Update: Sports Direct acquires House of Fraser for £90m
Sports Direct has acquired House of Fraser for £90m, swooping in to save the ailing department store chain barely two hours after it fell into administration.
A statement confirmed the group has acquired all of House of Fraser’s UK stores, the brand and all of the stock within the business. The company’s plans for the retailer are unclear, although there is speculation that some House of Fraser sites could be rebranded as Sports Direct.
Sports Direct owner Mike Ashley already held an 11% stake in the department store and had been named as one of the interested potential investors alongside Edinburgh Woollen Mills owner Philip Day and investment fund Alteri.
As well as operating 750 Sports Direct stores, Ashley has investments in Debenhams, French Connection and owns the clothing chain Flannels.
House of Fraser appoints administrators
House of Fraser has appointed Ernst & Young LLP as administrators to complete the sale of the group’s business and assets.
The retailer said talks with potential investors and its main creditors “have not concluded in a solvent solution”, leading to the appointment of administrators.
The business will continue trading while the administrators seek to complete a sale and all stores will be open for business as usual today. At the time of writing the House of Fraser ecommerce website was down.
Yesterday the struggling department store said it had until 20 August to find new investment to pay its concession partners or face collapse. Last week the retailer was dealt a fresh blow when its proposed Chinese backer C.banner pulled out of buying a 51% stake in the business from House of Fraser’s current Chinese owners, Nanjing Cenbest.
Potential investors said to be taking an interest in House of Fraser include Edinburgh Woollen Mills owner Philip Day, who also operates the Peacocks, Jane Norman, Austin Reed and Jaeger brands, and Sports Direct boss Mike Ashley, who already owns an 11% stake in the department store chain. There is also rumoured interest from investment fund Alteri, an offshoot of US hedge fund Apollo.
Suppliers to the retailer are concerned that under administration they will only regain a “fraction” of what is owed. Nigel Lugg, group executive chairman of Prominent Europe which supplies Chester Barrie menswear to House of Fraser, told the BBC said that if House of Fraser went into liquidation his company would receive between 3p and 4p in the pound of what he is owed.
Another supplier speaking anonymously to the BBC explained that he was “willing to lose around £20,000” as there are risks in the retail business, but he is concerned that “nobody seems to know what is happening.”
The fears are very real for House of Fraser’s 17,500 employees – 6,000 of whom are employed directly by the retailer and 11,500 concession staff. Already 6,000 jobs will be lost – 2,000 from House of Fraser and 4,000 brand and concession roles – if the retailer pursues its restructuring plan to close 31 of its 59 UK stores, announced in June.
Poundworld brand could be revived
Irish retail family the Hendersons are in talks to buy the Poundworld brand and the leases on some of its stores, potentially bringing the failed discount retailer back to the high street.
The proposed deal is thought to include around 10% of Poundworld’s 355 stores, according to the BBC, but will not save the jobs of any current staff. Poundworld went into administration in June resulting in 5,100 job losses. All its remaining stores will close today.
There is no stock associated with the potential new deal, meaning that if stores re-open under the Poundworld brand they would require both new stock and new staff. The BBC reports that the new management would have no debt or pensions obligations to existing staff, or be required to rehire any existing employees.
Based in Dublin, the Hendersons opened a store called Poundworld in Ireland in 1984, completely unrelated to the Poundworld brand founded in the UK in 1974 by Christopher Edwards. In 2007 the Hendersons sold the Irish Poundworld, which had been renamed Euroworld.
Junk food ad ban could cost TfL £13.3m a year
A proposed ban on junk food advertising on public transport in London could cost Transport for London (TfL) £13.3m a year in advertising revenue.
Applying to junk food defined as being high in fat, salt or sugar (HFSS) by the Food Standards Agency, if approved the ban would span the Tube, overground trains and buses.
TfL made around £20m from food and drink advertising in 2016-17, approximately two-thirds of which fell into the high in fat, salt or sugar category.
Advertising as a whole contributed £142m to TfL in 2016-2017, equivalent to 2.6% of its revenue. The FT reports that in July TfL’s commercial development director, Graeme Craig, said he expected his division to generate more than £300m this year through advertising and rental income.
However, London Mayor Sadiq Khan launched a consultation in May into a potential advertising ban as part of his plans to tackle the capital’s “ticking time-bomb” of childhood obesity.
Khan’s office said parents feel pressured to buy junk food after seeing adverts on the transport network and that if the ban goes ahead TfL will work with the affected brands, encouraging them to “promote healthier products, to try and ensure that the impact on revenue is limited.”
Arcadia struggles to crack China as it ends franchise partnership
Arcadia has ended its relationship with Chinese franchise partner Shangpin, proving a real blow to the fashion group’s ambitions for expansion in Asia.
The company formed the partnership with Shangpin in 2014, which made Topshop and Topman available to buy in China via a fashion website. Plans were then made to open up to 80 stores across the country.
Speaking to the FT in 2016, Arcadia founder Philip Green said that working in collaboration with Shangpin his company planned to open five stores in 2017, with a further 75 to follow. To date no stores have opened.
At the time Green said the partnership with Shangpin would “cement Topshop and Topman’s mission of becoming truly global businesses”.
According to reports in The Guardian, a spokesman explained that Arcadia still considers China to be a “hugely significant market for development” and the company will explore further growth opportunities for its brands in China. Topshop will, however, cease to be sold on Shangpin at the end of November.
WeWork secures $1bn investment
WeWork has secured a $1bn investment from Japan’s SoftBank, the latest cash injection for the co-working space provider intended to fund overseas expansion, the building of office space and acquisition of new properties.
The Japanese conglomerate had previously invested in a WeWork subsidiary in China.
The SoftBank investment comes despite the fact WeWork made a net loss in the first half of the year of $723m. Speaking to the FT, the company’s chief financial officer Artie Minson said that the widening losses were due to a “mismatch” in timing between what the company spends to renovate a location and when it is open for business.
WeWork’s occupancy rates rose to 84% at the end of the second quarter of 2018, from 74% at the beginning of 2017. In June the FT reported that the startup’s sales had more than doubled in the first quarter of 2018 to $342m and its earnings before tax had risen by 137% to $26m. By the end of May WeWork boasted some 256,000 members.
The company is hoping to reach a valuation of $35bn, according to reports made in June by investor Rajeev Misra, chief executive of the Vision Fund, which would make WeWork the world’s second most valuable startup after Uber.
Thursday, 9 August
Mars consolidates media account with MediaCom
Mars, one of the biggest advertisers globally, has consolidated its media account with MediaCom following a pitch. The decision aims to help Mars’s transformation by “building competitive advantage” through a focus on insights, investment and innovation
“This partnership will be a crucial accelerator in our ambition to be quicker, bolder and even more innovative when it comes to meeting our consumer needs. It brings thought leadership and actionable use of data and insights to meet our media needs.” says Andrew Clarke, chief marketing and customer officer at Mars.
The decision means Mars will move away from its three-agency structure globally. Previously, media planning was handled by MediaCom, media buying by Starcom on a local market level and MediaCom and OMD handling everything else. All three agencies pitched for the business.
“It was impressive to see some of the fresh, challenging approaches from all three of the agencies. It’s helped evolve our thinking throughout the pitch and inspired us to be even bolder in our ambition. GroupM created a custom operating model for us which enables us to put data at the heart of our decision making, drive speed at a global, local and campaign level, and use our resources efficiently,” says Rob Rakowitz, global media director at Mars.
Broadband firms reduce advertised broadband speeds
Every broadband company in the UK has cut broadband speed claims in advertising after the introduction of new rules by the ad regulator. According to consumer watchdog Which?, the cheapest packages now advertise speeds of 10 or 11 Mbps, rather than “up to 17 Mbps”, a drop of 41%. Across all types of packages, speed claims dropped by 15%.
The research also found TalkTalk had completely eliminated ad speed claims, while Vodafone removed the word “Fiber” from two offers. Only Virgin Media increased advertised speeds.
The changes come after the Advertising Standards Authority (ASA) introduced new rules that ensured companies could only show average speeds available to at least 50% of customers are peak hours.
Adidas sales get World Cup boost
Adidas’s sales got a boost from the World Cup, with the German sportswear giant selling a record number of football shirts even though the national teams it sponsors did not perform as well in the competition as those sponsored by rival Nike.
Shirt sales topped the eight million sold at the Brazil World Cup four years ago. It also sold 15 million official balls. The sales helped Adidas post second quarter revenue and profit that beat forecasts. Adjusted revenue increase 10% to €5.3bn, driven by a 12% rise at its footwear business. The company saw double-digit growth in the US, Asia-Pacific, Latin America and Russia.
Britvic puts focus on recycling with £850,000 investment
Britvic is investing £850,000 in UK recycling infrastructure as it looks to promote a more circular economy. The drinks company has signed a partnership with environmental compliance experts Comply Direct, which sees it commit to only purchase domestic packaging recovery notes (PRN), rather than export recover notes. The latter are generated by UK exporters and often encourage the export of waste abroad, where it is harder to monitor what happens to the materials.
Alison Rothnie, senior sustainability manager at Britvic, explains: “We understand the environmental impact packaging can have at the end of its life, and we are committed to playing our part to reduce this. By committing to only buy PRNs from UK recyclers, we are investing in better recycling infrastructure in the UK, helping to ensure more waste is recycled here where we can track its progress, and creating a stronger supply of recycled PET (rPET) which is a crucial part of developing a truly sustainable circular economy.”
The move is part of Britvic’s broader packaging strategy that ensure all its bottles are recyclable, that the amount of material used in each bottle is minimised, and that sees Britvic work with customers and industry organisations to encourage recycling.
M&S expand click-and-collect service to standalone food stores
Marks & Spencer is looking to make it easier for customers to return goods at any of its shops by expanding its click-and-collect service so customers can make online returns at Simply Food stores. Previously, customers could collect in these shops but could only return at larger format stores.
The new offering, offered through a partnership with Doddle, follows positive feedback following a test in seven locations last year.
“We’ve responded to increasing demand from our customers for more choice and convenience when it comes to collecting and returning their online orders,” says Richard Pugh, head of M&S.com returns. “Providing customers with a consistent customer experience, regardless of which Marks & Spencer store they’re in, is key to making every moment special.”
Wednesday, 8 August
Tesla boss ‘considering’ taking company private
Tesla’s chief executive Elon Musk is considering de-listing shares and taking the electric car company private, which could take the company’s value to around $80bn.
On Twitter, Musk said he could buy outstanding shares in the firm for $420 per share, compared with today’s opening price of $344, and that funding has been “secured”.
In an email to employees, Musk says: “As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders.
“Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term.”
Despite an increase in car sales, Tesla reported its biggest quarterly loss last week of $717m. Musk said at the time he remains confident the business will make a profit in the second half of the year and that its goal is to be “profitable and cash-flow positive for every quarter going forward.”
Snapchat daily users slide for first time
Snapchat lost almost 2% of its daily users in the second quarter of 2018 – the first time the social media app has seen a decline.
The Snap-owned app now has 188 million users, down from 191 million in Q1, a decline that CEO Evan Spiegel blamed on a redesign earlier this year. The drop in Snapchat daily active users “was primarily driven by a slightly lower frequency of use among our user base due to the disruption caused by our redesign,” Speigel says.
“We have been working hard to iterate and improve Snapchat based on the feedback from our community.”
However, revenues were up 44% year on year in Q2 to $262.3m against estimates of $249.8m, with the company posting an overall loss of $353m.
ITV backs new mobile streaming service in US
ITV is the latest company to back a new Hollywood mobile video streaming venture that is looking to rival YouTube and Netflix.
The startup, which is being led by Dreamworks co-founder and ex-Walt Disney Studios chairman Jeffrey Katzenberg and ex-Hewlett Packard Enterprise CEO Meg Whitman, has already raised $1bn (£770m) from major media and technology companies including Disney, Fox, Alibaba and Comcast’s NBC Universal.
Katzenberg says NewTV, a temporary name for the venture that is set to launch next year, “brings together the best of Silicon Valley and Hollywood to create the first entertainment platform built for easy, on-the-go mobile viewing”.
He says there has already been “tremendous interest from Hollywood’s top talent,” including directors JJ Abrams and Ron Howard, and producer Jerry Bruckheimer.
ITV’s managing director of ITV Studios, Julian Bellamy, says: “Global demand for high-quality entertainment continues to grow.
“Being part of the start of this exciting new mobile platform offers ITV’s hugely talented and creative people around the world the opportunity to produce content in a way never seen before.”
Uber rival enters UK market
Indian taxi-hailing company Ola is gearing up to come to the UK, with plans for a nationwide rollout by the end of the year.
The seven-year-old business, which currently operates in two countries – India and Australia – 110 cities and has 125 million customers, will start opening its doors in South Wales and Greater Manchester as soon as next month.
Steve McNamara, general secretary of the Licensed Taxi Drivers’ Association (LTDA), which represents drivers of black cabs, says it “welcomes fair competition in London” and would expect to see Ola play by the rules if granted a licence to operate in the capital.
“Ola says that it is committed to raising safety standards in the UK’s private hire industry from the get go, unlike Uber,” he adds.
Uber currently operates across 600 cities in 65 countries, with three million drivers.
Time Out and TfL unveil interactive campaign
Time Out has launched a new multi-channel campaign with Transport for London (TfL) to encourage Londoners and visitors to take more off-peak journeys and explore the city.
As part of the campaign, which builds on Time Out’s wider ‘Wonderful World of Off-Peak’ campaign, the Tube map has been redesigned as a new interactive cultural map of London including Time Out recommendations for more than 300 stations.
People will be able to click on the highlighted stations on the map and find museums, art galleries and street art suggestions, which then link to Time Out’s curated website content.
Spanning over nine months, the campaign – which Wavemaker and VCCP have helped to develop – will also include a four-page print cover wrap, advertorials, display advertising and badging for ‘your perfect weekend’ features, as well as promoted posts on social media.
“Following our hugely successful campaign earlier this year, we’re excited to be working with TfL on such a comprehensive long-term partnership,” says Time Out’s director of creative solutions EMEA, Jack Woodcock.
“Time Out and TfL have tons in common, both inspiring and enabling people to make the most of the city, whether that’s locals, out-of-towners or visitors. Time Out has been on a mission to get people out to experience what’s new cool, weird and wonderful in urban culture and entertainment since 1968, and TfL makes it easier to get to and from these places.”
Tuesday, 7 August
Facebook revamps tools to help users connect with local businesses
Facebook is redesigning its business pages on mobile in a bid to help users connect with local businesses. The new tools will allow users, for example, to make a dinner reservation, book a hair appointment or view upcoming events.
As part of the redesign, users will also be able to view ‘stories’ on businesses pages, ask for recommendations, build events, find jobs or use the standalone Facebook Local app to locate businesses nearby.
The redesign, which will be slightly altered for each category, is starting with pages for restaurants, local services, and TV shows. Facebook says it plans to roll out custom designs to other types of pages in the near future.
A spokesperson for the social media giant adds: “With over 1.6 billion people around the world connected to a small business on Facebook, people and businesses alike have told the platform they want even easier ways to connect.”
More than 800 million businesses use ‘Pages’ on Facebook and at least 85% of them use mobile, showing the need for businesses to be on mobile.
M&S partners with True to drive digital innovation
Marks & Spencer (M&S) has joined forces with True – a retail and consumer investment and innovation firm – to learn more about retail and consumer expertise, emerging technologies, proprietary research and sector-specific international network, as part of its drive to become a “digital-first retailer”.
The retail giant claims the partnership will help drive investable opportunities for M&S, as the business seeks to transform its digital capabilities.
M&S will also have access to True’s business model and Live Network, which provides access to the latest innovative technologies and expertise from within the sector that can best support the department chain’s digital ambitions.
M&S CEO Steve Rowe says: “Our partnership with True will give us unparalleled access to the latest innovations and technologies that have the potential to transform the way we operate and run our business.”
Just last week, M&S revealed plans to create a data academy, alongside London-based education business Decoded, in order to train staff in every area of the business in data skills, as part of its ongoing transformation programme.
Heatwave deters shoppers from high street
Despite the warm weather helping boost sales for food, drink and fans during July, it has kept shoppers away from the high street, hitting consumer spending.
According to a survey conducted by the British Retail Consortium (BRC), retail sales slowed in July with sales in stores open for at least a year rising by 0.5% compared to 1.1% in June.
In addition, total sales growth slowed last month, climbing just 1.6% compared with 2.2% in June. The slowdown came despite food sales experiencing their best July for five years.
BRC chief executive Helen Dickinson says many struggling retailers can’t wait for autumn to arrive, with the sweltering temperatures deterring shoppers from browsing. She adds the three-month long period of sunshine has also resulted in slowing demand for a number of products.
Barclays under fire from consumer watchdog
The UK’s consumer watchdog has reportedly launched legal action against Barclays, claiming the bank failed to remind customers about their payment protection insurance (PPI) policies.
Every year banks are required to tell customers how much they have paid in for PPI and notifying their right to cancel the policy anytime.
It is understood Barclays failed to provide a reminder to 2,265 Littlewoods credit card customers with PPI between October 2016 and October 2017.
According to the Competition and Markets authority (CMA), it issued Barclays with legal directions asking the bank to introduce better systems and procedures to ensure it doesn’t happen again.
Barclays has paid almost £336,000 in refunds to affected customers since 2016 when it reportedly failed to send apology letters and annual statements to about 10,000 PPI customers.
Manchester United reveals global partnership with betting app MoPlay
Manchester United has revealed a global multi-year partnership with MoPlay, a mobile betting and gaming app. As part of the partnership, the pair will produce fan content together, as well as participate in co-branded activations across the world.
Manchester United’s group managing director Richard Arnold, says: “MoPlay is an innovative and dynamic company looking to further enhance our fans’ gaming experience. It is an exciting new brand that aims to modernise and improve the betting industry and we are delighted to be part of this journey.”
Monday, 6 August
Mars pulls advertising from YouTube over brand safety issues
Mars has pulled its advertising from YouTube after one of its brands’ ads was shown at the start of a video about drill rap music.
According to The Sun, the ad for Starbucks sweets was shown before a video by group Moscow17. Drill music often features gang members rapping about violence; the video in this instance spoke about the group being “at war” with the police.
Mars says it is “unacceptable” for its brands to appear alongside content of this nature. The video is still on YouTube and has been viewed more than 40,000 times, but no ads now appear ahead of it.
A spokeswoman for Mars says: “It is unacceptable and disappointing to see one of our brands advertised alongside this video content. This clearly breaches our brand safety guidelines and Mars adverts should never run alongside such content.
“We have taken the action to remove all our online advertising on YouTube and can confirm we are working with Google and our media buying agencies to understand what went wrong. Until we have confidence that appropriate safeguards are in place, we will not advertise on YouTube.”
In response, YouTube says: “We are actively working with the Metropolitan Police to review videos that may be connected with this incident. Along with others in the UK, we share the deep concern about this issue and do not want our platform used to incite violence.”
Wonga saved from bankruptcy by emergency £10m cash injection
Wonga has been saved from insolvency by an emergency £10m cash injection from a consortium of tech investors.
The money has come from major VC firms including Accel Partners and Balderton Capital, accordin to Sky News. The investment values the company at £23m, well below previous valuations and some way from its one-time ambition to list on the New York stock market.
The company has struggled as compensation payouts increase following a rise in the volume of complaints made before new rules were introduced in 2014. The company has been loss-making over the last few years after the introduction of a number of regulatory hurdles, including a cap on the cost of short-term loans.
Even with the cash injection, it may still have to sell some assets, and raise more debt funding.
Wonga tells Sky News: “Wonga continues to make progress against the transformation plan set out for the business. In recent months, however, the short-term credit industry has seen a marked increase in claims related to legacy loans, driven principally by claims management company activity.
“In line with this changing market environment, Wonga has seen a significant increase in claims related to loans taken out before the current management team joined the business in 2014. As a result, the team has raised £10m of new capital from existing shareholders, who remain fully supportive of management’s plans for the business.”
House of Fraser sees of legal challenge as it looks to find a buyer
House of Fraser has settled a claim by its landlords that could have halted plans to sell the struggling department store chain. The company had hoped to use a company voluntary arrangement (CVA) process to shut half its stores, but the move faced a legal challenge by landlords who argued they were being treated as “second rate creditors”.
The landlords lodget their challenge after House of Fraser’s owner – halted plans to invest £70m into the business. That forced the company to look for a buyer that could rescue the business, but the legal challenge had been a significant hurdle to any deal, according to the Financial Times.
The company says: “House of Fraser is focused on concluding discussions with interested investors as per the original timelines set out by the business and recognising the risks in and around this litigation has entered into this settlement now to remove any risk to those discussions presented by this legal process.”
Walmart tests system that uses robot help fulfil online grocery orders
Walmart is testing a system that uses an automated system, called Alphabot, to help fulfil online grocery orders. The service lets customers order groceries, choose a pickup time and have them delivered to their car. To make this easier to fulfil, the system automatically gathers certain items from their location in the warehouse and transports them to an employee, who packages the order.
The hope is the system will take on some of the work that goes into collecting order items, making it cheaper and faster. It is currently being tested at a Walmart location in Salem, New Hampshire, with plans to have it up and running by the end of the year.
“Although this is a small pilot, we expect big things from it,” Walmart says. “We have a lot to learn about this new technology, and we’re excited about the possibilities of how we can use it to make the future of shopping — and working — even better.”
Business confidence on the slide as Brexit concerns bite
Business confidence fell into negative territory in the three months ending July as concerns over the impact of Brexit mount.
The sentiment survey, compiled by the Institute of Chartered Accountants in England and Wales, found business confidence had fallen to -2 between 23 April and 20 July having been on the rise over the previous three quarters. It jumped to +7 in the three months between February and April.
A separate poll of FTSE 350 businesses by ICSA – the Governance Institute, found that 55% of UK companies are predicting a decline in their business over the company year; six months ago that figure was 24%. Just 6% are anticipating that business will increase.
“It is hard to see any other reason for continuing pessimism over the economy other than the ongoing government infighting over Brexit and the lack of a clear plan if there is no deal at the end of the negotiations,” Peter Swabey, the policy and research director at ICSA, says.