How Does Under-Fire M&S Chief Keep His Job?

M&S Clothing Sales: 12 Quarters Of Decline

Updated: 2:13pm UK, Tuesday 08 July 2014

Marks & Spencer (M&S) has faced frustration from shareholders after reporting a 12th consecutive quarter of declining clothing sales.

The company blamed the roll-out of its new website, which it had previously warned would take time to settle in, and said it had been less promotional in the period with an increased focus on margin.

Sales at M&S.com sank by a whopping 8.1% during the 13 weeks to 28 June on the same quarter last year.

Like-for-like clothing sales fell 0.6%, confirming 12 successive quarters of falling sales, but womenswear sales saw growth, as reported by Sky News on Monday night. 

Marks and Spencer's like-for-like food sales were up 1.7% for the same period.

But it was the performance in clothing and the "settling in" of the new website that largely dominated the company's AGM in London - which began hours after the first quarter results were released.

One investor questioned the company's leadership - given the faltering fashion performance - but M&S outlined its belief that sales would soon pick up and be driven by its web offering.

The firm has invested £150m in the improved site as it bids to become an international multi channel retailer but teething problems have included issues with re-registration and navigation.

Chief executive Marc Bolland said ahead of the shareholder meeting: "We have seen a continued improvement in clothing, although as anticipated the settling in of the new M&S.com site has had an impact on sales.

"We are pleased that the womenswear business was in growth, driven by full price sales, in line with our increased focus on margin.

"Our food business had another great quarter, continuing to outperform the market, through our focus on differentiation through quality and innovation".

Mr Bolland said M&S was simplifying parts of the website, which currently has 3.2 million users, and expected the online business to be back in growth by the retailer's peak trading period which begins in November.

Shares in M&S rose 0.6% in early trading on the FTSE 100.

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Moulton In Talks Over Unipart Rescue Deal

By Mark Kleinman, City Editor

The City financier Jon Moulton is in talks to rescue Unipart Automotive, Britain's biggest independent car parts supplier, in a deal that could save more than 1,500 jobs.

Sky News can reveal Better Capital, the investment firm headed by Mr Moulton, is competing against Euro Car Parts, another major company in the sector, about a transaction which could take place this week.

A third bidder is also understood to be in talks about a deal, without which Unipart Automotive faces the prospect of administration.

Sky News disclosed earlier on Tuesday that Unipart Automotive's owners had lined up KPMG by filing a notice of intention to appoint the professional services firm as administrator after a period of poor trading.

Unipart Automotive employs roughly 1,600 people, the vast majority of whose jobs would be saved if, as expected, KPMG reaches a deal to sell the company to one of the three interested parties.

KPMG has been tipped as administators if necessary

Mr Moulton's interest follows his attempt to take control of MG Rover when the British car maker was put up for sale by BMW nearly 15 years ago.

Unipart Automotive, which is part-owned by Unipart Group and controlled by H2 Equity Partners, a Dutch private equity firm, has a network of 200 branches across the UK. Unipart Group sold a majority stake in 2011.

Mark Dixon, Unipart Automotive chief executive, said in response to Sky News' earlier report: "In response to current press speculation I can confirm that Unipart Automotive Limited are currently in detailed discussions with three parties in respect of the sale of the business.

"We are very hopeful of concluding this transaction in the next 36 hours.

"A notice of intention to appoint administrators has been filed, but merely with the intention of protecting Unipart Automotive while we complete this sale process."

According to the company's website, it is the largest independent supplier of car parts, workshop consumables and garage equipment to the after-market.

Unipart Automotive completed a refinancing in May which included new injections of capital from its shareholders in an attempt to buy the company breathing space.

KPMG declined to comment.

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Washington State Issues Marijuana Shop Licences

Marijuana retail shop owners in Washington state have been given the green light to open their doors after a series of licences were granted via overnight emails.

Some two dozen pot shops will be permitted to sell cannabis to the public beginning at 8am on Tuesday.

The move will officially make Washington the second state behind Colorado to allow marijuana sales for recreational use.

"We're pretty stoked," said John Evich, an investor in a cannabis shop in Bellingham, north of Seattle.

Colorado marijuana sales have netted millions in state taxes

Washington and Colorado voted in November 2012 to legalise marijuana for adults over 21, and to create state-licenced systems for growing, selling and taxing the pot.

Sales began in Colorado on January 1, resulting in roughly $2m (£1.2m) in marijuana taxes in the first month.

Officials in Washington eventually expect to have more than 300 recreational pot shops across the state.

Limited supply could send prices soaring as sales get under way

It remained unclear how many of the shops already granted licences planned to open on Tuesday.

James Lathrop, the owner of Seattle-based Cannabis City, worked into the night on Sunday to have his shop ready for Tuesday's launch.

He said: "I've had a long day. It really hasn't sunk in yet."

Retail shop owners are expecting long queues on the first day of sales

He said that he planned to hold off on opening his doors until noon on Tuesday despite the 8am privilege.

"Know your audience: We're talking stoners here. I'd be mean to say they need to get up at 5am to get in line," he said.

Mr Lathrop said he has arranged for a food truck, free water and a portable toilet to accommodate patrons who might spend hours queuing outside his shop.

Meanwhile, limited supply is expected to send pot prices soaring to $25 (£14.60) a gram or higher on the first day of sales - twice what people pay in the state's unregulated medical marijuana dispensaries.

Fewer than 100 of the more than 2,600 applications to become licenced marijuana growers have been approved by the state, and only about a dozen of those were prepared to harvest by the start of July.

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Lloyds Picks New Chief Amid Bank IT Scrutiny

By Mark Kleinman, City Editor

Britain's biggest high street lender will this week appoint a new IT chief as the banking sector seeks to overhaul creaking computer systems following a series of reputation-damaging failures.

Sky News understands that Lloyds Banking Group will announce the recruitment of Morteza Mahjour, the former chief information officer of Royal Bank of Canada (RBC), within days.

Mr Mahjour will be the latest Canadian banker to take a leading role in the UK banking system following last year's arrival of Mark Carney as the Governor of the Bank of England.

Reporting to David Oldfield, Lloyds' operations director, Mr Mahjour will take the same title that he had at RBC.

He will arrive at Lloyds, which is 25%-owned by UK taxpayers, at an important time, with major lenders attempting to rectify decades of under-investment in IT systems even as consumers demand access to increasingly sophisticated banking services.

A report by the British Bankers' Association to be published on Tuesday is expected to show that UK banking apps are now being used more than 2.5m times every day.

LLoyds boss Antonio Horta-Osorio is said to believe the post is crucial

Banks' investment in systems infrastructure has struggled to keep pace with this explosion in demand, however.

All of the major high street lenders have faced embarrassing breakdowns in technology in recent years, with Royal Bank of Scotland (RBS) experiencing arguably the most damaging just over two years ago.

Millions of customers were left without access to their money for several days, prompting RBS to pledge a huge investment in upgrading IT systems under its new chief executive.

Lloyds was hit by a similar, although less severe, glitch in March which shut down its network of cash machines for several hours.

The Financial Conduct Authority subsequently launched a probe into the resilience of banks' IT systems, with its inquiry the level of engagement of lenders' boards of directors on the issue.

Mr Mahjour spent nearly 25 years at RBC, which like its Canadian peers sailed unscathed through the financial crisis.

The role he is taking at Lloyds has been occupied on an interim basis in recent times, but Antonio Horta-Osorio, the bank's boss, is understood to believe that the post is crucial as he prepares to expand the range of digital services available to its customer base.

Lloyds declined to comment on Monday.

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Digital Banking Growth Poses Risk To Branches

A report for the banking industry has boosted its case for reductions in high street branches in favour of digital banking.

The study by the British Bankers' Association (BBA) and Ernst & Young, known as EY, found that mobile phone and internet banking transactions had reached nearly £1bn a day in the UK.

It meant, the report said, that the technology was used for transactions worth £6.4bn a week, up from £5.8bn in the previous year while banking apps for mobile phones and tablets were being downloaded at a rate of around 15,000 a day in 2014.

The study, titled The Way We Bank Now, said contactless cards were also increasingly popular and were expected to see spending rise to £6.1 million a week this year,  up from #3.2 million in 2013.

BBA chief executive Anthony Browne said: "This report shows just how enthusiastically the British public is embracing mobile banking, contactless cards and a range of other consumer-friendly banking technologies.

"The way we bank now has made it a lot easier for us to keep track of our finances, with far more options about how we spend our money and talk to our bank."

Tariq Khatri, EY partner for digital financial services, said: "Digital banking is really shaking up the market, driving competition and innovation.

This is great news for consumers and also potentially for the UK economy.

"The British public's adoption of digital banking has reached critical mass this year and we believe the UK has a unique opportunity to achieve a leading position in digital banking."

The report was released as a growing number of banks announce plans to shut branches, as part of moves to save costs and shift investment towards digital banking.

Back in April, RBS cited a 30% fall in branch transactions since 2010 for its decision to shut 44 branches, including 12 classed as "last banks in town."

More recently it confirmed that as part of efforts to boost digital customer growth it would be placing iPads in branches to help customers get to grips with mobile banking technology.

Barclays, which like Lloyds has been considering branch closures, is looking at a possible move to opening services in supermarkets as banks face pressure to ensure all customers have reasonable access to their money.

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Samsung Forecasts 25% Fall In Q2 Profits

Growing mobile phone competition from China and a strong South Korean currency will knock Samsung's latest profits by a quarter, the company has revealed.

It released an explanatory note to "address market and investor concerns" alongside its estimates for the second quarter of 2014 - due to be reported later this month.

Samsung blamed its plunging operating profit forecast, to $7.1bn (£4.1bn), on the growing popularity of cheap Chinese devices which has hit its share of the global smartphone market.

The profit estimate - which is a 25% hit on the same period last year - was down 15% from the previous quarter and missed analysts' expectations though its share price, while lower, remained resilient.

Samsung said: "The company witnessed a slowdown in the overall smartphone market growth and saw increased competition in the Chinese and some European markets.

Samsung expects a reduced advertising spend in the third quarter

"This led to higher inventories for the medium and low-end smartphones", it said, adding that earnings had also been hit by the appreciation of the Korean won against the dollar, euro and most emerging market currencies.

The surging won is currently running at six-year highs against the dollar, impacting South Korea's export-driven economy.

Sales in April-June were down 9.5% from a year earlier, though the electronics firm said it expected a more positive outlook in the third quarter with growing demand for 4G services in China and a much lower marketing spend expected to boost profitability.

However, the next quarter will also see the competition heat up with the expected launch of the iPhone 6 by chief high-end rival Apple.

The smartwatch market is growing in Asia particularly

Noh Geun-Chang, an analyst at HMC Investment Securities, told the AFP news agency: "The fundamental problem for Samsung is that the global handset market has become saturated and demand is moving toward low-priced handsets, where there is intense competition, especially from China".

At the top end, April saw the global roll-out of the latest version of its flagship Galaxy series smartphone, the S5, which came with a free premium software bundle as Samsung sought to pull in buyers tempted by cheaper models from Chinese rivals like Lenovo.

Initial sales of the S5 were positive, although critics said it offered little in the way of real innovation to set it apart from the iPhone and the Chinese phones and the feedback prompted the resignation of Samsung's chief phone designer.

While Samsung maintained a leading position in the global smartphone market in the first quarter of 2014, its share fell for the first time in four years to 31.2% from 32.4% a year ago.

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Payday Loan Complaints Double In Two Years

The number of complaints about payday loans has more than doubled since 2012 - with the most common gripe being from those who said they had been pestered for cash even though they had not taken out a loan.

The Financial Ombudsman said 794 people made complaints about payday lending in the 2012/13 financial year compared with fewer than 300 in the previous twelve months.

In almost two thirds of cases that were taken on, the office found in favour of the consumer.

The Ombudsman plans to release a more detailed report later in the summer but it warned that many customers struggling to repay loans felt powerless to complain and urged people to "confront the shame factor" and speak up about debt worries.

The statistics were released four weeks after the Competition and Markets Authority identified a lack of price competition in the sector which it said meant that payday loan customers may be paying too much to borrow.

Its preliminary findings calculated that consumers were forking out up to £10 over the odds for a typical loan.

Principal ombudsman Caroline Wayman said: "We often hear from people who took out a payday loan as a desperate last resort and blame themselves when the debt starts to spiral out of control.

"It's important that people don't feel trapped with nowhere to turn because of the stigma associated with short-term lending."

The payday industry, which is also facing regulatory pressure on misleading advertising, has been forced to adopt new rules which are aimed at better-protecting borrowers.

The country's biggest payday lender, Wonga, was last month penalised £2.6m for threatening customers in arrears with letters from fake legal firms.

The Financial Ombudsman said that if people felt they had been treated unfairly by their payday lender they could contact the ombudsman on 0800 0 234 567.

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Post Office To Enter Mobile Phone Market

The Post Office is to become a mobile phone provider in a move it says will challenge existing operators.

The mailing retailer said its mobile service would launch, using EE's network, in the autumn and initially be rolled out to 50 branches, online, and over the phone before being extended nationally later in the year.

The Post Office said its offer was a response to an online survey it carried out, pledging it would deliver "great value for money and transparency" and complement its existing services in the telecoms sector.

These include Home phone and Broadband, which serve almost half a million customers.

It declined to give any further details on pricing plans.

Martin George, Chief Commercial Officer at Post Office, said: "Our research tells us that people are seeking greater value, with one in three of those surveyed saying they intended to move away from one of the mainstream providers for their next service.

"We believe we are in an ideal position to offer a genuine alternative with over a third (36%) also saying they would consider us as their mobile provider.

"Launching our own mobile service, using EE's network, is a significant milestone in the Post Office's journey of change and a testament to our continuing efforts to offer more essential services for our customers".

The announcement follows a £640m boost from the Government last year to support a transformation of the Post Office, which has already seen more than 2,200 branches revamped.

Post Office will become a mobile virtual network operator, a wireless communications services provider, by using EE's network to provide mobile services to its customers.

Mr George added: "Our network of over 11,500 branches combined with our online, and call centre presence, gives us the perfect platform to become one of the most credible providers of mobile services in the market."

The launch of Post Office's mobile service will complement its existing award-winning products and services including travel money, travel insurance, savings, mortgages, mails and government services.

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Sports Bar Owner Rileys To Score With Sale

By Mark Kleinman, City Editor

The owner of the site that used to house London's famous Sports Cafe could be heading for a change in ownership after a sharp rebound in profits.

Sky News understands that shareholders in Rileys, which operates more than 60 sports bars across the UK, have drafted in advisers to oversee a review of options for the chain.

Insiders said on Tuesday that that could involve raising funds through debt or growth capital or pursuing an outright sale of the business.

A handful of private equity firms have already been approached to gauge their appetite to acquire Rileys, they added.

Global Leisure Partners (GLP), an advisory firm, is handling the process.

Rileys has been owned by Greybull Capital, a family office, since it acquired the business through a pre-pack administration towards the end of 2012.

Pre-packs can be controversial because they allow the new owner to shed a company's previous debts and other liabilities.

Greybull has also backed other prominent businesses which have changed hands in contentious circumstances, including Comet, the electrical goods retailer, whose eventual collapse sparked thousands of job losses.

Since taking control of Rileys, Greybull has shed about half its sites, which show live sport on big screens and provide venues for playing sports such as darts, pool and snooker.

The chain, which took over the running of the Sports Cafe on Haymarket in London's West End last year, now employs about 600 people and has more than half a million members, according to its website.

Sources said it had gone from making less than £1m of pre-tax profit to more than £2m.

Maurice Kelly, its chief executive, is understood to be keen to open more sports bars in and around the London area.

The chain's heritage dates back to 1878, when the first venue was opened by Edward Riley, an entrepreneur, as a sports emporium.

The division of Rileys that makes pool and snooker tables is now a separate company.

Greybull could not be reached for comment while GLP declined to comment.

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M&S Clothing Sales: 12 Quarters Of Decline

Marks & Spencer (M&S) has faced frustration from shareholders after reporting a 12th consecutive quarter of declining clothing sales.

The company blamed the roll-out of its new website, which it had previously warned would take time to settle in, and said it had been less promotional in the period with an increased focus on margin.

Sales at M&S.com sank by a whopping 8.1% during the 13 weeks to 28 June on the same quarter last year.

Like-for-like clothing sales fell 0.6%, confirming 12 successive quarters of falling sales, but womenswear sales saw growth, as reported by Sky News on Monday night. 

Marks and Spencer's like-for-like food sales were up 1.7% for the same period.

But it was the performance in clothing and the "settling in" of the new website that largely dominated the company's AGM in London - which began hours after the first quarter results were released.

One investor questioned the company's leadership - given the faltering fashion performance - but M&S outlined its belief that sales would soon pick up and be driven by its web offering.

The firm has invested £150m in the improved site as it bids to become an international multi channel retailer but teething problems have included issues with re-registration and navigation.

Chief executive Marc Bolland said ahead of the shareholder meeting: "We have seen a continued improvement in clothing, although as anticipated the settling in of the new M&S.com site has had an impact on sales.

"We are pleased that the womenswear business was in growth, driven by full price sales, in line with our increased focus on margin.

"Our food business had another great quarter, continuing to outperform the market, through our focus on differentiation through quality and innovation".

Mr Bolland said M&S was simplifying parts of the website, which currently has 3.2 million users, and expected the online business to be back in growth by the retailer's peak trading period which begins in November.

Shares in M&S rose 0.6% in early trading on the FTSE 100.

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