Short-sellers to pounce on high street weaklings. Hedge funds see struggling retailers as source of big profits. Hedge funds are ready to capitalise on weak Christmas trading updates from the high street after taking large bets against retailers’ share prices. One in five of the top 50 most heavily shorted companies on the London stock exchange are retailers, according to regulatory filings, underlining the continued pressure on the sector. Investors have stepped up short attacks on some of Britain’s biggest chains this year, including Marks & Spencer Group (MKS), Superdry (SDRY), Mothercare (MTC) and Kingfisher (KGF). Hedge funds view the retail sector as a potential source of big profits as shopowners face a “perfect storm” of rising costs, such as wages and rates, the popularity of online shopping and cautious consumer spending, analysts said. Short-sellers seek to profit from a fall in a company’s share price by borrowing shares and immediately selling them on the stock market. The investor banks a profit if they can buy them back later at a lower price.
Car sales slide as industry searches for a new model. Cheap money and dirty diesel have reshaped the industry, but fears over Brexit have it in a jam. Before the crash in diesel sales and consumer uncertainty over Brexit. Before the advent of semi-electrification, partly autonomous driving aids, built-in satnav and advanced entertainment systems. Before the inexorable rise of personal contract purchase plans, which means that no one really owns their car anymore. Before scrappage and the global financial crisis. Before all this, Britain’s fastest growing motor brands were also-rans. Instead of the triumvirate that has dominated for the past two decades in new car registrations — Ford, Vauxhall and Volkswagen — the trade has been opened wide by the rise of the German premiums, BMW, Mercedes-Benz and Audi. There has been a similar surge in popularity for budget models, such as Kia, Hyundai, Skoda and Seat.
Farewell the cup of cheer as costly gifts get a handbagging. For executives who were accustomed to receiving lavish gifts from clients, Christmas has become a time of relative austerity. Silver pens, designer handbags and fine wines have been replaced by USB chargers and reusable coffee cups. So much for the season of goodwill. The Bribery Act is to blame for the proliferation of these mundane tokens. Since the legislation was introduced in 2010, firms have had to think twice before offering extravagant presents. Financial thresholds, generally set under £100, limit how much can be given or accepted. At some companies, employees are subject to a ban. “Years ago you might have got an expensive Christmas hamper, and those sorts of things are less common now,” said Sarah Wallace, a partner at law firm Irwin Mitchell and specialist in financial crime. “Things are at a much more modest level.”
Patisserie Holdings (CAKE) finance team heads for door. At least three members of the Patisserie Holdings team have left the company after the arrest of its chief financial officer and the discovery of a £40 million black hole in its accounts. The Times has learnt that one of the members of Chris Marsh’s team that left is Pritesh Mistry, its financial controller and Mr Marsh’s No 2. An accounts payable manager and an accounts assistant have also gone. The company declined to say why they had left or even confirm that they were no longer with the business. None of the three responded to attempts to contact them for comment. Patisserie Valerie, which was founded in 1926, was acquired by Luke Johnson in 2006. He floated it as Patisserie Holdings in 2014 and it now operates 206 cafés plus 60 branded counters selling cakes in Sainsbury’s stores.
GlaxoSmithKline (GSK) boss Emma Walmsley axes Sir Andrew Witty’s pet projects. Glaxo Smith Kline’s chief executive has axed 80 drug-development schemes, drawing a decisive line under the legacy of her predecessor, Sir Andrew Witty. After just 18 months at the top of Britain’s biggest drug maker, Emma Walmsley, 49, has closed or sold 80 programmes — up from the 30 that Glaxo previously announced. New chief scientific officer Hal Barron, formerly of Swiss drug maker Roche, has overhauled the Stevenage-based research processes. He has put an end to the network of Dragons’ Den-style development units that were supposed to give Glaxo the feel of a biotech start-up, despite its size. Barron, who is based in California, has brought in a more traditional structure.
Interserve (IRV) weighed down by debt and rubbish. Undeliverable waste disposal deals proved to be the undoing of the FTSE 100 outsourcer. When Interserve won a contract to build a recycling and renewable-power plant in Glasgow in the summer of 2012, prospects for the fast-growing support services company looked bright. The £146m Glasgow deal came with the promise of a steady 25-year revenue stream. In return, Interserve would treat 200,000 tons of the city’s waste every year. Since then, however, that deal and a string of others have soured, and Interserve is locked in complex talks to stave off collapse. The plan, which has the backing of its lenders, is likely to all but wipe out its shareholders. The company’s fall from grace has been spectacular, but is far from an isolated story. Under Adrian Ringrose, its then chief executive, energy was a lucrative new sector to be targeted with vigour. He ploughed into deals and amassed a string of waste contracts from Derby to Peterborough. His board, chaired then by Lord (Norman) Blackwell, also chairman of Lloyds Banking Group, urged him on.
Norwegian tycoon Christen Ager-Hanssen slapped down by administrator AlixPartners over Johnston Press (JPR). Administrators hit out at Norwegian in battle for publisher. Administrators for Johnston Press have struck back at the eccentric Norwegian entrepreneur who has criticised them over the newspaper publisher’s demise. AlixPartners staunchly defended the process leading up to the £181m takeover of Johnston Press by its lenders, saying that no other offer “would have resulted in a solvent solution” for the group. The publisher, home of titles such as the i, The Scotsman and The Yorkshire Post, was bought last month by JPI Media, a company backed by bondholders led by GoldenTree Asset Management. Johnston Press’s pension fund, which had a deficit of £40m, has been dumped into the Pension Protection Fund (PPF), which means a reduction in benefits for its 2,570 members. Christen Ager-Hanssen, who was the biggest shareholder before it went under, branded the JPI Media sale “corporate theft” and fired off a letter to AlixPartners demanding more information. In a response seen by The Sunday Times, joint administrator Alastair Beveridge wrote that AlixPartners was satisfied that it had “complied fully” with its disclosure requirements.
British Gas owner Centrica (CNA) seeks rivals’ help to fight price cap. The owner of British Gas has issued a rallying call to the industry as it prepares to challenge the impending cap on energy bills. Centrica has contacted rivals via Citizens Advice and the trade association Energy UK to notify them of the legal move and inviting them to join in, raising the prospect of a wider attack on the way the energy cap has been set. From January 1, default tariffs will be capped at £1,137 a year in an attempt to save households about £76 a year, following concerns that customers are being ripped off. Centrica has consistently opposed the cap, saying it will not benefit households and could cost the FTSE 100 business £70m in lost profits. Last week, it announced plans for a judicial review of the way in which Ofgem, the industry regulator, calculated wholesale costs when setting the cap. Bosses stressed: “Through this action Centrica has no intention to delay implementation of the cap, and does not expect the cap to be deferred in any way.”
Fight for oil explorer Faroe Petroleum (FPM) ‘on knife edge’. The battle for control of North Sea oil producer Faroe Petroleum is “on a knife edge”, investors believe. The listed explorer is under siege from its largest shareholder, Norwegian rival DNO, which has tabled a bid of 152p a share, or £608m — which the board says undervalues the company. Shareholders are believed to have been supportive of an asset swap with Equinor announced this month, which boosted the firm’s value, while many analysts are backing management, but DNO increased its stake from 28.22% to 29.9%.
Crunch time for miner Sirius Minerals. Sirius Minerals (SXX) faces a critical month, with a target of the end of January to secure commitments from lenders for up to $3.6bn (£2.8bn) of debt. Talks are continuing with the government’s Infrastructure and Projects Authority to help cover any shortfall by guaranteeing bonds. Sirius needs cash for its Woodsmith Mine in North Yorkshire, where it will extract the fertiliser polyhalite before transporting it on an underground conveyor belt to Teesside to be shipped.
Debenhams sued by landlord Eliasz Englander over rent. Debenhams (DEB) is being sued by a reclusive property tycoon in a dispute that illustrates the tensions between retail landlords and ailing tenants. Gainhold, an investment vehicle led by the multimillionaire Eliasz Englander, is seeking £132,600 in unpaid rent from the struggling department store chain. The claim relates to part of Debenhams’ branch in Southend-on-Sea, Essex, that was sublet to Mothercare. The property is owned by Englander, whose family is worth £359m, according to The Sunday Times Rich List.
Superdry (SDRY) founder Julian Dunkerton plots coup to return. Julian Dunkerton, the co-founder of fashion brand Superdry, is plotting a shareholder vote to force his way back into the company. Dunkerton is working with advisers to call an extraordinary general meeting for a vote on whether he should be reinstated less than a year after leaving, according to a Sky News report. A vote could be held early in the new year. Dunkerton, who still owns 18% of the shares, has spent the past two months on a City campaign to convince investors that he should be reinstated after a series of profit warnings this year.
Dechra Pharmaceuticals (DPH) goes on the prowl overseas. Across Thailand, the number of cats and dogs kept as pets is surging, thanks to a combination of an ageing population and increasing urbanisation. Looking after them has ballooned into an industry worth $2.8bn (£2.2bn) a year — and is set to surge by 10%-15% annually. Expansion into Asia is expected to be a key source of growth for Dechra Pharmaceuticals, which makes medicines and vaccines specially for pets. While Dechra does not yet have a presence in southeast Asia, it is thought to be on the lookout for a deal. Chief executive Ian Page has already said he is in the market.
