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February 2010 Update

The Summary

Retail Administrations include Diamonds & Pearls (again, pre-pack), Designer Room, Ethel Austin and sister Au Naturale and the Fads, Textyle World and Leveys brands, owned by Divalimit. New retailers are Koodza, By Malene Birger, Pennyblack, Sofaitalia, Fragrance House from Scotmid, Hed Kandi, Barbacoa from Jamie’s Italian and a spate of new rumours about Dutch sportswear retailer McGregor.

Birth and Death of Retailers

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In Administration New Retailers

In the news… There have been some high profile casualties this month, but aside from the aforementioned administrations, we also note; Ascension have suspended shares after failing to secure funding; Internacionale has made redundancies at its head office; La Senza have been forced to seek funding; the sale of Matalan has been halted after bidders baulked at the high price tag; and New Look have pulled the IPO process, citing an ‘unfavourable market backdrop’! In other news, Ollie & Nic, One Stop, 99p Store and Cote have all announced expansion plans; Boots and Mothercare are to trial a partnership; Halfords has acquired Nationwide Autocentres – not Hobbycraft or Blacks Leisure as rumoured; Argos has refreshed its brand for the first time in years; and John Lovering is thought to be putting together a bid for sofa retailer DFS. In the Statistics section, most measures look encouraging, with YoY increases of 3.1% for ONS, 1.2% for BRC and 1.2% for the Nationwide House Price Index. The Consumer Confidence Index is also up, 2 points on last month, though Ireland continues to suffer, with CSO reporting the value of retail sales 12.4% lower YOY. Finally, Tesco has had a rough time of it with the press this month, as it seems not only do they take offence at pyjama-clad shoppers and shoulder-mounted children, but that they also take the ‘Think 25?’ initiative quite seriously, this month reportedly ID’ing a 24 year old buying a slice of quiche!

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Geoff’s View

Locking the Stable Door The proportion of UK multiple retailers trading unsustainably has increased from around 23% last year to 28% this year. Furthermore, the location of the stores of “at risk” retailers, and the reasons for their financial stress, are now different. Retailers are categorised as “at risk” if the ratio of gross profit on sales to the cost of labour and depreciation is below parity. Last year, a disproportionate number of shops of “at risk” retailers were in medium to large industrial towns, mainly in the north of England. The stores belonged principally to traditional retailers, such as Woolworths, whose store locations had been determined by historic shopping patterns. Many of these stores have, as anticipated, now closed and the towns are experiencing high rates of vacancy. This has attracted much attention, not least from BCSC, but in truth, the horse has bolted. These towns need to develop a new, viable retail strategy built around their surviving retailers. Amongst these retailers, the proportion now “at risk” is lower than the national average. There is, after all, still a role for these towns within the retail hierarchy. Currently, the proportion of “at risk” stores is higher than the national average in some prime retail locations scattered right across the UK. The likely explanation is that less experienced retailers have taken on inappropriate stores in otherwise sound retail locations. Identifying such traders and developing contingency plans is a significant asset management task. With credit difficult to secure, and banks looking to reduce outstanding loans, retailers that have expanded aggressively from an unsound base or taken on high levels of debt are amongst those most at risk. Given the continuing high proportion of “at risk” retailers, FSP anticipates that retailer failures will continue in smaller numbers throughout the year. However, the profile may change with a lower proportion of “traditional” retailers and more that are over-extended or debt-driven. As always, forewarned is forearmed. With kind regards Geoff Nicholson Managing Director, FSP geoff@fspretail.co.uk

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New Retailers By Malene Birger is preparing to make its first foray into the UK retail market, taking a 1,345sq ft store at

28-29 Marylebone High Street

Hed Kandi is planning to break into high street retailing with plans to open two stores this year

Jamie's Italian is to launch a new barbecue-based restaurant concept under the Barbacoa brand, with the first outlet due to open near St Paul's in London

Koodza is to make its UK debut this spring

Loft Design by… has secured its second UK boutique at 36 Marylebone High Street, W1

Love Coffee BB's Coffee & Muffins franchisee Shashi Patel has taken over the 13 BB's Coffee stores he operated and has rebranded them "Love Coffee"

Pennyblack is understood to be searching for its first UK flagship store

Sofaitalia is planning to open up to 15 furniture stores across the country over the next five years, having just opened the first 10,000 sq ft unit in Stockton

Store News 99p Store plans to open 80 new stores this year

American Apparel has signed for its ninth store in the UK

Argos has refreshed the brand to coincide with the launch of its latest catalogue. The retailer

has modified its logo, emphasising the "smile" design, and changes will be reflected on fascias, point-of-sale materials and online

B&Q is to take on leisure and outdoor retailers with the launch of a camping range in March

Bhs will try out a new look in May

Books Etc will be resurrected next week as an online offer, after the brand and website was bought out of administration following the collapse of parent Borders UK last year

Cash Generator is to roll out a new Express format to its nationwide chain of second-hand goods stores, following the success of a trial in Stretford

Cote is to expand its chain of ten restaurants with new sites in London, Birmingham and Farnham this year

Decathlon is to open its first store in Northern Ireland

Dobbies Garden Centres is to sell its own-branded products in parent company Tesco stores and build new stores on Tesco sites

G-Star will open 30 franchise stores within the next five years as part of an ambitious mono-brand store expansion strategy

Holland & Barrett is to make a play for the food-to-go sector with the unveiling of a new-look store

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Home Bargains has launched a £25m expansion programme under which it will open in Northern Ireland for the first time

JJB Sports The Competition Commission has provisionally cleared the acquisition by Sports Direct of 31 stores from JJB Sports

John Lewis At Home will open in the autumn, in Croydon, its second store

Kuyichi is looking for its first standalone store of around 2,000sq ft in London's West End

Lulu Guinness opened her first pop-up shop off London’s Carnaby Street between February 8 to 22

McDonalds is looking to open 15 new restaurants in the UK this year

McGregor is on the hunt for its first UK stores, and is aiming to have 10 to 15 stores in three to five years

Ollie & Nic will double its store count and launch concessions this year after a 211% jump in revenue

One Stop is aiming to open 20-25 stores per year on the back of growing customer numbers

Pierre Herme Paris is to debut in London at Grosvenor's 13 Lowndes Street in Belgravia

QS is to disappear from the high street by 2011 as owner Alok Industries ramps up conversions to its Store Twenty One fascia

Sainsbury's Local has unveiled plans to expand the format into Edinburgh’s "urban villages"

Sally plans to test a new format in five stores as it seeks to push its retail offer

Scotmid is planning to develop a chain of up to 40 perfume stores under The Fragrance House brand following the success of trial outlets in Livingston and Dundee

Starbucks has unveiled the second London store with its new "local" design concept

Supervalu is trialling a full online shopping service across four stores in Dublin and Cork

The Entertainer has overhauled its branding and store format following customer analysis, with a new fascia and modified logo, along with altered ceilings and flooring, better lighting, wider aisles, lower racks and increased signage

TK Maxx is looking to open a number of smaller c10k sq ft womenswear only stores that will focus on more top end brands

Wellworth It! A Woolworths-inspired store called Wellworth It! Will open at Ledbury in Herefordshire, in March

Financial Restructuring Adams administrators MCR are thought to have received eight detailed bids for the chain

Ascension shares have been suspended as it failed to secure finance for the company’s future

Bay Restaurant Group has received several expressions of interest from private equity-backed suitors

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BB's Coffee and Muffins is set to be revived, rebranded "Love Coffee"

Card Factory bidders are thought to be lining up offers in a sale that could fetch up to £400m

Clery's has asked its staff to work a four-day week in a bid to avoid axing jobs

Designer Room has gone into liquidation. All ten stores have closed after a potential buyer withdrew an offer

DFS Veteran retailer John Lovering has teamed up with private equity firm Permira to put together a deal for furniture retailer DFS valued at more than £500m

Diamonds & Pearls has been sold out of a pre-pack administration to a new company called Renaissance Jewellery

Ethel Austin and its sister homewares chain Au Naturale have gone into administration. Turnaround specilist Endless is reportedly considering a bid

Fads owner Divalimit has been placed into administration

Figleaves has received bid approaches from several different sources, according to reports

Greene King has bought eight managed pubs from Punch Taverns

Halfords has added car servicing to its portfolio with the £73.2 million acquisition of Nationwide Autocentres, though bids for both Blacks and Hobbcraft are rumoured

HMV Group has acquired Mama Group after receiving an adequate level of acceptance from the live music group’s shareholders

John Lewis is reportedly considering applying for a banking licence, as the retailer looks to take advantage of the fallout from the global credit crunch

KFC franchisee's in Ireland and Scotland incurred a pre-tax loss of £4 million in 2008, despite an increase in turnover at its restaurants

Matalan The sale of Matalan has been pulled after potential buyers failed to meet founder John Hargreaves’ price hopes for the value retailer

New Look has pulled its IPO process, citing an unfavourable market backdrop

Ocado has appointed advisors ahead of a float which could come as early as May, according to reports

Pets at Home has been sold to private equity house Kohlberg Kravis Roberts for £955m, including the debt

Pubs N Bars administrators have appointed Oxford Hotels & Inns to manage it for up to six months

SuperGroup has announced its intention to raise £125m by floating on the London Stock Exchange

Internal Restructuring Aldi has closed its Aldi Travel online booking website to new bookings in the UK

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American Golf Discount Centre

owner Lloyds Development Capital has injected £5m into the business and restructured its debt as it seeks to bolster the retailer to gear up for expansion

Blacks Leisure Group has unveiled proposals to raise £20.3m through a share placing and open offer

Boots and Mothercare have struck a partnership which will see a new children’s clothing and accessories brand sold exclusively in Boots

Escada has plans to expand internationally and is likely to introduce menswear and kidswear collections under new owner Megha Mittal

French Connection has kicked off a major brand repositioning with the launch of a dramatic new-look spring ad campaign, which is said to be its biggest since the launch of its infamous FCUK branding in 1997

H&M is to bring its Home offer to the UK, going head to head with Zara and Next

Internacionale has made a string of redundancies at its London buying office and appointed a new head of merchandising

JJB Sports chairman Sir David Jones is to step down from his role due to ill health

La Senza owner Lion Capital has acquired 100% of the long-term debt of La Senza, bringing to an end uncertainty over the lingerie retailer’s future

Republic has restructured its management team to support aggressive growth

Shop Direct Group plans to close three of its call centres

Tesco plc is expected to go head to head with estate agents within weeks with the launch of a property website, allowing home owners to advertise their properties for a flat fee

Very is launching a new maternity range with television presenter Denise van Outen

General Alliance Boots has moved a step closer to opening Boots-branded pharmacies in Sweden by striking a

tie-up with a company owned by the Swedish Association of Pharmacists

B&Q has been drawn into a row after hiring gardening expert Alan Titchmarsh after some critics argued BBC presenters must be impartial

Best Buy has trademarked the name of defunct electricals retailer Rumbelows but the brand will not be used by the US giant

Burberry is to restructure its Spanish arm in a bid to bring the division in line with the global business

Ebay is muscling in on mainstream fashion players with the launch of its first fashion designer collaboration

Game is trialling a social networking site

Hollister has sparked fury by seeking "cool, good-looking" people to work in its first Scottish store

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Iceland has today started a nationwide search for a customer to become the new face of the brand after Coleen Nolan stepped down

iPod is the most searched-for brand term on the internet in the brown goods sector, generating 9% of all searches in a month

Key Staff Changes occurred in the following retailers this month; Lombok, Amazon, Majestic Wine, Morrisons, Animal, Debenhams, Arcadia Group, Burberry, Diesel, Fat Face, John Lewis, SuperGroup, Play.com and Liberty of London

Lush Chief Executive Andre Gerrie has bought surfwear brand Mambo from Blacks Leisure Group for £800,000 via his Hong Kong investment vehicle

Morrisons has launched a legal case against former employees of Safeway including its former chairman David Webster to recoup up to £16.4m it faces for alleged dairy price fixing with other retailers

Obesity A London council is considering the implementation of a ‘No Fry Zone’ around its 65 primary schools in a bid to curb the growing obesity trend in the region’s children

Scottish Retail Retailers in Scotland will be harmed by the Scottish Government’s failure to introduce business rates transitional arrangements, according to the Scottish Retail Consortium

Supermarkets have secured the top spot in the children's wear sector for the first time, taking over from high street retailers with a 29% share of the market

The Nectar Card has become the most popular loyalty card in the UK with 16.8m people now using the card

Property Blockbuster is understood to be working with restructuring firm KPMG on negotiations with more

than 600 landlords as part of cost cutting plans

Brasserie Blanc has secured a site in the redevelopment of the former Stock Exchange on Threadneedle Street

Eldon Square The St Andrew’s Way redevelopment of Eldon Square shopping centre has opened

Focus has asked its landlords to allow it to delay making its January and February rent payments

Gallagher Developments has put the Junction 9 retail park in Wednesbury, near Birmingham up for sale at £120m

Peel Holdings is to submit plans to build a £15m shopping centre in Loanhead, Midlothian

PruPIM has bought the 127,500sq ft Ravenside retail park in Edmonton, north London, for just under £48.3m

St Modwen Properties PLC

has exchanged contracts to sell Catford shopping centre in Lewisham, south east London, to Lewisham Borough Council for £11.52m

Suits You has proposed a Company Voluntary Arrangement which will allow parent SRG to negotiate with landlords on Suits You leases which are losing money

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Retailer Results

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UK Overview ONS Retail Sales

*The value of retail sales in January at current prices not seasonally adjusted increased 3.1% YoY, changing the 3 month moving average to 3.1%, from 3.2% in December. Value of sales through food stores in January increased by 1.9% YoY, compared with 5% in December, while the value of sales through non-food stores was up 2.7% YoY. As always, Non-Store Retailing (now excluding Repair) was the best performing sector, with a YoY increase of 17.2%. Textile, Clothing & Footwear also did well, up 3.5% YoY, while the Household Goods sector continues to suffer, down 8.4% YoY and pushing the 3mma into negative territory.

*Please note that ONS made several changes to its Retail Sales reporting in January 2010. For more information, see http://www.statistics.gov.uk/pdfdir/rs0210.pdf

Please see the Retail & Economic Statistics page on SnapShop for more historical detail

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Internet Retail Sales

Based on BRC figures, non-food non-retail sales were 14.6% higher in January YoY, expectedly down from 26.5% for December. According to the ONS*, Internet sales accounted for 8% of all retail sales in January, up from 7.7% in December.

Internet Sales

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BRC YoY % Change ONS Internet as % of Total

*ONS are trialling an experimental measure of Internet retail sales. For more details see http://www.statistics.gov.uk/articles/nojournal/Internet_information_paper_February_2010.pdf.

BRC Retail Sales

Year-on-Year (YoY) total UK retail sales values in January increased 1.2%, while like-for-like (LfL) sales decreased 0.7%.

British Retail Consortium - Retail Sales Monitor

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Retail sales in central London in January were 3.5% higher on a like-for-like basis than a year ago, when sales had risen 6.5%. This was the worst January sales growth since 2005. Please see the Retail & Economic Statistics page on SnapShop for more historical detail

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Pedestrian Flows

SPSL’s Retail Traffic Index for January decreased by 27.5% MoM against December, and 5% on January 2009. Experian FootFall reported a MoM decrease of -29.4% and a YoY decrease of 2.6%

Pedestrian Flows - Year-on-Year Change

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Interest Rates

In February, the Bank of England’s Monetary Policy Committee once again voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. To provide some variety and comparison, SnapShop has adjusted the graph to show data back to February 2006.

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Please see the Retail & Economic Statistics page on SnapShop for more historical detail

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Inflation

In the year to January, the consumer prices index (CPI) rose 3.5%, up from 2.9% in December. The more familiar RPI (Retail Prices Index) increased, from 2.4% in December, to 3.7% in January. Both reflect the increase in VAT rates from 1st January

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House Prices

According to the Nationwide index, the price of a typical house rose by 1.2% in January MoM. The average price of a typical UK property in January was £163,481. Commentary by Nationwide states “unless there is a fall in property values in February, annual house price inflation is likely to move into double-digit territory next month for the first time since May 2007.”

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NB: YoY figures refer to left hand scale, MoM statistics refer to right hand scale. September YoY was flat. Please see the Retail & Economic Statistics page on SnapShop for more historical detail

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Consumer Confidence

The GfK NOP Consumer Confidence Index rose by 2 points during January to -17. Confidence in the “general economy” over the last 12 months rose four points, bringing it twenty three points higher than this time last year.

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Please see the Retail & Economic Statistics page on SnapShop for more historical detail

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Ireland Overview CSO Retail Sales

At time of writing, the most recently published data were for December, when the value of retail sales in current prices, not seasonally adjusted, was 12.4% lower YOY, decreasing the moving YOY 3 month figure to –12.2% from –11.9% in November. The value of food sales in December decreased to -9.5% YOY, and the value of non-food sales increased to -14.8% from –16.5% the previous month.

Please see the Retail & Economic Statistics page on SnapShop for more historical detail

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Inflation in Ireland

In Ireland, HICP rose to -2.4% in January, while CPI increased, to -3.9% - increases for the second month in a row.

Irish Inflation (HICP v CPI)

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Please see the Retail & Economic Statistics page on SnapShop for more historical detail.

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And Finally… A Moment On The Lips, A Lifetime On The Hips

Feeling a bit peckish but don’t want to pile on the pounds? Fancy a bag of crisps but worried about the salt content? Never fear, Cranswick Food Company are here to help.

The Duchy Originals sausage producer has tried to patent a revolutionary new product that promises to provide everything the slimming carnivore could ask for – namely, meat crisps.

Said crisps promise to contain fewer calories, fat and salt than the traditional potato variety while having all the flavour of your favourite Sunday roast. These little gems are made by whizzing up some beef and turkey, mixing it with emulsifiers, heating gently then microwaving. Yum!

I don’t know about you, but I can hardly wait…

www.fspretail.co.uk 23/02/10

FSP has gone to its best efforts to ensure this data is correct but the author reserves the right not to be responsible for the accuracy of information provided.

SnapShop Monthly, a benefit of SnapShop Membership, is provided by:

FSP 20 Manor Court Yard Hughenden Avenue

High Wycombe Buckinghamshire

HP13 5RE

Tel: 01494 474740 Email: snapshop@fspretail.co.uk

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