Companies in the news ... and how they were assessed
Patisserie Valerie: cookie crumbles
Three months after an alleged accounting scam sucked the cream from Patisserie Valerie’s millefeuille, the café chain has collapsed into administration, said Russell Hotten on BBC News. Administrators from KPMG will close 70 outlets immediately with the loss of about 900 staff; the remaining 121 shops will continue trading “in the hope of finding a buyer”. It emerged last week that the state of Pat Val’s accounts was even “worse than the £40m black hole originally discovered”, said Laura Onita in the London Evening Standard. After a deal with lenders, HSBC and Barclays, expired last Friday, the chain’s biggest shareholder, chairman Luke Johnson, failed to secure an extension of the lifeline. “It is hard to choose the most shocking ingredient in Patisserie Holding’s latest confession,” said Nils Pratley in The Guardian. Was it the revelation of “thousands of false entries into the company’s ledgers”? Or news that profits will be “materially below” even the reduced sums predicted when the scandal blew? Johnson “did the honourable thing” last October when he pumped in £20m of his own cash to keep the chain alive, but shareholders have been left woefully in the dark. Any dim hope of recovering any value from shares bought in good faith has now been extinguished.
Sports Direct/hmv/game Digital: becoming Jeff
The new “king of the high street” has rescued another ailing retailer, said Hannah Uttley in the Daily Mail. Fresh from sniffing around stricken Debenhams, Mike Ashley has now made a bid for HMV, which went into administration just after Christmas. “Speculation is mounting” that Ashley, 54, the founder of Sports Direct, wants to merge HMV with the video game company Game Digital (in which he has a 25% stake), to corner what’s left of Britain’s physical entertainment market. Ashley has certainly been on a binge: in the past six months he has also bought House of Fraser and Evans Cycles at knock-down prices. He clearly thinks there’s some value in bottom-fishing, but “it’s a bit of a rag, tag and bobtail collection if you’re being rude about it”, remarked Russ Mould of AJ Bell. Ashley seems to want to turn Sports Direct “into a sort of bricks and clicks miniAmazon” by “picking up the trail of debris” the internet has left on the high street, said James Moore in The Independent. His determination to go against the grain is impressive: many thought Jeff Bezos was “bonkers” when “he took a series of flyers” early in Amazon’s history. The only problem is that Ashley “is clearly no Bezos”.
Santander: recruitment farce
What an embarrassment for Banco Santander, said Nils Pratley in The Guardian. The Spanish bank has dropped its new CEO, Andrea Orcel, before he had even arrived, having baulked at the prospect of paying a s50m “golden hello” – the price of “picking up the tab” for Orcel’s “pile of unvested rewards” at his old employer, UBS. Santander’s board reckoned, correctly, that the move would “cause a storm in Spain”. Still, everyone in this farce has been made to look silly. “Top of the list” is the bank’s chair, Ana Botín, who announced the appointment before she had “squared” the money. But Orcel looks “ridiculous” too, because he quit his gig at UBS before tying down his new contract. Years ago, Orcel described the banking industry as “too arrogant, too self-convinced”. This little “parable” of greed and hubris shows how little things have changed.