Asos has become the latest retailer to warn on profits following a spell of very poor trading in November. The online-only retailer said that although trading in September and October had been broadly in line with expectations, “November, a very material month for us from both a sales and cash margin perspective, was significantly behind expectations”. Shares in ASOS (ASC) tumbled 41% to £24.50 in early trading. The profit warning also hit the rest of the retail sector, with shares in Next (NXT), Marks & Spencer Group (MKS), Primark owner Associated British Foods (ABF), JD Sports Fashion (JD.) and dropping by between 4.8% and 3%. It is the latest retailer to warn on profits after Superdry (SDRY) and Bonmarche Holdings (BON) last week. It also comes after Mike Ashley, the founder of Sports Direct, said that trading in November had been “unbelievably bad” and that most retailers would be “smashed to pieces” trying to recover from that. Trading last month at Asos was hit by a high level of discounting and promotional activity across the market. Asos said that the increased discounting, coupled with the unseasonably warm weather during the three months to the end of November, had reduced its average selling price, which had not been compensated by higher units per basket. “The current backdrop of economic uncertainty across many of our major markets together with a weakening in consumer confidence has led to the weakest growth in online clothing sales in recent years,” it said. “We have recalibrated our expectations for the current year accordingly.”
The merger of two of Britain’s biggest energy suppliers has been scrapped after the price cap and tough competition rendered the proposed new company unviable. SSE (SSE) said that it had pulled the plug on the proposed combination of its household energy supply business with Npower, owned by Germany’s Innogy, after failing to agree revised terms to salvage the deal. The merger was first proposed a year ago and the new supplier had been due to be listed as an independent company in London early next year. However, the combined company would no longer be viable, SSE said, blaming “very challenging market conditions” and highlighting heavy losses at Npower. SSE said that it would consider other options for its household supply arm, including listing it separately or “a sale or an alternative transaction”, while Innogy said that it was assessing options for Npower.
Lloyds’ compensation scheme ‘defective’. A compensation scheme set up by Lloyds Banking Group (LLOY) for small business owners ruined by a banking fraud has been labelled “defective”, based on a “flawed” methodology and “partial” to the bank’s interests. A barrister’s opinion commissioned by representatives of some of the victims outlines alleged failings with the redress process established for business owners who suffered after a fraud at the Reading branch of HBOS. Scores of small companies were damaged or destroyed when consultants linked with an HBOS “turnaround” unit asset-stripped their businesses and stole from the bank. Six men, including two former employees of the lender, were jailed for the £245 million scam last year. HBOS merged with Lloyds in September 2008. Legal advice prepared by Jonathan Laidlaw, QC, and seen by The Times says that the compensation scheme is “unlikely to provide just redress” and that the level of compensation being paid out “gives rise to a real sense of injustice”.
Patisserie’s suppliers lose patience with late payments. An influential Commons committee has requested details of Patisserie Valerie’s payment practices with suppliers amid concerns about lengthy delays. MPs on the business, energy and industrial strategy select committee have written to Steve Francis, the new chief executive of the scandal-ridden café chain, after The Times revealed that the company had faced a series of winding up petitions from creditors. Patisserie Holdings (CAKE) and Stonebeach, a subsidiary, were challenged with at least four winding-up petitions in the High Court before the business revealed its financial crisis in October. The petitioners were HM Revenue & Customs, Dairy Crest, the listed food group, and Preston council. The scrutiny comes as The Times has also learnt of allegations of how Patisserie Valerie made late payments to some of its suppliers on multiple occasions. One small photography business was paid only this month after a two-year wait, while another supplier turned up at the company’s office with baseball bats, according to a source.
Laura Ashley prepares to close stores. The shutters are set to come down on about a quarter of Laura Ashley’s high street shops as it rethinks it stores format and prioritises an expansion in China. The shift at the retailer famed for its floral print fashions is the brainchild of Andrew Khoo, its new chairman. Mr Khoo, who took over from Khoo Kay Peng, his father, last week, plans to shut about 40 of Laura Ashley’s 160 stores, reducing the total in the portfolio to 120. He said it was possible that the remaining stores would be larger and could take on some of the staff whose jobs were in peril. Ashley (Laura) Holding (ALY) has already closed 40 outlets since the beginning of 2015, so the latest plan appears to be an acceleration under the new chairman. The company was founded in 1953 by Bernard Ashley and his wife Laura. Its floral and lacy designs were hugely popular during the 1980s and it also sells furniture, lighting, paints, wallpapers and other home accessories.
Retailers may have suffered the biggest drop in footfall for a November in a decade, but latest figures for the pub and restaurant sector suggest that it is not all doom and gloom on the high street. According to the Coffer Peach Business Tracker, collective like-for-like sales across the sector grew by 1.5% compared with November last year, an improvement on the generally flat trading this year. Pub and restaurant operators each recorded positive sales last month — with collective like-for-like figures ahead 2.1% and 0.6% respectively. However, restaurants in particular remained under pressure from increased costs and fierce competition. London outpaced the rest of the country, with like-for-like sales up 2.3% compared with 1.3% outside the M25. Drink sales were the main driver of pubs’ improved performance, up 3% against a 0.6% uplift in food sales.
Pressure is mounting on Britain’s largest privately owned construction company as its banking partners delay signing off on a crucial refinancing. Laing O’Rourke, the contractor behind projects ranging from the London 2012 Olympics site to the Scottish parliament, is more than two months late filing its UK accounts amid increased scrutiny from lenders and accountants. Stewart McIntyre, finance director of Laing O’Rourke, said that there had been “more inspection by funders into our business plans, types of contract, geographic risk, sector risk and client risk to make sure our plans are robust”. Mr McIntyre added that the company has more than 15 different financial stakeholders, which made progress slow, but added that he was “confident” that it would secure its refinancing before it is due in April 2019. Financial stakeholders and auditors have also required extra checks over the impact of Brexit on the business and the stability of the supply chain, he said. Laing O’Rourke said it had “insulated its business” against Brexit uncertainty, with measures including bringing forward delivery plans for heavy-duty plant equipment that it imports from the European Union.
The technology industry fears that a skills shortage could stunt its growth, with new figures showing that job vacancies are growing. The number of unfilled positions in the information and communication technology sector last quarter rose by 24.3% compared with a year ago, according to data from the Office for National Statistics, one of the largest increases of any industry. The ratio of jobseekers with previous employment in the industry to relevant jobs has dropped below one, meaning that there are more vacancies than people looking to fill them. However, graduates do not always land the jobs they dream of. About 20% of recent computer science graduates are in non-professional jobs or are unemployed six months after completing their course, pointing to a disconnect between recruiters’ wishes and graduates’ situations. Government plans to curb immigration could make recruitment harder still. People from overseas looking for digital jobs outnumber Britons by as much as fifteen to one, according to Indeed, an employment website.
