Retail finds a flawed hero
AS someone living close to Richmond Park in London it is hard to be unaware of the huge popularity of cycling. It is almost impossible to traverse this pastoral haven without encountering pelotons of men and women clad in Lycra dominating the roads and footpaths.
It is hard to understand how Britain’s oldest specialist retailer, Evans Cycles, could end up in administration given the squadrons of UK riders willing to pay top dollar for the correct kit.
Our old friends business rates and upwardonly rent reviews at Evans’ 62 stores are among the causes of the collapse. The result is that it has plopped neatly out of the hands of the undertakers into retail buyer of the last resort, Mike Ashley.
Along with Sports Direct and 19th in the Premier League Newcastle United, Ashley is busy catching falling knives. He has acquired House of Fraser and Evans in just a few short weeks. He is also the biggest investor in Debenhams with 29.7pc of the shares in the department store chain which recently reported a loss of £500m.
Ashley ought to be a national hero for propping up high streets under enormous stress. As courageous as this may seem, his stewardship of Sports Direct as a public company does not inspire great confidence. In spite of his frequent boasts about wanting to turn Sports Direct/House of Fraser into the new Selfridges, his record for managing aspirational assets such as Fraser and Evans is less than glossy.
The lower reaches of Britain’s most treasured sports emporium Lillywhites, in the heart of London, looks like a flea market.
Working conditions at Ashley’s warehouses have been excoriated in the Commons and the company’s governance is at best wafer-thin.
Nepotism looms large with Barlin, a delivery firm run by big Mike’s brother, receiving £11m from a contract last year.
Ashley’s son-in-law Michael Murray holds the grand title of head of elevation, whatever that may mean.
Governance rarely troubles investors when things are going well as Reckitt Benckiser, now RB, could testify after a rocky patch. The market quite likes the Evans deal, marking up Sports Direct in latest trading. There is no escaping the fact that it has been a troubled investment with the shares currently valued at just one-third of their peak in 2014.
Long funds look to have been displaced by hedge funds with ‘Posh’ Crispin Odey holding 5pc of the stock. It would be terrific for retail if Ashley were able to turn House of Fraser and Evans around.
But he already looks very overstretched given Sports Direct’s vanishing earnings.
Drugged up
GOOD fortune and a robust performance for a new drug are providing a fair wind for chief executive Emma Walmsley at Glaxosmithkline as she strives to sharpen the pharma champion’s prospects.
The expected patent threat to its blockbuster asthma drug Advair is still to arrive because the generic firms are struggling to come up with an applicator that satisfies regulators.
The boost comes from the runaway performance of its shingles vaccine Shringrix, which is off to a flying start with prospective sales of £700m to £750m this year.
As a former sufferer, one understands the enthusiasm. Other positive developments include the results released this week for an experimental injection of two HIV drugs which would cut the treatment schedule for patients from 365 pills to a dozen injections a year.
It is perhaps no coincidence that vaccines are one of the areas where GSK has demonstrated special skills.
All of this helped it to outperform analyst profit forecasts as Walmsley, assisted by highly rated R&D chief Hal Barron, seeks to break the blockages in the drugs pipeline.
His goal is to weed out the weaker drug candidates and speed up the development and approvals for more promising medicines. Initial reaction to the third quarter data was positive, with shares up 2pc.
But concerns about GSK’s ability to fill the Advair gap with new chest products took the shine off the stock in later trading. Walmsley is learning how hard it is to push the boulder up the hill.
Horror headlines
ONE hates to be a party pooper but could do without the Halloween releases.
Barclays Smart Investor unveiled ‘ three potential nightmares haunting investors’.
Reuters warned that Standard Chartered ‘Halloween cheer masks multiple ghouls’ and Mark Zuckerberg ‘serves platter of creepy crawlies.’
Enough already.