Retail News UK

DSGi revealed that underlying pre-tax profits dropped to £52.4 million in the 24 weeks to October 13, compared with £70.3 million the previous year.

The electricals giant blamed the fall on a disappointing performance at PC World and UniEuro.

PC World was affected by the overstock of laptops and increased hardware in the mix, but the retailer said that stock levels are now back to normal. However, sales at UniEuro remain disappointing, which the group said is down to a tough consumer environment. Group sales jumped 8 per cent to £3.38 billion, with like-for-likes up 5 per cent.

Sales in the UK and Ireland rose 5 per cent to £1.19 billion, with like-for-likes up 6 per cent. Underlying operating profit almost doubled to £14.1 million, aided by the sale of flatpanel TVs. Currys, including Currys.digital, experienced a strong year of growth in both sales and profits.

Group chairman Sir John Collins said: "We had an encouraging start to the year in terms of sales and I am pleased with the performance of the UK electricals businesses as well as our operations in the Nordics, Greece and Central Europe." However, he said that  overall profit was disappointing, primarily due to PC World and UniEuro.

Pali International analyst Nick Bubb said: "Having spoken to the company, there are no surprises. At 113p, the shares are trading on a 20 per cent discount but, unless bid rumours revive, it's hard to see much short-term upside pre-Xmas."

Collins added: "There is much debate about the uncertain outlook in many of our markets. Accordingly, it is appropriate to be cautious about the consumer environment in 2008."

The 1,200 sq ft (110 sq m) shop was designed by the retailer's in-house team and cost about £250,000 to fit out and equip, according to Rituals partner and UK franchisee Neil Chahal.

The front half of the store is devoted to cosmetics, with a black centre-floor counter and a table extending into the middle of the shop, providing a home for basins and towels,  for those seeking to test-drive the products.

The perimeter has black wood fixturing and is used to display cosmetics and oriental artefacts, intended to promote a sense of Eastern mysticism within a contemporary setting.

The walls on the right have been covered in fine-gauge netting that has been back-lit with spotlights at floor level. On the left, the walls are black and filled with a graphic explaining the "philosophy" behind the brand.

The back of the store is a mini-spa area, offering a range of treatments. It features a dark-wood counter, mirroring the floor. This is backed by a graphic depicting green bamboo.

Rituals will open up to 10 stores in the London area initially and will open its second branch at the new St Pancras International station later this month.

Chahal said negotiations are under way for sites at Windsor, Bromley, Westfield's White City scheme, Walton-on-Thames and The City. He added that the initial roll-out should be completed by the end of next year.  

Rituals operates in eight countries, but has held back from opening in London because of the cost of property.

A spokeswoman said: "London is such a sophisticated market that we had to get it right elsewhere, before bringing it to the UK."   

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Sales at the department store group – a key barometer of trading on the high street – have picked up following a tentative start to the winter season, which was driven by cold weather and the start of the Christmas party season.

The retailer said sales in the week to November 24 exceeded £78 million. John Lewis' Oxford Street branch hit a £1 million midweek takings target a week earlier than last year.

In the previous week to November 17, year-on-year sales increased 7 per cent to £71 million.

Eveningwear, lingerie and premium beauty brands have fuelled the growth, according to the retailer.

John Lewis director of retail operations Patrick Lewis said: "The cold, crisp weather has created a festive buzz in our shops and we are very encouraged by these results, which show an excellent increase on strong figures from both last week and last year.

"It is clear that big-name brands are important to shoppers in 2007, with gift-buyers already heading to audio and toys and partygoers heading for the fashion floors, or creating their own bespoke outfits with some help from our haberdashery department."

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Furniture and floorcoverings retailers have enjoyed a sales lift this year but should prepare for tougher conditions in 2008, according to Verdict Research.

Verdict estimates that the sector will have grown in 2007, at its fastest pace for three years. However, stripping out the boost to sales from higher inflation, year-on-year volume growth will be lower.

"The high proportion of homeowners on fixed-rate mortgages is a key reason why furniture retailers have not yet experienced a softening in demand," said Verdict lead analyst Nick Gladding. "However, as the discount period on mortgages arranged two to three years ago expires and the housing market weakens, trading conditions will become much tougher. The non-essential replacement and big-ticket nature of furniture and floorcoverings products means that consumers are more likely to defer a purchase than in most other sectors of retail."

The report suggests the pressures of cost inflation have prompted some retailers to begin to move away from heavy discounting and price promotions. Retailers are beginning to explore new ways of promoting their products and marketing on innovative features, style, design and lifestyle.

Home Retail Group's Argos and Homebase chains hold first and second position respectively in terms of furniture market share. They are followed by Ikea, DFS, MFI and Homestyle.

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Retailers could lose millions if England fails to qualify for the Euro 2008 finals tonight.

Englandshirt maker Umbro will release a trading statement tomorrow following the match. Last year, £32 million of its £56 million turnover was made through its replica England kit and licensed apparel.

Supermarkets and electricals retailers may also suffer if England do not make it further in the competition. According to the British Retail Consortium, supermarkets made an extra £124 million every week the team were in the 2006 World Cup.Sales of flatscreen TVs also doubled during the World Cup. However, the high street and shopping centres suffered very low footfall during matches.

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WHSmith chief executive Kate Swann has been offered a new three-year pay deal, which could earn her up to £5 million in the next three years.

Swann could earn £3.78 million in shares, as well as her £504,000 annual salary. The scheme will be voted on by shareholders at the retailer's AGM in January.

Swann has revived WHSmith's fortunes in recent years. And, if she accepts the new deal, it could end speculation about her future – she would have to invest a year's salary in WHSmith's shares to qualify for the payout. Swann is already in line to collect a £3 million bonus in February. A further 40 senior managers are expected to share about £9 million.

Pali international analyst Nick Bubb said: "Investors have been nervous that Kate Swann will walk away in early 2008 with her first three-year reward and get a new job. It is not a mega-incentive, but it is clearly a very useful one."

Last month, the retailer reported soaring group profits, but like-for-like sales dropped. Group pre-tax profits in the year to August 31 were £76 million – up from £44 million last year.

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Peacocks chief executive Richard Kirk told The Times that the potential £800 million refinancing of the group may have to wait until next summer.

Kirk said the group was taking a "rain check", despite speculation that up to five bidders are interested in the business.

Peacocks was taken private by a consortium led by American hedge funds Och-Ziff and Perry Capital in December 2005.

Potential bidders are understood to include Bahrain investment fund Arcapita and private equity houses PAI and Cinven.

Kirk said: "A few months ago there was talk that maybe we should refinance the business because the debt markets were buoyant. As it happens, the debt market has changed – it's closed – so we have done nothing.

"We are not in active talks to refinance or sell and we will look again next year. It may take two to three months for markets to improve, or it may take until the summer."

Kirk said Peacocks has the potential to double in size and have 1,000 stores across the UK. It opened its 500th store at the Metro Centre in Gateshead last week.

Kirk said like-for-like sales at Peacocks and Bonmarché are ahead of last year.

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Marks & Spencer has launched a food range in India as it prepares to ramp up operations there.

The retailer, working with local partner Planet Retail Holdings, hopes that its edibles will be as popular with shoppers in Delhi as they are in Derby.

It has dedicated about 500 sq ft of its 20,000 sq ft Ambimall flagship store in Gurgaon, near the Indian capital, to an offer including canned vegetables, sauces and gift food.

Marks & Spencer chief executive Stuart Rose has earmarked international development as a key component of his growth strategy. India, along with China, will be a priority for expansion.

He set a target for the international division, headed by Carl Leaver, to generate between 15 per cent and 20 per cent of group sales within five years.

The retailer has a dozen Indian shops at present, which have until now only sold clothing. The introduction of food is aimed at driving footfall and extending consumer appeal. An M&S spokeswoman said that other international franchise stores carried food and it made sense for appropriate Indian shops to do the same.

She said it was too early to decide whether a wider roll-out would go ahead, but Indian sources expected food to be introduced elsewhere as bigger M&S stores open.

Most British retailers operating in India sell clothing or general merchandise, but there is also thought to be a big opportunity for food. Waitrose, the John Lewis-owned grocer, supplies product to hypermarket business HyperCity. It has recently extended the arrangement to sell its foods through HyperCity's fledgling chain of upmarket convenience shops, ExpressCity.

Bryan Roberts, analyst at consultancy Planet Retail – which has no connection with M&S's Indian partner – said that the introduction of a food offer in India made sense.

He said: "There's a lot of potential there. The Indian consumer has proved to be very aspirational and a well-regarded brand like M&S should prove extremely popular."

India: land of retail opportunity

Number of M&S stores in India: 12

M&S international division operating profit: £52.5 million

Value of Indian retail market: US$330 billion

Some of the UK and international retailers developing operations in India: Argos, Bhs, Debenhams, Mothercare, Next, Oasis, Waitrose, Wal-Mart

John Lewis posted a solid increase in sales for the week ending November 16, as colder weather lifted clothing sales.

The department store chain delivered sales up 1.8 per cent over the period, although that was substantially down on the 14.4 per cent uplift for the same week last year.

John Lewis personnel director Eric Gregory said: "The colder weather encouraged clothing sales and the best scores came from menswear, leisure and beauty, with menswear branded casualwear to the fore."

John Lewis Direct registered booming sales up 31 per cent, driven by a strong furniture performance.

Stablemate supermarket chain Waitrose reported a 5.1 per cent sales increase in the seven days to November 10, with sales bolstered by a strong performance from its fireworks offer. This week, Waitrose opened a supermarket in Rickmansworth, Hertfordshire, its first store built above a multi-storey car park.

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DKNY Jeans is to part-anchor the new luxury area at the Trafford Centre in Manchester.

The fashion retailer will open a 3,000 sq ft (280 sq m) store this year on the site previously occupied by Next, which has relocated in the centre. The store will be adjacent to a 5,000 sq ft (465 sq m) Armani store, which is also due to open this year.

"We're delighted that DKNY is coming to the Trafford Centre," said Cushman & Wakefield director Martin Acton, who advised the Trafford Centre. "It follows on from getting John Lewis and increasing the brand focus to create an area of exclusive branded retailers. DKNY takes the Trafford Centre to a different dimension."

Among the fashion retailers at the centre is Vivienne Westwood, which opened its first standalone accessories store there last year.

Ted Baker is also understood to be interested in opening a store and other signings are lined up for later this year. DKNY was represented by Michael Peddar & Co.

The Trafford Centre is also  to unveil its homewares section, called Barton Square, this year. Flagship stores will include Marks & Spencer and Habitat. The 200,000 sq ft (18,580 sq m), £70 million development will adjoin the existing centre.

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