Companies in the news ... and how they were assessed
House of Fraser: old ghosts, modern ghouls
Maybe we shouldn’t read too much into the travails of House of Fraser, whose survival now apparently hinges on closing 31 of its 59 stores at the risk of 6,000 jobs, said Alistair Osborne in The Times. Angst over the death of the high street is nothing new: The Specials penned Ghost Town in 1981; and the number of large department stores in Britain has fallen by a quarter in a decade. The 169-year-old chain has also suffered “perpetual changes of ownership”. Having latterly been bought by one Chinese investor, Sanpower, it’s now being sold “in shrivelled form” to another. Historic regional stores like Frasers (Darlington), Rackhams (Shrewsbury) and Howells (Cardiff), which together comprised HOF, are indeed “ghosts from the retail past”, said Zoe Wood in The Observer. But the current management’s insolvency survival stratagem is very much of the moment. “Landlords are in open rebellion” over the company voluntary agreement (CVA) proposed by HOF, which will allow it to ditch struggling stores, because they claim it is “an unfair cherrypicking exercise”. Yet, however reluctantly, creditors will probably vote to back the CVA, said Ben Marlow in The Sunday Telegraph. But what next? Beyond the store closure programme, there doesn’t seem to be much of a plan, bar a few platitudinous statements. At any rate, it’s a stay of execution.
Poundworld: founder to the rescue?
More than 5,000 jobs are also at risk at Poundworld, said Caitlin Morrison in The Independent. The Yorkshire-based discount chain went into administration this week after last-ditch rescue talks failed. Bought three years ago for £150m by US private equity group TPG, the low-cost emporium has struggled with the usual issues of declining footfall and increased costs. Individually, each of these failures can be explained away, but their cumulative effect is concerning. Indeed, growing numbers of retailers are taking drastic action after being “trapped in long store leases” and hurt by rising costs, taxes and the shift online, said Jonathan Eley in the FT. That’s why New Look, Mothercare and Carpetright have all adopted CVAS (see above), under which creditors agree to a reduction in their claims so that the company can continue trading; many other companies are closing stores. The tills at Poundworld may yet keep ringing, said The Guardian. Chris Edwards, who founded the business in Wakefield in 1974 before selling it to TPG, is thought to be keen on buying it back.
Carmakers: tariff troubles
European car bosses have rounded on President Trump over his threat to impose 25% tariffs on vehicles imported into the US, said Peter Campbell in the FT. They warn that the move, specifically aimed at harming the German manufacturers Trump accuses of “eating into the market of domestic premium brands”, will have damaging repercussions across the sector. The latest White House rumblings have raised questions over “whether they need to produce more vehicles in the US to avoid being stung by the tariffs”. The manufacturing map is also changing in Europe, said Alan Tovey in The Daily Telegraph. Jaguar Land Rover is moving the manufacture of its Discovery off-roader from Solihull to a “giant new factory in Slovakia”, resulting in several hundred job losses. The future at Solihull is electric: the plant is being retooled for electrically powered Range Rovers.