If this is its plan House of Fraser is a lost cause
Every now and then, journalists obtain documents that shed precious light on a controversial or a high-profile situation. Such moments are gold dust. It allows us to report the facts, to cut through all the spin and reveal what is really going on. Last week was one of those instances when I received a 23-page presentation that House of Fraser had put together for its investors. The file was essentially a begging letter – House of Fraser is on the brink of insolvency and approval is needed from its shareholders and bondholders for a comprehensive restructuring plan designed to save it from the scrap heap.
The document made grim reading. There were the usual excuses from struggling retailers about how shopping habits had changed dramatically. It blamed Brexit, major cost pressures from the National Living Wage and business rates, and the need to step up investment in its stores.
And it laid bare the chain’s precarious finances and poor trading figures in black and white, making it plainly obvious that its prospects are far worse than the company has been letting on publicly. Like-for-like sales down; turnover falling; annual profits half what they were; a non-existent digital strategy; and a company living on regular handouts from its owners.
Management’s solution is the same as every other troubled retailer right now: a company voluntary arrangement, which controversially allows it to ditch struggling stores. CVAS are the high street survival tool du jour. House of Fraser wants to jettison roughly half its estate – a move that will trigger 6,000 job losses and leave scores of towns with yet another big empty property unlikely to be filled.
Yet remarkably, beyond the store closure programme, there doesn’t seem to be much of a plan. Instead, there is an assortment of vague and often embarrassing statements: “Become the antidote to the issues of the high street” and “focus on being a fabulous retailer”. If this is the grand plan for survival then it may as well give up now. The current crop of senior managers are clueless in the face of severe technological disruption.
House of Fraser boss Alex Williamson called it one of the chain’s most important days. If the plan fails, House of Fraser will almost certainly disappear from the high street. A yes vote will secure yet another injection of funds but I doubt it will be more than a stay of execution.
‘Beyond the store closure programme, there doesn’t seem to be much of a plan’
Pitfalls of subprime lending
Now does not seem like the best time to be floating a subprime lender on the stock market. After a crackdown on payday loans, followed by a squeeze on doorstep lending, the FCA has indicated that a broader crackdown on the subprime market could come.
This means Amigo Loans, which provides credit of up to £10,000 to those with bad credit histories provided payments are guaranteed by a friend or family member, is potentially in the firing line.
Yet James Benamor, the brains behind the firm and its major shareholder, is planning to take it public in the coming weeks.
He owns 85pc of the company, which is expected to fetch a value of £500m, crystallising a fortune of more than £400m.
When you’re charging interest rates of nearly 50pc to people who have been frozen out of the high street lending market, a windfall of such proportions is unlikely to pass the taste test. Apart from an appearance on Channel Four’s
The Secret Millionaire a decade ago, 41-year-old Benamor has largely managed to maintain a low profile. Not for much longer I suspect.
Casualty of anti-plastic backlash
It doesn’t take a genius to work out that plastics manufacturing isn’t the best line of work to be in right now. Thanks to the groundbreaking work of BBC series Blue Planet, many of the most toxic and damaging plastics face extinction.
Still, you’ve got to feel sorry for RPC, the FTSE 250 packaging supplier. After an impressive ride, its shares crashed 12pc last week over fears it would fall foul of government and EU pledges to stamp out single-use plastic products.
Analysts have pointed out that RPC does not make any of the items covered by a ban, but that hasn’t calmed investor nerves. Yet City sources say big US rivals are fully aware of the distinction and have already begun circling. RPC has been a huge British success story. Let’s hope it survives an unfortunate blip.