In a sign of the challenges facing the retail industry and department stores in particular, Sir Charlie Mayfield, head of the John Lewis Partnership, said he was expecting first-half profits of “close to zero” and lower overall full-year profits (The Times £). John Lewis Partnership, the employee-owned retailer regarded as a barometer of the middle-class British consumer, has warned that half-year profits will be “close to zero” as it prepares to invest heavily in services and technology (The Financial Times £). It expects to see profit growth at Waitrose, but a decline at John Lewis and will face ‘significant extra costs’ across the partnership level as it invests in IT (The Daily Mail).
The John Lewis Partnership has said it will make no profit in the first six months of this year and is to close five Waitrose stores as tough trading on the high street takes its toll (The Guardian). The John Lewis Partnership is bracing for a hefty drop in profits and is curtailing its presence on the high street as it plans to grow the business through unique products and services rather than rolling out stores (The Telegraph).
John Lewis Partnership, the owner of Waitrose, on Wednesday said that in response to what it called “a period of generational change” in retail, it would redouble its efforts to underline points of difference rather than pursuing scale for its own sake (The Financial Times £).
Sir Charlie Mayfield, chairman of the employee-owned partnership, said the move was a “sign of its intent” to become the best place to work in retail and to reinforce the message that its staff were at the heart of its business (The Times £). The name change to Waitrose & Partners and John Lewis & Partners was intended to emphasis the importance of the chain’s 85,000 members of staff (The BBC).
The death of the department store is a much-vaunted topic, but according to industry experts, 2018 could be the year that finally brings the concept to its knees, writes The Daily Mail.
Sky’s Ian King says the profit warning does not signal another major retail casualty ahead as many competitors stumble. (Sky News)
The FT’s Lombard column writes: “With all this strategy costing £500m a year — potentially reducing half-year profit to zero — partners may wonder what is so different about a bonus cut, a pension hit, or a risk of store closure.” (The Financial Times £)
Keith Hamill, chairman of Premier Foods, has strongly backed the chief executive of the Mr Kipling cakemaker, who faces calls for his resignation from one of the company’s biggest investors, saying its brands would not fetch a good price in the current “challenged” climate. (The Financial Times £)
Ben Marlow in The Telegraph writes: “Premier’s board has pledged to stick by Darby. Yet, given his dismal track record, surely it is [firing him] precisely what should happen? As First Group’s Tim O’Toole recently found out, persistently bad stewardship can’t be allowed to go on forever. The board needs to wake up and get a grip.” (The Telegraph)
Conagra Brands, the company behind Healthy Choice frozen meals and Hebrew National hot dogs, has agreed to buy US Bird’s Eye frozen foods maker Pinnacle Foods for $10.9bn, including debt, in the latest mega deal of the year. (The Financial Times £)
It has been a downbeat year for big US food companies. But the freezer section of grocery stores has been a comparative hotspot. Frozen foods have chalked up positive organic sales growth in recent months. Millennials are embracing frozen foods as a healthy option. (The Financial Times £)
Costa Coffee owner Whitbread was the latest victim of Britain’s declining high streets on Wednesday as it revealed an exodus of shoppers knocked sales in the first quarter of its financial year (The Telegraph). Whitbread reported its first like-for-like sales fall in almost a decade as its Premier Inn and Costa Coffee businesses both went into decline in the first quarter (The Times £). The expansion of Costa Coffee in China and self-service “express” machines across the UK has helped Whitbread, the chain’s owner, offset sales declines on Britain’s high streets, which have been hit by falling consumer spending (The Financial Times £). Whitbread has blamed falling sales at its Costa coffee shops on cash-strapped shoppers staying away from Britain’s high streets (The Guardian). Costa Coffee became the latest high street casualty as sales cooled in its first quarter (The Daily Mail).
Cake Box rose almost 19 per cent higher on the fresh cream cake retailer’s Aim debut. The shares closed at 127p, with the initial public offering having been priced at 108p last Friday. (The Times £)
Some JD Wetherspoon pubs are temporarily without draught John Smith’s and Strongbow, and a science centre has cancelled its summer programme, owing to a shortage of carbon dioxide across Europe (The Guardian). Britain’s biggest pub group says some outlets are running out of certain beer brands as CO2 gas shortages continue to hit the food and drink sectors (BBC). The maker of the two popular brands, Heineken, says supplies will be available again in a couple of days (Sky News).
China has ended a two-decades-long ban on exports of beef from the UK, first introduced after the outbreak of BSE - or “mad cow disease” - in the 1990s. The government said the development will be worth £250m to British producers over the next five years. (The BBC)
Retail sales bounced back to a nine-month high after a lacklustre start to the year. The CBI’s distributive sales survey found volumes were “well above average for the time of the year” as the summer sun brought more people out on to the high street. (The Times £)
According to the Telegraph’s store closure tracker, which tracks closures from major retailers, an estimated 1,334 shops have been closed or earmarked for closure since January - potentially putting 23,400 jobs at risk. (The Telegraph)