Supermarket Price Wars Stifle Sales Growth

UK retail sales fell in July as the supermarket price war continues.

According to the British Retail Consortium (BRC), like-for-like-sales for the month were down by 0.3%, a sharpe contrast to the same period in 2013, when they rose by 2.2%.

The drop was driven by shoppers spending less on food as British supermarkets compete with heavy price cuts.

The quarterly picture looked dreary as food sales slumped by 3.5% in the three months to July.

It comes as food inflation remains at a record low.

The BRC's director general Helen Dickinson said: "Food experienced its deepest three-month average decline since at least December 2008, explained partly by the continuing keen price competition between supermarkets, which consumers are taking full advantage of, and record low food inflation."

David McCorquodale, head of retail at KPMG, which formulated the data, added: "The grocers' figures continue to make for gloomy reading for the sector.

"The impact of their prolonged discounting campaigns may be good news for consumers, but must be being felt deeply by the retailers given like for like sales have fallen in value every month for the last 12 months, save for April when Easter helped sales."

He said: "The headache for the grocer investor is the tonic for the consumer: it's likely these price wars are here to stay for the foreseeable future."

But while supermarkets suffered a blow, non-food sales grew by 2.4% in July.

Total retail sales for the month rose by 1.3% to show that consumers are spending, although at a slower rate to last year, when sales grew by 2.3%.

The strongest performing category was furniture, which saw its highest growth since January, while fashion retailers also reported good summer sales.

Mr McCorquodale said: "The tale of two sectors continues with polarisation between food and non-food.

"While non-food retailers had a stellar month, surpassing even last year's record sales performance, the grocers saw sales tumble in value as their competitive pricing continued."

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Barneys Agrees To Pay Fine Over Race Row

Barneys has agreed a $525,000 (£312,700) settlement following allegations that the luxury retailer racially profiled customers at its flagship store in New York.

The agreement comes after a probe was launched last year amid complaints that minority shoppers were followed by store security and disproportionately singled out for credit card scrutiny.

In October, two young black shoppers at the store said were detained by police after legitimately purchasing expensive designer goods.

The allegations sparked protests

In announcing the settlement, New York Attorney General Eric Schneiderman said: "This agreement will correct a number of wrongs, both by fixing past policies and by monitoring the actions of Barneys and its employees to make sure that past mistakes are not repeated."

The department store also agreed to hire an "anti-profiling consultant" and make changes to its suspected theft policies and security training, Mr Schneiderman said.

Barneys' CEO Mark Lee said the company was pleased with the settlement.

Jay-Z and HBO series Treme actor Rob Brown were caught up in the furore

He said: "Barneys New York has prided itself on providing an unparalleled customer experience to every person that comes into contact with our brand - open and welcoming to one and all."

Allegations of racial profiling, which were also levelled at Macy's, sparked protests last fall and led to a meeting between Mr Lee and civil rights activist the Rev Al Sharpton.

Macy's, which agreed to pay a $600,000 fine following similar allegations in 2005, reached an undisclosed settlement in July with actor Rob Brown, who is black.

The Treme series star filed a civil lawsuit against the department store in November after he was detained over accusations of credit card fraud while he was buying a gift for his mother.

Music mogul Jay-Z was also caught up in the furore over his planned collaboration with Barneys for a holiday collection.

The rapper eventually decided to move forward with the charity project after he was permitted to help lead the retailer's policy review.

Barneys, Macy's and other retailers agreed in December to create a customer bill of rights.

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Care Giant Races To Avert £500m Sale Collapse

By Mark Kleinman, City Editor

The parent company of HC-One, one of Britain's biggest nursing home operators, will hold crunch talks this week aimed at preventing the collapse of a £500m sale of the business.

Sky News has learnt that NHP is expected to meet with representatives from Credit Suisse, the Swiss banking giant, which is taking legal action to stall the auction in an attempt to secure repayments to bondholders.

HC-One, which owns and operates approximately 220 sites previously run by the now-defunct Southern Cross group, had been on the verge of agreeing a sale to Formation Capital, a US-based healthcare investor.

Credit Suisse has warned that it will pursue further legal avenues to derail the sale without a string of assurances from the company and its partners by August 15.

The legal tussle, which the Swiss bank believes is necessary to protect its financial interests, has thrown the future ownership of the UK's third-biggest care home operator into fresh doubt.

HC-One, whose parent company is carrying more than £1.3bn of debt, has about 10,000 residents across its estate and employs roughly 14,000 staff.

Formation, which declined to comment, is said to have told the selling shareholders that its offer will lapse shortly without a resolution of the impasse, although it is unclear whether it will abandon its interest altogether after that point.

It is reported to have pledged to invest tens of millions of pounds to fund new homes and modernise existing ones.

Anchorage Capital, a Wall Street hedge fund which is another HC-One creditor, is also trying to delay the sale.

Analysts speculated that regulators could seek to intervene if the situation deteriorated to the extent that stakeholder confidence in HC-One was undermined.

In a statement issued to Sky News on Monday, NHP said it had halted the sale process because of the dispute and is "engaging with Credit Suisse and other stakeholders with a view to resolving the issue and completing the sale of the group as soon as practicable".

An insider said the row would not have an impact on patient care and pointed to more than £80m invested in HC-One since November 2011.

"The sale process represents the next phase of ensuring HC-One remains a stable, debt-free and fully funded organisation, committed to providing the kindest possible care," the statement said.

"We are deeply disappointed that Credit Suisse has taken this action at this late stage."

The row could trigger a renewed debate about the extent of private sector involvement in crucial healthcare services after more than a decade of debt-fuelled takeovers of care home and hospital operators.

Southern Cross's collapse in 2011 under a toxic combination of mounting debts and rising rents sparked recriminations between ministers, landlords and care home operators.

The parent of HC-One, which is chaired by Chai Patel, the healthcare tycoon behind The Priory rehab clinics, also said that without a resolution of the dispute, it would consider selling the business through an alternative process.

This would involve selling the underlying assets themselves - the 221 care homes - rather than the shares in the companies which own them.

In response, Credit Suisse said it supported the work undertaken by Mr Patel to stabilise the business, adding in a statement: "Any contractual disputes between CS and other transaction parties relate to the holding company of HC-One and will have no bearing on the day-to-day operations of HC-One itself."

Dr Patel and other directors are reported to be in line for a £5m bonus if the company is sold.

Deutsche Bank, which was appointed by Capita, the special servicer, to run the auction, could not be reached for comment.

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GSK Investigates New Syria Bribery Allegations

GlaxoSmithKline (GSK) says it is investigating new bribery allegations raised by an apparent whistleblower concerning its operations in war-torn Syria.

The pharmaceutical firm, which was already facing accusations of corruption in its consumer business in the country, spoke out after the news agency Reuters published details of an anonymous internal email containing allegations that Syrian doctors were bribed to help boost medicine sales.

The claims in the email - sent last week to top managers including chief executive Sir Andrew Witty - related to the activities of GSK staff and local distributors and is understood to have contained names.

The FTSE 100 company told Sky News: "We have zero tolerance for any kind of unethical behaviour and we welcome people speaking up if they have concerns about alleged misconduct.

"On 6 August 2014, we received an email making claims regarding GSK's pharmaceutical operations and related distributors in Syria.

"All the claims in this email will be thoroughly investigated using internal and external resources as part of our ongoing investigation into operations in Syria.

"We are committed to taking any disciplinary actions resulting from the findings.

"We have suspended our relationship with our distributors in the country pending the outcome of our investigation.

"We remain committed to the secure, humanitarian supply of safe and effective medicines and vaccines to patients in need."

GSK's ethical standards have been called into question amid a series of corruption claims covering China, Lebanon, Iraq, Jordan and Poland.

The most high-profile allegations relate to its operations in China where GSK is alleged to have funnelled hundreds of millions of pounds to doctors and officials.

A new twist emerged in June when GSK confirmed its former top boss in China, Mark Reilly, had been filmed in a covert sex tape prior to the bribery investigation being launched by Chinese officials.

Four China staff members were arrested in July as part of the wider corruption probe while a British man, Peter Humphrey, who had carried out an investigation for GSK in China was jailed last week for breaking privacy laws.

Reuters said the new corruption claims in Syria involved alleged bribes paid to boost sales of various medicines, including ones to treat cancer and to prevent blood clots.

It reported they took the form of cash, trips and free medical samples running into thousands of pounds.

While GSK suspended its consumer business in Syria two years ago because of the country's civil war, it has recorded annual sales of almost £6m.

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Barcode Scanning App Used To Boycott Israel

More than 400,000 people are boycotting goods produced by Israeli-linked companies using a barcode scanning app.

Buycott allows users to identify the source of products instantly so that purchases do not conflict with their beliefs.

People can set up banned product lists to support their own particular interests or causes, but it is the anti-Israeli lists which have boosted the app's popularity.

Founder Ivan Pardo told Forbes: "I noticed three weeks ago that we were seeing an unusual spike in traffic.

The iPhone app's popularity has soared as a result of the Israeli conflict

"Next thing I knew Buycott was a top 10 app in the UK and Netherlands, and number one in a number of Middle Eastern countries. Word was spreading through social media."

The group Long Live Palestine Boycott Israel lists 49 brands to avoid and has 275,000 members.

The firms on the list include hummus maker Sabra, SodaStream due to its operation in the West Bank, and Volvo, whose machinery was used to dismantle some Palestinian settlements.

Another anti-Israel group has more than 100,000 members.

Those who have signed up to the list can then scan barcodes on products using their smartphone, and the app shows whether it is Israeli-made or not.

But Mr Pardo pointed out that the app was not designed specifically to target Israel, and says he has no strong views on the conflict.

"It bothers me that a lot of people are downloading Buycott and thinking that it was written specifically to boycott Israel.

"It was not, and to counter that notion I have been actively encouraging pro-Israel groups to start campaigns supporting Israel."

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Just Eat Delivers Tasty Results As Profit Triples

Just Eat's profit almost tripled in the first half of the year as the online takeaway service added thousands of restaurants to its books.

The company saw its pre-tax profit rise from £3.1m to £8.6m in the six months to the end of June.

It also reported a 58% increase in its revenue, which amounted to £69.8m.

It comes as Just Eat expanded its portfolio of restaurant tie-ups by 4,400, meaning it now has a total of 40,800 outlets on its books.

Orders through Just Eat rose by 50% to 27.5m, with half of those being made using mobile devices.

Just Eat boss says further growth will come from mobile strategy

Chief executive David Buttress said: "We are accelerating our mobile strategy across all our geographies and in the UK over 56% of orders are already being placed via apps or through a mobile device.

"Our growing network of more than 40,000 restaurant partners combined with 6.9m active users provides further momentum to fuel our expansion through the remainder of 2014 and beyond."

Just Eat operates in 13 countries with Britain and Denmark being its biggest markets.

The results are the company's first since it floated on the London stock market in April, with a valuation of £1.55bn.

Following the announcement of its half year results it became one of the FTSE 250's top risers on the day as shares soared by more than 10%.

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Brazilian Bunch Disrupt Banana Merger

Banana producer Chiquita Brands International has received a £364m buyout offer from Brazilian orange juice company Cutrale Group, in partnership with Brazilian investment firm Safra Group.

The unsolicited bid interrupts merger talks between Chiquita and Irish fruit company Fyffes.

In March, the two companies agreed to merge to create the world's largest banana supplier in a £314m deal.

The tie-up would also form a tax inversion, in which a US company bases itself abroad through a merger, lowering its tax rate and freeing up overseas cash.

Tax inversions have received publicity recently, notably in the pharmaceutical sector with the proposed Pfizer takeover of AstraZeneca.

The US Treasury last week suggested it may take action to crack down on the practice.

The surprise offer from Cutrale and Safra saw a significant reaction from the markets on Monday, as Chiquita's share price rose more than 30%.

The share price had fallen more than 10% since the Fyffes deal was announced, and the Brazilian companies cited that as a reason for bringing their offer for Chiquita now.

If successful, Cutrale and Safra would split the ownership of Chiquita equally.

The banana supplier has until Friday to respond to Cutrale and Safra's offer. If its board decides to decline, the Brazilian businesses would have the option of making a hostile takeover bid.

Chiquita would have to pay £5m to withdraw from merger talks with Fyffes.

It has said it is reviewing the offer with its advisors at Goldman Sachs and Wells Fargo, and has made no further comment.

Fyffes made no comment.

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Firing On All Cylinders: The Man From The Pru

By Ian King, Business Presenter

While its principal domestic rival, Aviva, remains a turnaround in progress, Prudential reminded the market today why it has been the darling of investors in the insurance sector during the last few years.

The 17 per cent rise in first half operating profits, to £1.52bn, announced by Tidjane Thiam, the chief executive, was comfortably ahead of market expectations.

What was especially striking about these numbers is that they have been achieved in the face of some significant headwinds. Pru's UK arm, once seen as something of a Cinderella operation compared with its racier businesses in the United States and Asia, cranked up operating profits by 10 per cent in spite of the pensions bombshell dropped by George Osborne, the Chancellor, in his March Budget that paralysed annuity sales across the industry.

This was because, while sales of individual annuities fell sharply, sales of with-profit bonds were strong, as were sales of 'bulk annuities', the long-term contracts by which a company pension scheme insures itself against long-term liabilities.

Tidjane Thiam, chief executive of Prudential

In Asia, the region seen in the long run as offering the most exciting growth, Pru also did well in the face of instability in Thailand and flood-hit Indonesia and falls in a number of local currencies (which means lower profits when translated back into sterling). Strong performances in Singapore and Hong Kong, in particular, will have reassured investors that the growth in Asia's middle classes, the factor seen as driving profits in years to come, is continuing unabated while the Pru's recently-extended distribution deal with Standard Chartered continues to pay off.

The star performer, though, was Jackson Life, the Pru's US business, where operating profits were up by 28 per cent as stronger stock markets and an improving economy boosted the confidence of customers.

Rounding it off was another resilient performance from M&G, the Pru's fund management arm, which enjoyed strong inflows of money from retail and institutional investors alike.

Overall all, then, these figures point to a business firing on all cylinders. If shareholders have a slight grumble, it may be that the dividend, raised by 15 per cent, has not been hiked by more.

But that should inspire confidence that Mr Thiam and his team can still find a better use for the cash being thrown off by this company than simply handing it back to shareholders.

It is why the Pru's shares, up by more than one and a half per cent this morning, trade at a premium to the sector.

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CVC Looks To Cement Deal With Sovereign Funds

By Mark Kleinman, City Editor

The private equity firm CVC Capital Partners is joining forces with some of the world's biggest sovereign wealth funds to bid for £4bn of cement assets that would make it a major player in the building materials sector.

Sky News has learnt that CVC is in discussions with Singapore's Government Investment Corporation (GIC) about a combined offer for a package of businesses being sold by Holcim and Lafarge, the Swiss and French cement giants, as they look to seal a £32bn merger.

CVC, which is best-known for its controlling stake in Formula One motor racing, is also understood to be talking to other state investment funds about teaming up on the proposed deal.

Two years ago, CVC sold a 10% stake in its own management company to three sovereign wealth funds, including GIC and the Kuwait Investment Authority.

GIC is also a significant investor - or limited partner - in CVC's buyout funds, which it deploys to acquire companies around the world.

The Singaporean vehicle does not disclose the scale of its assets under management but it has emerged as one of the largest state funds of its kind during the last decade.

The disposals being planned by Holcim and Lafarge include Britain's biggest cement-maker, Lafarge Tarmac, which the French group announced last month it would take full control of in order to make a full sale of the business easier.

Lafarge said it would pay at least £885m to Anglo American, the mining group, for its 50% stake in the Tarmac division, which is also likely to attract interest from other industry players.

Holcim and Lafarge will also sell assets in markets such as Austria, France, Germany and Hungary in order to smooth the regulatory passage of their deal, which is one of the biggest mergers in any industry to be announced so far this year.

At least two other private equity consortia have been formed to bid for the cement operations which are being spun out of the combined group: Blackstone has teamed up with Cinven and the Canada Pension Plan Investment Board, while BC Partners and Advent International are also preparing a joint bid.

Initial offers are understood to be due next month.

CVC declined to comment.

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Ladbrokes Profits Halve Despite World Cup Surge

Ladbrokes profits have halved in the first six months of 2014, but it claims to now be ready for growth.

The gaming company cited its restructuring in preparation for the World Cup as the reason for its decline in pre-tax profit, which fell 49.7% to £27.7m.

It was also hit by "customer-friendly results" from football in January and horse racing in June.

Ladbrokes says it has delivered on all its key operational objectives for the first half of the year, which included switching its gaming products to a new system and replacing 9,000 gaming machines with more sophisticated models.

Once these restructuring changes are taken into account, operating profit was £56.8m, down 33.7% from the same period in 2013, broadly in line with market expectations.

Chief executive Richard Glynn will hope that this is enough to reassure Ladbrokes shareholders, who have raised concerns in recent weeks over the company's performance.

Betting in this year's World Cup was up 20% on the previous tournament in 2010.

Mr Glynn called 2014 "the Mobile World Cup", as 1100% more gamblers placed their bets over their mobile devices.

An improvement in Ladbrokes's digital division will be welcomed by the markets, ahead of a 15% online betting tax set to be introduced in December.  

Mr Glynn said high street betting "offers a resilient source of cash flow despite a challenging trading and regulatory environment", as Ladbrokes completed 46 store closures of the 50 to be shut down this year.

The company has chosen to focus on football as its priority market, as it claims "horse racing still struggles to attract younger betting customers".

The Ladbrokes share price was up 1% in lunchtime trading.

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