Heavy rain heaped more pressure on UK shopkeepers in November, with high street retailers hit hardest by declining shopper numbers. The number of visitors to high streets fell by 4.3% in November compared with the same month last year, twice the rate of decline of retail parks, which fell by 1.8%, according to new figures from Springboard, a data company. Parts of Yorkshire, the Midlands, Lincolnshire, north-east England and the eastern fringes of Scotland were particularly affected by heavy rainfall and flooding during November, with more than twice the normal level in some places, according to the Met Office. The Springboard analyst Diane Wehrle said that while high streets always tend to suffer more from rain than other shopping destinations, many retail parks had also taken action to slow their rate of decline, including by adding more restaurants. Overall retail footfall across the high street, shopping centres and retail parks declined by 3.4% year on year in November, said Springboard, based on data from 480 shopping locations.
Tesco (TSCO) is considering a sale of its Thai and Malaysian stores that could result in Britain’s largest supermarket chain exiting two of its last remaining international businesses. In a statement published on Sunday afternoon, the supermarket said it had started a review of the businesses after an approach by an unnamed buyer. Tesco operates 1,967 stores in Thailand, under the Tesco Lotus brand, and another 74 in Malaysia, employing more than 60,000 people. The businesses made combined revenues of £4.9bn in the year ending in February, making a profit of £286m – about a fifth of Tesco’s total global profits. Clive Black, an analyst at Shore Capital, said the Asian operations were a “trophy asset” given Tesco’s leading market position in Thailand and the growth potential offered by a country experiencing increasing urbanisation. “It could go for a very high price, and it’s also the case that Tesco doesn’t need to sell,” he said. “It should be a knockout price.”
Last week the focus of the pain faced by retailers shifted from the shop floor to investors’ pockets as one of the UK’s biggest property funds placed a temporary ban on withdrawals. The £2.5bn M&G Property Portfolio – which owns Gracechurch – pulled down the shutters, admitting that it could not sell properties fast enough to repay the investors who wanted out. M&G PLC (MNG) blamed the flight of investors on the uncertainty created by Brexit and “ongoing structural shifts in the UK retail sector”, adding that “deteriorating market conditions have significantly impacted our ability to sell commercial property”. Bricks-and-mortar shops used to be a predictable home for investors and pension funds, thanks to the marriage of reliable rent-paying retailers and Britons who shopped until they dropped. But not these days. The rise of online shopping, combined with flaky consumer sentiment and rising costs such as business rates, are convulsing the retail sector, and no one knows when the pain will stop. The fact that the retail sector is going through a rough patch is not news to anyone. A succession of household names – from the department store chains House of Fraser and Debenhams (DEB) to, most recently, the card retailer Clintons – have resorted to rescue deals to stay in business over the past two years. Others, such as Karen Millen and Coast, have shut up shop and moved online. So unloved is Marks & Spencer Group (MKS) these days that it has dropped out of the FTSE 100. The quoted property companies have been hammered too. Intu Properties (INTU) has debts of £4.5bn and is headed for a cash call. Its shares have fallen by nearly 70% this year, and the group – which was the subject of an abortive £2.9bn takeover last year – is now worth less than £500m. Nearly 40% of the M&G fund’s holdings are shopping centres and retail parks. Its biggest investments include Gracechurch, which it bought for £88m in 2013; Fremlin Walk in Maidstone, Kent, where struggling House of Fraser is the star attraction, which cost £110m in 2014; and the Bridgend Designer Outlet in Wales, which it snapped up for a similar amount in 2015.
