Topic: Carillion scrambles to stay afloat

[Lush is the best medicine...]

Thats not the observation we have. Stores may have a place but if there is a complimentary area then its them and the website is now the key offering. That is certainly the case the younger the demographic is.

Usually we have tracked the life of significent product purchase being need > online reviews > online search > store visit > purchase. In that there is various levels of savvy usually in the search stage with more savvy users doing google compare or just comparing to amazon as a default.

Stores are very much geared now to show products in their best light and will be more and more about showing off more popular items. In the retail company i work for we have talked about reducing the size of the ‘lighting’ section to just put there those handful of items that sell well rather than display most of the range.

Even if stores are important, one thing is for sure that their presence on our high streets will be greatly reduced.

oh stores are definitely turning more into showrooms where depending on the product they’ll become pick up locations as well for online orders. And of course retailers will have to focus a lot more on the customer experience as well

The interesting thing is what happens to the big out of town retail parks, 10/15/20 years ago you’d make a day of it but now would you be that arsed in many cases?

[SP]

Longer term business rates need to be adjusted to equalise the tax burden between a shop and an internet retailer distribution centre. The tax regime should not be helping to accelerate the demise of shops.

[CraigDS]

Longer term business rates need to be adjusted to equalise the tax burden between a shop and an internet retailer distribution centre. The tax regime should not be helping to accelerate the demise of shops.

Business rate have long been a killer for the high street store and need changing.

[redbyrdz]

oh stores are definitely turning more into showrooms where depending on the product they’ll become pick up locations as well for online orders. And of course retailers will have to focus a lot more on the customer experience as well

The interesting thing is what happens to the big out of town retail parks, 10/15/20 years ago you’d make a day of it but now would you be that arsed in many cases?

Same day delivery will put an end to that, why drive 30min each way, pay for parking and spend an hour finding the product in store when you can have it delivered to your door in 2 hours?

I can see a lot of them turning into warehouses with a pick-up counter though.


We'll be going back to a mix of deliveries and small local shops again. There'l always be a place for shops that sell you a pint of milk, and probably those selling more 'artisan' products. But big stores for global brands? Can't really see them last.

[Ziltoid]

Only time I ever used Maplin (for work or personal) was if we needed something urgently that day - I suspect the same for a lot of people. Probably not a big enough market to survive.

Our company certainly did at one time

[Nobby Reserve]

Longer term business rates need to be adjusted to equalise the tax burden between a shop and an internet retailer distribution centre. The tax regime should not be helping to accelerate the demise of shops.

Rents are a much bigger burden, especially on the High Street.

You have buildings/blocks of buildings that were bought as investment vehicles years, sometimes decades ago. The rents charged to shops are adjusted (mostly at lease renewal, although some have mid-term adjustment mechanisms) dependent on current property value. The landlord companies/owners are getting returns on their investments that are at eye-popping rates compared to their initial investment (even if you factor in an inflation-indexed rise the asset value). And they still have that massive, over-inflated asset in their ownership.

This more than business rates cripples retail businesses on the high street.

[ShakaHislop]

Prezzo to close 94 restaurants in rescue bid - BBC News
http://www.bbc.co.uk/news/business-43259062

Mothercare shares slide on profit downgrade
http://www.bbc.co.uk/news/business-43260011

[Lush is the best medicine...]

Mothercare shares slide on profit downgrade
http://www.bbc.co.uk/news/business-43260011

unlucky you sexist bastards

[Jiminy Cricket]

Rents are a much bigger burden, especially on the High Street.

You have buildings/blocks of buildings that were bought as investment vehicles years, sometimes decades ago. The rents charged to shops are adjusted (mostly at lease renewal, although some have mid-term adjustment mechanisms) dependent on current property value. The landlord companies/owners are getting returns on their investments that are at eye-popping rates compared to their initial investment (even if you factor in an inflation-indexed rise the asset value). And they still have that massive, over-inflated asset in their ownership.

This more than business rates cripples retail businesses on the high street.

But, ultimately, the rents charged should be self-correcting. It is one thing to hold out for year or two for the right business to come along, who is willing to pay your very high rent and agree to a very long lease. Surely, when no one comes along to rent your retail space (or the retail space of your neighbours) for a decade, the penny will drop.

[CraigDS]

But, ultimately, the rents charged should be self-correcting. It is one thing to hold out for year or two for the right business to come along, who is willing to pay your very high rent and agree to a very long lease. Surely, when no one comes along to rent your retail space (or the retail space of your neighbours) for a decade, the penny will drop.

You'd think so, but having rented prime high street retail space in 5 different areas (City centre in 3 different cities) the one thing that is always the same is the greed of landlords.

[jillcwhomever]

Longer term business rates need to be adjusted to equalise the tax burden between a shop and an internet retailer distribution centre. The tax regime should not be helping to accelerate the demise of shops.

I totally agree with that. Ever since the Co-op went in our street, the premises have remained empty for almost nine months now. Before there was no problem getting anyone else in but now nobody can afford the business rates. If "big" supermarkets are struggling to open in these places, I can't even begin to imagine how smaller businesses are staying afloat. Something really needs to be done about this.

[CornerFlag]

Oh.  Cool.

https://www.theguardian.com/business/2018/mar/04/government-let-slip-chance-to-retrieve-364m-from-carillion

Government let slip chance to retrieve £364m from Carillion

Cabinet Office did not pursue directors to accept proposal that could have cut cost of collapse to taxpayers

The government knew of a plan that could have retrieved more than £360m from Carillion, limiting the cost of its collapse to taxpayers and sparing pension scheme members from cuts to their retirement payouts, but did not encourage directors to pursue it.

Multiple sources told the Guardian that the Cabinet Office, responsible for oversight of government contractors, did not apply any pressure on Carillion’s directors to adopt the proposals, presented by accounting firm EY in mid-December last year.

EY’s plan would have involved breaking up the company, selling the profitable parts and placing the rest into liquidation, avoiding an involuntary collapse.

The accounting firm believed this would generate £364m, of which £218m could be injected into the firm’s 13 pension schemes, estimated to have a deficit of close to £1bn.

One source familiar with the company’s final weeks said this could have prevented some of the schemes entering the Pension Protection Fund (PPF), an outcome that will reduce the amount that many of its 27,500 members receive in retirement.

A spokesperson for the former directors admitted last week that they rejected EY’s plan, believing they could still engineer a turnaround by convincing banks to swap some of their debt for stakes in the company.

Several sources have confirmed to the Guardian that the Cabinet Office also saw EY’s calculations but did not put any pressure on Carillion directors to pursue it.

EY drew up two scenarios, an involuntary insolvency that would leave little cash to pay creditors, pensioners and the administrators, or the break-up plan that could have raised £364m.

“Both options were communicated to government, the company’s lenders and pension trustees at the time,” said the former directors’ spokesperson.

The Cabinet Office confirmed it had seen the options presented by EY but declined to comment on how it responded. A spokesman said: “Throughout this process, the government has been clear that its priority is to ensure that public services continue to run properly, and we regularly meet with our strategic suppliers and monitor their financial health. Since the collapse of Carillion, our plans have ensured that public services can continue to run as normal.”

But the Guardian understands that government officials, who were holding weekly meetings to monitor Carillion’s health, did not believe it appropriate to offer business advice to directors.

A source who was present at discussions between the company, government and the pension trustees said: “I think they [the government] thought that if they could get to the end of January, they could find new finance and the company would survive, maybe in a different structure.

“I don’t think they thought it would go bang.”

The source added that there was no certainty that EY’s plan would have worked but admitted that if it had, some pension schemes could have stayed out of the PPF, which would have incurred a lower liability.

He added that it could also have lowered the expense borne by taxpayers, who have so far spent £50m out of £150m set aside by the government to pay for Carillion’s liquidation process.

Jon Trickett, the shadow minister for business and the Cabinet Office, said: “This is astonishing. They [the government] were asleep on the job, the question is why.

“The first explanation is a blind ideological commitment to outsourcing, that private is always better than public even when it’s blindingly obvious that the public sector needs to intervene. The second is that they’re preoccupied with infighting over Brexit.

“The public purse, the staff, recipients of Carillion’s services and the pension fund are all suffering as a consequence of public failure.”

Gail Cartmail, the assistant general secretary at trade union Unite, said: “The government’s catalogue of failures with regards to Carillion is growing by the day. By failing to ensure an orderly break up of Carillion they have cost the taxpayer millions of pounds in insolvency costs and redundancy payments.

“It also meant that sub-contractors continued to provide goods and services to Carillion which they will never be paid for which has resulted in workers losing their jobs and companies going to the wall.

“This is yet another reason why we need a full public inquiry into Carillion’s collapse so that all the relevant information is placed in the open and those responsible for this terrible mess are named and shamed.”

Fresh revelations about the government’s failure to act come a day after MPs conducting an inquiry into Carillion’s demise released evidence they said indicated “gross failings of corporate governance and accounting”.

MPs on the business committee and their counterparts on the work and pensions committee published a report that was commissioned in September by banks that were considering lending the company more money.

The report warned that Carillion was facing a financial crisis after suffering major losses on key projects in the UK, Canada and the Middle East, accusing it of “overstatement” of profits on the contracts. Less than four months later, Carillion collapsed into liquidation, a process that has cost taxpayers £50m, triggered 1,400 redundancies and threatened the survival of thousands of firms in the company’s supply chain.

Written by business advisory group FTI, the report highlighted accounting practices designed to “enhance the reported profitability and net debt position” of Carillion, rather than dealing with its underlying practices. These included deferring payments, bringing forward receipts from contracts and accepting short-term loans from joint-ventures.

“The group has been poorly managed for a considerable period during which time significant underperformance and contract issues have been masked by aggressive accounting,” FTI said.

It accused the company of accepting large contracts too quickly and on “inappropriate” terms, in order to secure upfront payments and report large contract wins. It said Carillion compensated for its failure to convert its reported profits into genuine cash by racking up ever higher debts.

When confronted with FTI’s findings, the company’s management said they believed the assessment was too harsh, according to the report. But FTI insisted its report was balanced and did not even represent a “worst case” scenario, adding that lending Carillion any more money would be “extremely high risk”.

[killer-heels]

Another nail in the coffin of the high street and a step closer to Amazon domination

http://www.bbc.co.uk/news/business-43401674

[Nobby Reserve]

Another nail in the coffin of the high street and a step closer to Amazon domination

http://www.bbc.co.uk/news/business-43401674

Perhaops, but it's more parasitic corporate shysterism that's orchestrated its demise:

The US parent company filed for bankruptcy in September and reports suggest it may start closing its 800 stores in the US as early as this week.

The business was bought in 2005 by a group of investors including private equity firms Bain Capital and KKR, which loaded it with some $5bn (£3.6bn) in debt. The company was crippled by interest payments which at times reached $400m a year.

"Any potential purchaser would have difficulty in sorting things out, for instance getting the rights to use the name, which is held by the American parent.

"In addition there are many services provided within the group by different subsidiaries, so if you take over one part you have to make alternative arrangements or negotiate new terms. Put all that together and becomes very complicated."

[stevensr123]

Perhaops, but it's more parasitic corporate shysterism that's orchestrated its demise:

So pretty much what the two cow boys did to us?

Buy with debt and then offloaded it onto the company, Bastards.
l

[Lush is the best medicine...]

Another nail in the coffin of the high street and a step closer to Amazon domination

http://www.bbc.co.uk/news/business-43401674

toys r us were more out of town retail park though?

Then again they were run horrendously badly for years which is why they failed, look at smyths who’ve done incredibly well down to how they do things there compared to toys r us

[ShakaHislop]

New Look to axe 1,000 jobs and 60 stores

http://www.bbc.co.uk/news/business-43486521

[CornerFlag]

Claire's looks like it'll be one of the next ones to go under.  Basically pick a shop that's been in Birkenhead in the last 25 years and you'll see it go under.

[dudleyred]

Claire's looks like it'll be one of the next ones to go under.

Can be no real surprise

Always thought you’ve got to sell a shit load of hair bobbles each day to pay the staff let alone all the other overheads- I’m amazed they’ve lasted this long!

[CornerFlag]

Can be no real surprise

Always thought you’ve got to sell a shit load of hair bobbles each day to pay the staff let alone all the other overheads- I’m amazed they’ve lasted this long!

There's one in the Pyramids in Birkenhead and I'm pretty sure last time I passed it I was seeing a "buy 6 for the price of 3" offer.  SIX.

[Greg86]

There's one in the Pyramids in Birkenhead and I'm pretty sure last time I passed it I was seeing a "buy 6 for the price of 3" offer.  SIX.

Having popped in with the Mrs recently and bought with that offer, you're still only spending 30 - 40 quid even for 6 items depending on what you pick up.

And they've managed to outlast Conviviality (Bargain Booze, Wine Rack, Matthew Clark, Bibbendum).

http://www.bbc.co.uk/news/business-43580679 More related to poor governance and lack of proper internal controls / focus than anything else.

[CraigDS]

Carpetright is the latest. Closing 92 stores and asking for rent concessions on another 113 via a CVA.

[Nobby Reserve]

Kleeneze gone into administration.

[CornerFlag]

Jaguar Land Rover getting rid of 1,000 jobs, blaming Brexit and confusing taxes on diesel cars

http://www.bbc.co.uk/news/business-43756202

aguar Land Rover says it will not be renewing the contracts of 1,000 temporary workers at two factories.

The UK's biggest carmaker, owned by India's Tata Motors, blamed "continuing headwinds" affecting the car industry.

It said it was continuing to recruit large numbers of engineers and apprentices and it remained committed to its UK plants.

Earlier this year, it said it would cut production amid uncertainty over Brexit and changes to taxes on diesel cars.

Those cuts were made at its Halewood plant in Merseyside. These jobs will go at the Solihull.

JLR was expected to announce the cuts on Monday, with Brexit and confusion over diesel cars again being cited as the chief reasons for the changes.

JLR employs 40,000 people in the UK, 10,000 at Solihull.

Professor of industry, David Bailey, from Aston University, said: "With the big turn against diesel engines, Jaguar Land Rover is particularly exposed as more than 90% of its UK sales are diesels.

"JLR has just revealed its full-electric i-Pace model and have indicated offering all-electric or hybrid variants of all their models by around 2021, but they have been far too slow compared with Tesla and BMW."

He said the problems caused by Brexit were also unlikely to be solved in a timely manner: "It's hard to say how long this production uncertainty will continue around Brexit negotiations, because it's still unclear what the trading relationship will be between the UK and EU with regards to tariffs."



Analysis: Simon Jack, business editor
JLR was very exposed to the demise of diesel. Recent figures from the trade body showed sales of diesels fell a whopping 37% in March compared with the previous year.

Unhappily for JLR, 90% of its vehicles are powered by diesel engines and there are critical industry voices that say they have been slower than their rivals to embrace hybrids and electric.

JLR Plants in China and Slovakia are increasing production, but company insiders were keen to stress that it would continue to invest in its UK plants and recently launched a drive to recruit another 5,000 engineers.

Jaguar sales are down 26% so far this year, compared with last year, while demand for Land Rovers in the UK is down 20%.

Last year, global sales hit a record, but the company acknowledged that the UK market was "tough".

Diesel registrations overall in the UK industry have plunged, down a third compared with January to March 2017

Comments are hilarious on there.

[ShakaHislop]

Discount retailer Poundworld is looking at closing about 100 of its 355 stores, putting up to 1,500 jobs at risk.

Poundworld is considering the move under an insolvency process called a Company Voluntary Arrangement (CVA).

Like many retailers Poundworld has been hit by falling consumer confidence, rising overheads and the weaker pound.

The chain imports a lot of its stock and is having to pay more for it because of the fall in the value of the pound.

http://www.bbc.co.uk/news/business-43908423

[killer-heels]

House of Fraser, Mothercare and Debenhams are the ones to keep an eye on next. All struggling severly.

[Libertine]

GDP growth down to 0.1% for 1Q 2018.

[Nobby Reserve]

GDP growth down to 0.1% for 1Q 2018.

Per capita GDP has actually fallen

With inflation also easing back, the silver lining is that pressure on interest rates relax

[CornerFlag]

£10bn merger on the cards for Asda and Sainsbury's.

http://www.bbc.co.uk/news/business-43933517

Sainsbury's and Asda in merger talks

British supermarket chains Sainsbury's and Asda are in merger talks - although both brands are expected to be retained.

Talks between the two chains - the second and third largest supermarkets in the UK - are at a reasonably advanced stage, BBC business editor Simon Jack confirmed.

The combined group would comprise 2,800 stores and would represent around 30% of the UK grocery market - similar to that of market leader Tesco.

[CraigDS]

I’d be surprised if it was allowed.

[Jimmy Conway]

I’d be surprised if it was allowed.

Agreed. Can't be healthy for 60% of market to be controlled by 2 supermarket chains.

That's one thing the supermarket sector has, is huge competition and price wars.

[Eeyore]

Agreed. Can't be healthy for 60% of market to be controlled by 2 supermarket chains.

That's one thing the supermarket sector has, is huge competition and price wars.

If it isn't allowed though who is going to compete against Amazon. Short of breaking up Amazon we are likely to need a couple of huge Supermarket chains otherwise we will see the end of bricks and mortar Supermarkets.

[killer-heels]

Agreed. Can't be healthy for 60% of market to be controlled by 2 supermarket chains.

That's one thing the supermarket sector has, is huge competition and price wars.

If anything there is too much saturation. Aldi and Lidl have changed the market completely and Tesco, Morrisons, Asda and Sainsburys are too many players.

[CraigDS]

If it isn't allowed though who is going to compete against Amazon. Short of breaking up Amazon we are likely to need a couple of huge Supermarket chains otherwise we will see the end of bricks and mortar Supermarkets.

Getting rid of one of the big 3 only helps Amazon. All 3 of the big 3 should be primed to compete with Amazon given they have the infrastructure already in place (stores/stock/distribution) to do so. It's not like they are small fish and cannot keep their prices low, they do.

[Nobby Reserve]

Getting rid of one of the big 3 only helps Amazon. All 3 of the big 3 should be primed to compete with Amazon given they have the infrastructure already in place (stores/stock/distribution) to do so. It's not like they are small fish and cannot keep their prices low, they do.

Spot on.

But I have doubts about the level of corruption in this country (and especially with Tory governments)

[killer-heels]

Sainsbury’s ceo caught singing before an interview

https://mobile.twitter.com/Telegraph/status/991014581458923521?ref_src=twsrc%5Etfw&ref_url=http%3A%2F%2Fwww.bbc.co.uk%2Fnews%2Flive%2Fbusiness-43924573&tfw_creator=BBCNews&tfw_site=BBCNews

[CraigDS]

House of Fraser using CVA to close some stores and renegotiate rent on others... http://www.bbc.co.uk/news/business-43973149

[mulfella]

House of Fraser, Mothercare and Debenhams are the ones to keep an eye on next. All struggling severly.

How do I go about shorting this stuff? This thread is gold

[killer-heels]

How do I go about shorting this stuff? This thread is gold

To be honest it wont be long before M&S hit the shit.

Basically, everyone on the high street is toast. We will all be shopping in Amazon stores soon.

[Nobby Reserve]

House of Fraser using CVA to close some stores and renegotiate rent on others... http://www.bbc.co.uk/news/business-43973149

"Landlord CVA's" are becoming more prevalent as struggling retailers seek to terminate rental agreements or reduce rents for struggling stores.

The terms of the CVA's usually promise full payment to non-landlord creditors (banks, HMRC, trade suppliers) and even in some case full payment for certain stores.

I presume that something prevents landlords agreeing to these without the imposition of a CVA, or a whole lot of fafing about could be prevented.