Business news in brief
BHS to relaunch online a month after last high street stores close
British Home Stores is set to relaunch online today – a month after the last of its high street shops shut down – with 23 UK suppliers and 84 employees. The business went into administration in April and the company was wound down when a buyer could not be found. Now BHS International, formed by the Al Mana Group, is relaunching the “iconic” brand, allowing shoppers to make purchases on a new website.
From this morning, BHS.com will sell a range of lighting, bedroom and bathroom products. The company said all launch suppliers were based in the UK, and 84 employees were based primarily in London. It has also partnered with Ascenos, a British call centre firm with a team based in Glasgow. Kitchen, dining and clothing ranges were set to go on sale next month.
BHS said the launch products made up around three-quarters of the most popular online items sold by the retailer before it went into administration. BHS International managing director David Anderson said: “A huge amount of work has gone into rebuilding and launching BHS back into the UK as an online retailer. With a loyal British customer base of well over one million people and the fact that we have secured contracts with so many leading suppliers who are providing products that were among the most popular with our shoppers, we are in the best possible position for launch.”
The collapse of BHS affected 11,000 jobs, 22,000 pensions, and sparked a lengthy parliamentary inquiry.
British Airways forms joint business with investor Qatar Air
British Airways parent IAG and its largest shareholder Qatar Airways agreed to set up a joint business that will see them code-share on flights linking dozens of destinations while operating a joint timetable and sharing revenue and costs on services between London and Doha. The deal, which comes into effect on 30 October, will see British Airways attach its code to Qatar flights beyond Doha to destinations in countries including Pakistan, Ethiopia, Iraq and Vietnam, with the Gulf carrier doing likewise on the UK airline’s operations to cities across the UK and continental Europe.
The companies said yesterday they’ll also code-share on their flights between Britain and Qatar, including seven daily trips between London and Doha, which will essentially become joint services. Regulatory authorities have been informed of plans to operate single timetables and set common fares.
Qatar Airways last month lifted its IAG holding to 20 per cent, taking advantage of a slump in Londonbased group’s share price following Britain’s vote to leave the European Union. Qatar first took a stake last year after its Chief Executive Officer Akbar Al Baker became close to IAG counterpart Willie Walsh, who had backed the Gulf carrier’s bid to join the Oneworld global alliance.
Bloomberg
Sainsbury’s sales weaken as UK grocery price war takes toll
Sainsbury’s reported slightly weaker sales as it offered customers fewer promotions on food and endured its first ever quarterly decline in clothing revenue. Same-store sales fell 1.1 per cent, excluding fuel, in the 16 weeks ended 24 September, the London-based company said yesterday. That compares with the median analyst estimate for a 1 per cent drop and the previous quarter’s 0.8 per cent decline.
The figures show that Britain’s mainstream grocers continue to struggle in the face of an onslaught from discounters Aldi and Lidl. Like industry leader Tesco, Sainsbury is reducing the number of promotional deals and offering lasting discounts on items such as pizza and nappies as it simplifies pricing and seeks to narrow the gap to the budget chains. The company is also reducing its reliance on food, this month completing the purchase of the Argos general-merchandise chain for £1.4bn.
“The brand has come down to earth with a bump,” John Ibbotson, director of researcher Retail Vision, said. “The abolition of multi-buy promotions and the introduction of simpler pricing looks distinctly underwhelming in the current brutal market conditions.”
Sainsbury shares fell 0.4 per cent to 251.9 pence in London yesterday. The decline in sales was driven by food price deflation, Coupe said in a statement, adding that transaction and volume numbers rose in the quarter. The CEO said he expects the market to remain competitive, with Aldi declaring this week it will cut prices further if necessary.
Bloomberg
SABMiller shareholders approve ‘megabrew’ takeover deal by Budweiser brewer
Shareholders of beer giant SABMiller have given the green light to the firm’s £79bn takeover by Budweiser brewer Anheuser-Busch InBev, paving the way for the biggest deal in UK corporate history. SABMiller said investors backed AB InBev’s £45-a-share offer, which was upped from £44-a-share in July following the collapse in the value of the pound after the Brexit vote. The record-breaking deal – dubbed “megabrew” – is now set to complete on 10 October, creating a brewing giant with a raft of some of the world’s biggest beer brands.
The two largest shareholders in SABMiller – cigarette maker Altria Group and the wealthy Santo Domingo family of Colombia, which together control around 40 per cent of shares – were excluded from the vote but had already pledged their support for the deal. Investors in Belgium-based AB InBev also approved the takeover at a meeting in Brussels earlier yesterday.
AB InBev said it welcomed the shareholder backing. Carlos Brito, chief executive of AB InBev, who will also lead the merged group, said the deal will combine the two firms’ “teams, strong heritage and passion for brewing”. AB InBev also confirmed the combined group will be called AB InBev after the merger.
Deutsche Post hits at Royal Mail with £243m deal
Deutsche Post agreed to buy independent British letter and parcel delivery service UK Mail Group in an effort to boost its presence in a market dominated by former state behemoth Royal Mail. The company will pay 440 pence per UK Mail share, valuing the deal at £242.7m, excluding debt, the Bonn-based company said yesterday. That’s a premium of 43 per cent to Tuesday’s closing price.
While UK Mail has only a 5 per cent share of the regular UK parcels market dominated by Royal Mail, it has successfully shifted from a business-to-business to more consumer-oriented focus in line with demand, said Andy Jones and Damian Brewer, an analyst at RBC Capital Markets in London. It also offers high delivery visibility, with live tracking and one-hour arrival slots, and tends to carry higher value items.
In the diminishing letters market, UK Mail and Whistl, a former unit of PostNL that was subject to a management buyout last year, together account for about 45 per cent of volumes in terms of collection and sorting, though Royal Mail still makes almost all final deliveries under a state requirement, RBC said.
Bloomberg
TUI withstands Turkey shock as full-year earnings edge higher
TUI, Europe’s largest tour operator, said full-year earnings will probably beat its forecast after the company managed to keep its hotels and cruise ships full this summer even with a shift in business from the eastern to western Mediterranean prompted by terrorism attacks in Turkey. Underlying earnings before interest, taxes and amortization in the year ending 30 Sept will rise by 12 per cent to 13 per cent at constant currencies, Hanover, Germany-based TUI said in a statement yesterday.
That compares with an earlier prediction of at least 10 per cent growth. Sales and customer numbers from its source markets rose 1 per cent as prices remained flat. Excluding travel to Turkish destinations, bookings from those markets advanced 7 per cent. “The 2016 summer season was a particularly challenging time for tourism companies and airlines,” Chief Executive Officer Fritz Joussen said in the statement. “We’re very strong in the Mediterranean. We’re investing in the Caribbean and Southeast Asia and in the expansion of our cruise ship fleet. This diversity makes our risks manageable.”
TUI’s performance contrasts with smaller UK rival Thomas Cook Group, which said Tuesday that its prices and bookings in summer each fell 4 per cent, following a profit forecast cut in July.
Bloomberg