt so many high street retailers.

For much of its history, Debenhams was highly profitable and was an established anchor tenant on many UK high streets and shopping centres.

In the 1950s, Debenhams had 110 stores, making it the country’s largest department store group.

It listed on the London stock market for the third time in 2006, following a spell in private equity ownership that proved lucrative for CVC Capital Partners and TPG but which left its balance sheet saddled with what proved to be unsustainable debts.

And while customers increasingly moved their shopping online, Debenhams was opening new stores as recently as 2017 and its large physical presence came with high costs – rising rents, business rates and maintenance.

Continue Reading

Business

Hollywood Bowl faces being skittled by investors in pay row | Business News

Published

on

Hollywood Bowl faces being skittled by investors in pay row | Business News

The boardroom pay chief at Hollywood Bowl is facing a shareholder backlash this week after the company decided to ignore the coronavirus crisis in its decision about incentive payouts to top executives.

Sky News has learnt that Hollywood Bowl has been trying to appease top investors in recent days in order to prevent an embarrassing revolt at its annual general meeting on Friday.

Institutions have been angered by the tenpin bowling operator’s move to assess executives’ performance under a long-term incentive scheme until February, rather than September, 2020.

Like other leisure groups, Hollywood Bowl was forced to close its 64 UK sites – which also trade under the AMF and Puttstars mini-golf brands – for much of last year because of the pandemic.

The company’s decision to move the goalposts in relation to its LTIP has, however, infuriated investors which supported the company by injecting nearly £11m in a share placing last year.

Hollywood Bowl also received taxpayer funding through the furlough scheme, while shareholders were hit by the suspension of its dividend.

The change to the share scheme performance period meant that targets were met in full, paying out 81% of the maximum on a pro rata basis.

If the plan was assessed across the originally planned period concluding in September, it would not have paid out at all.

Hollywood Bowl’s decision to “exercise discretion” by shortening the performance period risks inflaming tensions around boardroom pay, with companies such as the publisher Future and cinema operator Cineworld also in the line of fire.

The tenpin bowling group’s shares have slumped by nearly a third over the last year, leaving it with a market capitalisation of just over £320m.

Institutional Shareholder Services (ISS), an influential proxy adviser, has recommended that shareholders vote against both Hollywood Bowl’s remuneration report and the re-election of non-executive director Claire Tiney, who chairs the pay committee.

“While shareholders will note that awards will be subject to a two year holding period and continuous employment, they may question whether such payments are appropriate, given the company’s circumstances, the government help received, furloughing 98.6% of staff (it will be noted that unlike the case in other companies, the directors did not reduce their salaries to reflect reductions for the furloughed staff, but deferred a portion of their salaries until October 2020) and suspending dividends,” ISS said.

“It may therefore be questioned how the payment of awards to directors is commensurate with experience of other stakeholders.”

In a statement, a Hollywood Bowl spokeswoman said its board had “received external advice to ensure that its remuneration policy strikes the right balance between the interests of shareholders and the ability to incentivise and retain senior management, which is undoubtedly in the best interests of all of our stakeholders”.

“The board’s new holding conditions on the LTIPs vesting further align management to shareholder interests while recognising that management comfortably exceeded the challenging EPS targets set in 2017 prior to the pandemic, and the significant shareholder value created by since IPO.

“No new LTIP targets are being set until the board has greater visibility on outlook.”

A source close to the company said its management had delivered a £1.4m profit for the financial year despite the nationwide lockdowns and COVID-19 operating restrictions.

Continue Reading

Business

Asos emerges as surprise frontrunner to clinch TopShop crown | Business News

Published

on

Asos emerges as surprise frontrunner to clinch TopShop crown | Business News

Asos, the online fashion retailer, has emerged as the surprise frontrunner to buy TopShop from the administrators to Sir Philip Green’s former high street empire.

Sky News has learnt that Asos has moved into pole position to buy the brand for more than £250m, days after a consortium led by Next withdrew from the race.

If successful, it may renew fears for the future of most of TopShop’s workforce, given Asos’s status as a pure-play digital retailer.

Asos is not holding any talks about buying TopShop stores, according to insiders, although it is also keen to acquire Arcadia’s Miss Selfridge brand alongside TopShop and TopMan.

A source close to Asos cautioned on Saturday night that a deal had not been struck and that there was no certainty that an agreement would be reached to acquire one of Britain’s best-known clothing brands.

Asos is competing against rivals including Boohoo; the American retailer Authentic Brands Group, which is working in tandem with JD Sports Fashion; and Shein, a Chinese fashion group.

Asda, which is itself in the process of being taken over by the petrol stations giant EG Group and private equity firm TDR Capital, is also said to have been among the bidders during the process.

A deal could be struck by the end of the month, although a person close to another bidder warned that the situation remained “fluid” and could yet result in another outcome than an acquisition by Asos.

Other parties remain in talks with Deloitte, although none are said to have the logic that Asos possesses because of its existing wholesale relationship with TopShop and the strategic importance of its growing presence in the US market.

Earlier this week, Next and its partner, Davidson Kempner Capital Management, a US investment firm, pulled out of the sale process, citing the elevated price expectations of Arcadia Group’s administrator, Deloitte.

A separate process is being run by Deloitte, which was appointed as administrator to Arcadia in November, for the group’s other brands.

Up to 13,000 jobs are at risk from Arcadia’s collapse, with brands including Evans, Wallis and Outfit seen as less likely to attract bidders.

The demise of Sir Philip’s empire follows the failure of retailers such as Cath Kidston, Oasis and Warehouse and Debenhams as the coronavirus crisis has exacerbated the financial pain being experienced across the British high street.

It is Arcadia’s appointment of administrators that is likely to emerge as the most enduring symbol of the pandemic’s impact on the economy.

Sir Philip bought the high street group in 2002 for £850m, and just three years later paid what remains one of the largest-ever dividends – £1.2bn – to Arcadia’s registered owner, Lady Christina.

For years, he was feted as a high street colossus, advising David Cameron on public sector waste during his period as prime minister.

In 2012, he sold a 25% stake in TopShop’s immediate holding company to Leonard Green & Partners, a private equity firm, valuing the fashion chain at £2bn.

Sir Philip was later to buy it back for just $1.

Asos and Deloitte declined to comment on Saturday night.

Continue Reading

Trending