The supermarket giants will reveal underwhelming Christmas sales figures this week, as the relentless pressure from discount rivals Aldi and Lidl continues to cast a shadow over the sector. Morrison (Wm) Supermarkets (MRW) is expected to be the biggest loser, with analysts at Barclays forecasting that, excluding its wholesale business, like-for-like sales will have fallen by 2.5% over the festive period. The City also expects Tesco (TSCO) and Sainsbury (J) (SBRY) to report declines in sales, albeit more modest. “I don’t think there will be any great disasters, but people won’t exactly be popping champagne corks,” one senior supermarket source said. “The volume of sales has been buoyant but that hasn’t translated into value because the price competition has been so intense.” Aldi and Lidl reduced prices on bags of festive vegetables to just 15p to lure shoppers through their doors in the run-up to Christmas. Over the past decade, the expansion of the discounters squeezed the big four supermarkets’ profitability by about 40%. Aldi and Lidl are still opening about 100 stores a year between them. Apart from Aldi and Lidl, B&M European Value Retail S.A. (DI) (BME) and Home Bargains are expanding their store networks, while online takeaway firms such as and meal-kit providers such as Hello Fresh are progressively nibbling away at supermarket sales, which have been especially subdued since the summer. The societal shift towards lower waste and more mindful consumption brings additional challenges.
Anglo American (AAL) has come under pressure from a small cohort of investors to keep mining thermal coal, highlighting the conflicting demands of climate change on the company. Anglo has been under growing pressure from investors to quit its thermal coal business. Burnt in power stations, it is a big factor in carbon emissions. Anglo, revived by chief executive Mark Cutifani, has said it will quit thermal coal mining, but has not stated when. Anglo has come under pressure from South African investors not to ditch thermal coal completely, over fears for the country’s energy security and economy. However, other investors are against coal mining: Norway’s $1 trillion (£764bn) wealth fund is to stop backing companies that extract more than 20m tons of coal a year, while Australia’s bush fires have stoked debate about coal mining in the country.
Bonmarche Holdings (BON) creditors are unlikely to recover much of the £23.9m they are owed, following the fashion retailer’s collapse in October. FRP, which is handling the administration, said in a report that it could not guarantee there would be enough cash to make any distributions to unsecured creditors. These include suppliers, owed £12.6m, and HMRC, owed £1.1m. Retail tycoon Philip Day, worth £1.2bn according to The Sunday Times Rich List, bought the fashion retailer in July in a cut-price £5.7m deal, despite warnings from auditor PwC that it might not continue as a going concern. After the business was placed in administration, Peacocks, part of Day’s Edinburgh Woollen Mill Group, tabled a bid to buy back the chain shorn of its debts and rent obligations. FRP has named Peacocks as its preferred bidder.
Aggressive activist investor Elliott Advisors has quietly cut its stake in Hammerson (HMSO), easing some of the pressure on the heavily indebted shopping centre owner. Last month, Elliott reduced its position, held through derivatives, to below 5% of Hammerson’s stock. The activist started ploughing in to Hammerson shares after the owner of Birmingham’s Bullring shopping centre rebuffed a £5bn takeover approach from French mall owner Klépierre in April 2018 — a 41% premium to its share price at the time. Since then, the share prices of retail landlords have plunged amid a spate of bankruptcies and store closures. With more pain expected on the high street this year, Trafford Centre owner Intu has told investors it will likely resort to a rights issue to stave off collapse.
The government’s pubs code adjudicator found that Marston’s (MARS) had broken industry rules and was “significantly deficient” in its treatment of Edward Anderson, a tenant. Marston’s claims the finding will have “no consequence across the industry”, but tenants’ representatives say that it should pave the way for thousands of pounds of compensation for every publican similarly overcharged. Paul Newby, the adjudicator, found that Marston’s had broken the code by failing to provide Mr Anderson with accurate information on how much of the beer it was supplying was saleable. Tenants have been complaining for five years that they are charged for the size of a cask rather than the saleable pints within it. A 72-pint firkin may contain only 68 saleable pints; the rest may be yeast sediment. The brewer will pay duty to on the smaller amount but will charge the pub for 72 pints. Since rent reviews are based on sales forecasts linked with 72-pint casks, tenants say they have been overcharged by thousands of pounds a year for many years. The adjudication is the first time that the pubs watchdog has found against a pubs company on the issue.
Next (NXT) has raised its forecast for annual profits and claimed that consumers are in better shape than feared after increasing its sales during the vital Christmas period. The retailer said yesterday that sales had risen by 5.2% year-on-year between October 27 and December 28. The fashion chain’s performance, which counters gloomy warnings about the health of the retail sector, prompted it to increase its forecast for pre-tax profits for the year to the end of January from £725 million to £727 million, which would represent a year-on-year rise of 0.6%. Full-price sales are now expected to grow by 3.9% in the year, compared with expectations of 3.6% previously.
A former Tesco (TSCO) executive has been appointed as interim finance chief of Marks & Spencer Group (MKS) after the previous holder of the job left following a botched rights issue. David Surdeau, 63, will become chief financial officer on January 7, replacing Humphrey Singer. He is not a candidate for the post on a permanent basis. Mr Surdeau spent 16 years at Tesco, including as finance director of its European businesses, vice-president of its Polish operation and group director for planning, Treasury operations and tax. Mr Singer, 54, left Marks & Spencer this week. His departure was announced on September 23, just after M&S had fallen out of the FTSE 100 index and in the wake of a rights issue that had blindsided some investors.
