Good morning and welcome to the Business Breakfast live blog for Monday, January 21. I’m Coreena Ford and I’m running the blog today.
The business team’s live blog brings you all the breaking news from across the North East, the UK and beyond – basically anything and everything from the world of business.
First up this morning is a report from a real estate firm which predicts another horrendous year for the high street, with tens of thousands of jobs expected to be lost.
We also have news from Patisserie Valerie, Just Eat and William Hill.
As usual, I’ll also include links to stories which you may have missed over the weekend too.
Don’t forget to join our ChronicleLive business group on Facebook so you can get the latest news from our business team.
And if you’d like to contribute tweet at @jnlbusiness to share your opinions, drop me a line at [email protected] or tweet me at @Scoopford or call on 0191 2016331.
North East firm launches Dublin division amid Brexit business worries
A major marine insurance group headed in the North East has officially launched a base in Ireland, as part of moves to make sure it has access to EU markets following Brexit.
North P&I employs in excess of 300 people at its Newcastle Quayside office and is the region’s longest-established firm in its sector.
The group was formed in 2015 following the merger of North and Sunderland Marine, creating the biggest global firm of its kind, with Sunderland Marine focusing on insuring large ships such as freighters and North carving a niche in commercial vessels, operating in markets across the globe.
In direct response to the Brexit vote, the firm unveiled contingency plans to make sure both companies continue to have access to EU markets, resulting in the creation of a Dublin subsidiary.
The firm has now confirmed that its subsidiary in Ireland, North of England P&I Designated Activity Company, has received authorisation as a non-life insurance business from the Central Bank of Ireland (CBI).
Mountain Warehouse posts strong Christmas figures
Outdoor retailer Mountain Warehouse has defied the high street gloom and reported record Christmas trading following a surge in sales of socks, fleeces and gloves.
In the 13 weeks to January 6, Mountain Warehouse saw revenue jump almost 12% to £84.7m.
The privately owned group also enjoyed a bumper Black Friday, with total sales up 20% and online sales passing £1 million on a single day for the first time in its history. Boss Mark Neale said this puts the business on track for record full-year profits.
Last year the retailer, which employs around 3,000 people, grew its sales by 22% to £225.3m and booked earnings of £32.6m.
Mountain Warehouse served over three million customers during the 13-week festive period, with bestsellers including over 500,000 pairs of socks, almost a million fleeces, over 500,000 winter jackets and over 400,000 pairs of gloves.
The chain, which started with a single store in 1997, now has 340 in nine counties and plans to reach 400 over the next 18 months, creating 600 new jobs.
Patisserie Valerie locked in talks with lenders
Patisserie Valerie has said it is still locked in talks with its lenders as the future of the cake chain remains in doubt amid an accounting scandal.
The firm said in a brief update that it is in discussions with HSBC and Barclays to extend a standstill agreement on its debts which expired last week. It said: “Patisserie Holdings plc announces today that, further to the announcement on 16th January, the company is still in discussions with its bankers to extend the standstill of its bank facilities beyond 18th January and will issue an update when those discussions have concluded.”
Last week, Patisserie, chaired by Like Johnson, revealed that it has hired advisers at KPMG to carry out a review of all options following an accounting scandal which pushed it close to collapse last year.
It also unveiled the “devastating” extent of irregularities in its books, which included thousands of false entries into the company’s ledgers.
The firm said an initial investigation pointed to cashflow and profitability being worse than previously thought when the problem was first discovered in October.
The discovery of a black hole in the company’s accounts in October last year pushed it into a crisis which saw it almost cease trading. A rescue plan was passed by shareholders in November, resulting in the issue of £15m worth of new shares.
Just East chief executive steps down
Just Eat has announced that chief executive Peter Plumb is to step down from the online takeaway firm with immediate effect.
Chief customer officer Peter Duffy will take the role of interim boss as the search for a permanent replacement gets under way.
The group did not give a reason for Mr Plumb’s abrupt departure; however, it is understood that the board wants a fresh face to lead Just Eat as it faces rising competition.
Mr Plumb’s departure comes only weeks after Just Eat was described by one of its shareholders as the worst-performing online food firm in the world as it called for a radical shake-up.
Cat Rock Capital, which owns 2% of the firm, urged Just Eat’s board to “address key issues” and sell off non-core assets, such as its interest in the iFood business in Brazil and other non-European businesses.
Just Eat is desperately attempting to keep up with Deliveroo and Uber, firms that have been muscling in on its territory of late. Speculation that Uber is in early talks to buy rival Deliveroo has also recently hit Just Eat’s shares.
Mike Ashley ‘in talks’ to bail out HMV
Sports Direct boss Mike Ashley is in talks for a possible takeover of HMV, according to reports.
Mr Ashley has handed an offer to administrators KPMG for the struggling high street music chain, which has more than 100 stores, Sky News reports. It comes months after he saved House of Fraser, the department store chain, from collapse in a £90m deal in August 2018. KPMG said “a number of offers” have been received for HMV since it went into administration in December, but has declined to reveal the identity of bidders. Mr Ashley is said to have spoken with music and entertainment industry figures about his possible rescue deal. Around 2,200 jobs were put at risk when HMV went into administration. KPMG gave a deadline of January 15 for offers and said on Wednesday that several were made “on various bases”. Will Wright, a partner at the firm and joint administrator of HMV, said they would “evaluate these further over the coming days”. He added: “We will continue to endeavour to trade all stores while discussions with all the relevant stakeholders continue.” Mr Ashley’s recent House of Fraser takeover included all 58 of its UK stores and he vowed to turn it into the “Harrods of the high street”.
Office space with its own ‘speakeasy’ opens in Newcastle
A new business community, equipped with co-working space and its own design studio, has opened in Newcastle to help local firms improve their marketing.
The Brand Society is located at St Peter’s Wharf and has been launched by brand performance specialist Precept.
Overlooking St Peter’s Marina, the co-operative service will be open to Precept’s clients, as well as non-clients, who want to boost their marketing activities.
The recently renovated space will work as a co-working space for local firms who will be able to take advantage of the on-site design studio.
Businesses will also be able to hire kit to run events in the facility, as well as attend events put on by The Brand Society.
What’s the FTSE latest?
The FTSE-100 index opened at 6968.33.
The pound at 8am was 1.2868 dollars compared to 1.2897 dollars at the previous close. The euro at 8am was 0.8846 pounds compared to 0.8810 pounds at the previous close.
William Hill pencils in profits drop
William Hill expects full year profits to drop 15%, with the bookmaker blaming conditions on the High Street.
The bookmaker said that adjusted operating profit is set to come in at £234m, lower than last year but in line with expectations and within the previously guided range of £225mto £245m.
William Hill hailed “excellent growth in the US”, but bemoaned a reduction in retail profits, which it said were “challenged by wider high street conditions”. Last year, the firm warned over profits as regulatory and tax changes hit online growth, saying it will knock it by £20m in 2018 and a further £25m in 2019. William Hill is among gambling firms set to be hit by the Government’s crackdown on fixed-odds betting terminals, limiting the maximum stake to just £2 from £100, which will take effect in October next year.
But the company is looking to provide alternative gaming options as well as refocusing its estate to offset the hit from the regulation.
Boss Philip Bowcock said: “2018 was a pivotal year for both William Hill and the wider industry.
We now have greater clarity around the key challenges and opportunities for our business. In 2019 we will remodel our retail offer while building a digitally-led international business.”
High Street to ‘shed another 175,000 jobs’ in 2019
A further 175,000 jobs are set to be lost from the High Street this year and the value of retail property will tumble amid challenges continuing within the sector, new research shows.
Over 23,000 shops are expected to close in this year, according to research by real estate adviser Altus Group.
The numbers mark a significant increase on 2018, when a series of company failures and store closure programmes claimed almost 20,000 stores and 150,000 jobs.
Meanwhile, the woes of the industry are set to hit the value of retail property, which is expected to decline by 15.9% as shoppers are tempted away from the by online alternatives.
Altus Group’s annual Commercial Real Estate (CRE) Innovation Report found that 62% of major UK property owners and investors say Amazon and other online players have disrupted the retail property market.
A further 78% said the trend towards “experiential” retailing is now impacting their investment decisions, as customers seek out experience-led shopping. Altus Group managing director Guillaume Fiastre said retail property value had dropped significantly due to headwinds facing the sector, but that “survivors” would emerge from the current transformation.
Retail of the future will use bricks-and-mortar spaces in a very different way mixed in with leisure and lifestyle residential spaces, for example.
The most successful retailers – the survivors – are learning to draw in their customers with the promise of a personalised experience. Technology makes that all possible, but it still needs a strong human element.
Last year saw major retailers including Maplin, Toys R Us and House of Fraser go into administration.
Many other shopping chains slashed their store estates in response to reduced footfall on the high street. Retailers planning to close stores this year include Marks & Spencer, Debenhams and House of Fraser.
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