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Philip Green Targets Brazil, China for Expansion of Topshop Clothing Chain

by on May 21, 2010

By Andrea Catherwood and Sarah Shannon May 21 (Bloomberg) — U.K. retailing billionaire Philip Green will open stores of his Topshop fashion chain in Brazil and China as he looks to new markets to drive growth. “I think we’ll go to China in the next year” after reaching an agreement a week ago to enter Brazil, the 58-year- old owner of Arcadia Group Ltd. , said in a Bloomberg Television interview at his new store in London’s Knightsbridge shopping district. “We’ve been working on Hong Kong for quite a while and we’ll expand in America.” Green, who opened the three-story Topshop outlet selling 85-pound ($122) floral jumpsuits opposite Harrods on May 19, said he’s discussing four or five locations in the U.S., including sites in New York, Los Angeles, Miami and Chicago. The retailer opened its first Manhattan store last year and is spending 80 million pounds to 90 million pounds a year on new projects, he said. “If you want to create a global brand, you’ve got to be able to create location,” he said of the new London outlet and added that “we’re in exploratory mode” in the U.S. Topshop will also probably open in San Francisco and Las Vegas, he said. Green’s Arcadia owns U.K. fashion brands Wallis, Evans and Dorothy Perkins. It also owns retail chains including BHS department stores, and Green said he would consider buying other chains. “We have a lot of firepower to do it,” Green said. “We’re not heavily geared.” BHS Green, who made an unsuccessful attempt to acquire Marks & Spencer Group Plc in 2004, is adding brands such as Wallis and Burton to the BHS stores to drive sales and create “more of a department store feel,” he said. Profit has advanced 30 percent at the outlets involved in the revamp, carried out by Chief Operating Officer Ian Grabiner . Green would “definitely not” sell BHS, he added. While the British billionaire’s show-business joint venture with American Idol judge Simon Cowell is “exciting,” Green said his focus will be the stores. The privately owned retailer reported operating profit gained 13 percent in the year ended August 2009, while same- store sales were flat. To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net .

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Philip Green Targets Brazil, China for Expansion of Topshop Clothing Chain

by on May 21, 2010

By Andrea Catherwood and Sarah Shannon May 21 (Bloomberg) — U.K. retailing billionaire Philip Green will open stores of his Topshop fashion chain in Brazil and China as he looks to new markets to drive growth. “I think we’ll go to China in the next year” after reaching an agreement a week ago to enter Brazil, the 58-year- old owner of Arcadia Group Ltd. , said in a Bloomberg Television interview at his new store in London’s Knightsbridge shopping district. “We’ve been working on Hong Kong for quite a while and we’ll expand in America.” Green, who opened the three-story Topshop outlet selling 85-pound ($122) floral jumpsuits opposite Harrods on May 19, said he’s discussing four or five locations in the U.S., including sites in New York, Los Angeles, Miami and Chicago. The retailer opened its first Manhattan store last year and is spending 80 million pounds to 90 million pounds a year on new projects, he said. “If you want to create a global brand, you’ve got to be able to create location,” he said of the new London outlet and added that “we’re in exploratory mode” in the U.S. Topshop will also probably open in San Francisco and Las Vegas, he said. Green’s Arcadia owns U.K. fashion brands Wallis, Evans and Dorothy Perkins. It also owns retail chains including BHS department stores, and Green said he would consider buying other chains. “We have a lot of firepower to do it,” Green said. “We’re not heavily geared.” BHS Green, who made an unsuccessful attempt to acquire Marks & Spencer Group Plc in 2004, is adding brands such as Wallis and Burton to the BHS stores to drive sales and create “more of a department store feel,” he said. Profit has advanced 30 percent at the outlets involved in the revamp, carried out by Chief Operating Officer Ian Grabiner . Green would “definitely not” sell BHS, he added. While the British billionaire’s show-business joint venture with American Idol judge Simon Cowell is “exciting,” Green said his focus will be the stores. The privately owned retailer reported operating profit gained 13 percent in the year ended August 2009, while same- store sales were flat. To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net .

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Retailers in U.K. Offer Last-Minute Tax Breaks, Discounts in Shopping Rush

December 26, 2009

By Sarah Shannon Dec. 26 (Bloomberg) — U.K. retailers including Kingfisher Plc and PC World targeted shoppers seeking a last-chance tax break along with post-Christmas bargains, offering promotions on kitchens and laptop computers. Chancellor of the Exchequer Alastair Darling will restore the value-added tax, a levy on sales, to 17.5 percent effective Jan. 1, after reducing the rate to 15 percent a year ago to help pull the economy out of the recession. Kingfisher, Europe’s largest home-improvement chain, is offering 50 percent discounts today on bathrooms and kitchen doors at its B&Q chain while DSG International Plc , owner of the Currys electronics stores and PC World, advertised ‘Beat the VAT increase!’ on posters and reduced a Sharp Corp. 32-inch flat- screen television to 299 pounds ($477) from 599 pounds. “Encouraging customers to buy before the VAT increase is a great way for retailers to get money in before Jan. 1,” said Jon Wright , the retailing manager at Euromonitor, a London-based market research firm. “The clearance sales will be the biggest sales driver for shoppers, but the VAT will help that.” Purchasers of higher-priced items such as kitchens, bathrooms and electrical goods should be the biggest winners in the sales, Wright said. Today’s Boxing Day holiday may be the biggest shopping day of the year, according to Experian Group Ltd. research, as it falls on a Saturday, typically the peak day for retail revenue. Britons are increasingly prepared to shop over the festive period, the firm said. Laptop Bargains In London’s West End, Simon Mustafa, 34, was browsing the laptops at the Currys store in Oxford street. “I’ve been planning this purchase since well before Christmas,’ he said. “It’s worth waiting for the sale and I’m getting an extra saving by missing the VAT.” Online retail traffic also is likely to spike today, according to Interactive Media in Retail Group, a trade organization. “Shoppers use it to search for bargains, as a price comparison site, and there is an awful lot of shopping as Britons cash in their vouchers on new iPhones and electricals,” David J. Smith, director of operations at IMRG, said by phone. “Amazon are having a very good period online, as well as John Lewis and Marks & Spencer.” IMRG forecasts online sales in December will climb to 5 billion pounds ($8 billion), compared with 4.6 billion in 2008. Online Discounts Retailers began offering discounts online before the Christmas period this year. John Lewis Partnership Plc, the owner of department stores and Waitrose supermarkets, started its 50 percent Christmas discounting at 6 p.m. on Dec. 24, while the stores begin those discounts Dec. 27. Tesco Plc , the U.K.’s largest retailer, started Web-based promotions for its non-food products such as pillows, sofas and toys on Dec. 22. Debenhams Plc , the U.K.’s second-largest clothing retailer, was among the first chains to open its doors at 7 a.m. with discounts of as much as 70 percent on products including leather coats by designer John Rocha and Meyer saucepan sets. At the Oxford Street outlet of the clothing chain Next Plc , 22-year-old Ana Cabrita said she’d been queuing for more than 15 minutes to snap up bargains on winter coats and workwear. “They always have great sales here,” she said. “My friends got here at 6 a.m. and there were already people waiting. It’s worth it for the bargains.” Trevor Pereira , commercial director at Capital Shopping Centres Plc, the owner of 14 regional malls including Lakeside in southeast England and Braehead in Scotland, said customers had been “flooding in” for laptops, televisions, mobile phones and homewares. ‘Extremely Busy’ “Shoppers have been planning their sale purchases before the VAT hike comes into effect, and as a consequence we are extremely busy,” he said. Snowy condition across the U.K. deterred shoppers before Christmas, with retail visits down 7 percent in the week ended Dec. 13 from a year earlier, the market research firm Synovate said. London and the Southeast recorded the lowest levels. “Droves of people were simply put off venturing out in the snow and ice, and retailing was one of the main casualties,” Synovate’s Tim Denison said. “These figures are weather-related and not indicative of a softening in underlying demand.” U.K. retailers can expect “bumper Christmas sales” as Britons start to overcome 18 months of concern about the economy, according to a study published last week by Datamonitor Group. About 70 percent of the country’s consumers plan to spend more than normal, the study found. Biggest Day The New West End Company, the organization representing retailers in central London’s main shopping district, estimates half a million people will visit the area, its biggest shopping day. The group forecasts more than 60 million pounds in sales today. Antonio Nardone, from Bari, Italy, said he came to London for the Christmas holidays with his wife and two daughters to take advantage of the promotions. “The sales here are very impressive,” he said inside House of Fraser Plc’s handbag section on Oxford street. His wife, Luisa, held up an orange suede crocodile-print bag from Mulberry Group Plc. “It was 655 pounds and now it’s only 455 pounds,” she said. “This is such great shopping. You can’t get prices this good at home.” To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net .

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U.K.’s `Bumper’ Holiday Shopping to Boost Marks & Spencer Profit Estimates

December 18, 2009

By Sarah Shannon Dec. 18 (Bloomberg) — At a Harvey Nichols holiday store in northern England, shoppers are taking little notice of the country’s longest recession on record. They’re snapping up the luxury retailer’s 200-pound ($323) food gift baskets instead. “It’s greatly exceeded expectations,” general manager Iain Mackenzie said of the 2,000 square-foot (186 square-meter) outlet in Manchester’s Trafford shopping center. Harvey Nichols, known for its flagship London luxury department store, has to send a truckload of new stock to the shop every day, he said. U.K. retailers can expect “bumper Christmas sales” as Britons start to dispel 18 months of concern about the economy, according to a study published this week by Datamonitor Group. About 70 percent of the country’s consumers plan to spend more than normal, the study found. With fewer discounts being offered before the holiday, analysts say profit estimates for store owners such as Marks & Spencer Group Plc may have to rise. “Undoubtedly people are spending more and throwing off the shackles they had earlier in the year,” Andrew Parkinson, general manager of the Bluewater shopping mall in Kent, southeast England, said by phone. Gifts, jewelry and catering are doing “tremendously well,” he said. According to Datamonitor, 16 percent of Britons now say they can see early signs of economic recovery, compared with 9 percent in June. The researcher conducts a monthly survey of about 300 consumers in each of 19 countries. ‘More Optimistic’ “U.K. consumers have become more optimistic about their spending because they believe we’ve seen the worst of the recession,” said Annabel Gorringe, lead analyst at Datamonitor. John Lewis Partnership Plc, the U.K.’s biggest department- store owner, said yesterday that sales at the chain rose 15 percent in the week ended Dec. 12, with growth accelerating to more than 16 percent in the following four days. At the Bluewater mall, Parkinson said he expects the highest Christmas sales in two years, with revenue likely to be up by as much as 5 percent on last year. “A healthy December 2009 should deliver forecast upgrades,” for U.K. retailers’ earnings, said Rod Whitehead , retail analyst at Deutsche Bank AG in London. He estimates total non-food same- store sales will rise by 4 percent in December, compared with an 8 percent decline for the same month last year. Morgan Stanley analysts say increases to profit estimates of about 10 percent will be “widespread” for retailers in January, helped by stronger sales, reductions in inventory and less discounting. Marks & Spencer, the U.K.’s largest clothing retailer, and smaller rival Next Plc are the first publicly traded retailers scheduled to report Christmas sales on Jan. 6. Good As It Gets Christmas may be as good as it gets for retailers. Value added tax will rise to 17.5 percent from 15 percent in January, while possible interest-rate hikes and higher income taxes next year mean the rebound in consumer spending probably won’t last, according to Nick Coulter , an analyst at Numis Securities. “A number of negatives are out there,” Coulter said. “A lot of the good news is already priced into the stocks.” U.K. retail stocks rallied in 2009 as consumer confidence rose to the highest in 1 1/2 years and lower mortgage repayments prompted Britons to make purchases. The 18-member FTSE 350 General Retailers Index has risen 69 percent since Jan. 1, compared with a 22 percent gain by the benchmark FTSE 100 Index. “Investors should sell given that we believe upgrades are now expected whereas the risk of negative same-store sales growth excluding value added tax is now,” said Caroline Gulliver an analyst at Execution Ltd. in London. She has an “underweight” rating on U.K. general retailers. Christian Audigier In Manchester, Harvey Nichols’ Mackenzie says 60-pound bottles of Christian Audigier champagne wrapped in signature tattoo designs are flying off the shelves at the luxury chain’s so-called pop-up store. The seasonal outlet, which opened in November and won’t close until at least the turn of the year, has already run out of 30-pound Christmas breakfast giftboxes offering tea, coffee, clotted cream biscuits and ‘lashings of preserves.’ No discounts are being offered, compared with 25 percent off promotions offered at stores last year. “It’s appealing to a market looking for stocking fillers and gifts for friends and family,” Mackenzie said. The new store has been “very exciting.” To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net .

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U.K. Retailers Avoid Christmas `Armageddon’ Repeat With Fewer Discounts

November 26, 2009

By Sarah Shannon Nov. 26 (Bloomberg) — A year after swaths of panic price cuts led to a Christmas “Armageddon” for U.K. retailers, Britons may find it harder to get a bargain before the holiday. Marks & Spencer Group Plc, New Look Group Ltd. and House of Fraser Ltd. are among stores that say they don’t plan full-scale discounting before Dec. 25. With consumer optimism holding at an 18-month high, shoppers may still spend more in December than a year ago, according to researcher Mintel International. “I can’t see last year’s level of disorder on the high street,” New Look Finance Director Alistair Miller said in an interview with Bloomberg News. Going on sale before the holiday “is an absolutely suicidal move for retailers.” According to analysis conducted by PricewaterhouseCoopers LLP, only 43 percent of town-center retailers offered discounts or ran promotions this week, compared with 62 percent a year ago. Ninety of Britain’s 100 biggest store owners started discounting before Christmas last year as the financial crisis that followed the collapse of Lehman Brothers Holdings Inc. caused consumers to slash their holiday budgets. “There’s much less blanket discounts this year,” said Richard Dickinson, chief executive officer of the New West End Company , the organization which represents retailers in central London’s main shopping district. “Stores have been much more astute about ordering. What people are doing is much more event driven and promotion driven.” No ‘Armageddon’ Only 40 percent of central London retailers are planning pre-holiday discount days this year, according to Dickinson. Numis Securities analyst Andy Wade expects Christmas to be “a lot stronger” for profitability as discounting subsides. Marks & Spencer’s gross margin narrowed by 1.7 percentage points in its last fiscal year after the retailer held two “Christmas Spectaculars,” one-day events in which the price of almost all products was cut by 20 percent. Those won’t be repeated this year, according to Executive Chairman Stuart Rose , who said this month that the “Armageddon” scenario of 2008 has now passed. M&S, the U.K.’s largest clothing retailer, will “trade full price through Christmas,” Rose said. Instead of price cuts, the London-based company will rely on 1,000 new products such as a 45-pound ($75.2) Christmas dinner for four people, and a 10 million-pound advertisement campaign featuring stars from the Absolutely Fabulous television series. Smaller Discounts House of Fraser Plc, the U.K.’s third-largest department- store chain, will only run “targeted promotions” such as 25 pounds off party-wear in the run up to Christmas, spokeswoman Clotilde Gros said. Last year, the retailer offered price cuts of as much as 50 percent before the holiday. New Look, the owner of 610 budget fashion outlets, will run promotions on party dresses later in the holiday season and start discounting by as much as 70 percent from Dec. 26, Miller said. “Compared to the build up to 2008’s doom and gloom laden Christmas period, 2009 is looking much more positive,” said Jon Wright , retailing manager at market researcher Euromonitor. “Retailers have cut their cloth accordingly in terms of inventory, staffing, merchandising activities and promotion.” According to PWC, stores were offering smaller discounts of about 25 percent this week, down from 40 percent a year ago. Mintel forecasts that December retail sales will rise by 2 percent after declining 1.7 percent in the same month last year. The lowest interest rates on record and improving house prices have buoyed Britons willingness to spend, according to Richard Hyman , strategic retail adviser to Deloitte & Touche LLP. Debenhams, John Lewis “I certainly feel more confident about the economy,” said Joanne Burrows, 61, as she shopped for gifts on London’s Oxford Street. “My husband and I are feeling a bit more certain about our savings and house prices seem to have recovered a little. I’d say I’m spending more than last year.” To date, few town center retailers have followed the lead of department-store chain Debenhams Plc, which started a 250 million-pound price cutting campaign on Nov. 18, surpassing its 200 million pounds of discounts before Christmas last year. John Lewis Partnership Plc, the biggest U.K. department store owner, will start its clearance on Dec. 26 at its Trafford outlet in northwest England, spokeswoman Laura Chilvers said. All other shops will go on sale from Dec. 27. Sales at John Lewis rose 15 percent in the week ended Nov. 21 and were up more than 20 percent in the following four days, the company said today. “Christmas 2009 will be more profitable than last year thanks to a more benign competitive environment,” said Kate Calvert , an analyst at Shore Capital. Price cutting in December last year was exacerbated by closing down sales at 815 Woolworths Group Plc stores across the U.K. ‘In Denial’ Not everyone agrees that the holiday will see growth in U.K. retail sales. Verdict Research forecasts a 0.7 percent drop. Deloitte’s Hyman expects Christmas sales to be a “whisper” up on last year, only to fall by 1.5 percent in 2010 because of a planned increase in value-added tax in January and potential rises in interest rates and unemployment. “It’s extraordinary that retail has held up as well as it has given the recession, and it really is a testament to how wedded to spending the U.K. consumer is,” Hyman said. “You could say they are in denial.” On Oxford Street, 37-year-old Caroline Chambers said she can afford to spend more on gifts than she did last year. “My husband feels more secure in his job and that’s made a big difference to how we feel about spending,” Chambers said. “I’m not that worried about next year. Things are improving.” To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net .

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