Sports Direct agreed a deal to rescue House of Fraser’s shop on Oxford Street just over a week after acquiring the struggling chain. However, the House of Fraser website has been taken offline due to a dispute with the warehouse operator.
XPO Logistics is claiming more than £30m is due in unpaid debts. It also says that 627 jobs are at risk at two warehouses it operates for House of Fraser in Milton Keynes and Wellingborough.
The deal for the Oxford Street store will allow the department store to remain on one of London’s key high streets, as the store had been set to close under the terms of the CVA announced in June 2018.
Sports Direct bought House of Fraser out of administration for £90m on 10 August, with owner Mike Ashley committed to saving 47 of 59 House of Fraser stores.
James Keany, head of national agency at landlord CBRE, said: “This deal only happened because all parties realised it was better to keep the store open and fully operational. It was a real case of landlord and tenant genuinely working together and at great speed. Everyone was sensible about the terms of the transaction.”
The news follows Mulberry, which operates 21 concessions at House of Fraser stores, announcing it expected exceptional costs including restructuring of £3m in the six months to the end of September.
George Lawrie, principal analyst at Forrester said: “Mulberry directors issued the profit warning because they couldn’t be sure that House of Fraser would meet its obligations. In the long run, however, the outlook is rosy for brands that connect directly to loyal consumers.
“In the past, luxury brands relied on department stores to act as a showroom for their merchandise, but empowered customers value the expert help of department stores less. They instead frequently visit manufacturer or brand websites more than that of the retailer when conducting research or building their wish list. In fact, successful luxury brands that are most diligent are chasing digitally savvy consumers.”
Debenhams has added store upgrades and a new brand identity – billed as a new look for Autumn 18 – to work to improve the online shopping experience in its Debenhams Redesigned strategy. The new look is a way “to signify overtly to customers that Debenhams is changing and give them more reasons to come in store,” said Debenhams’ Chief Executive Sergio Bucher.
The department store, a Leading retailer in IRUK Top500 research, says its new look is the next phase in a transformation that aims to change the way shoppers think about Debenhams. It follows a revamp of the online business and a partnership with Mobify which has seen shopper journeys reduce by half and conversion rates improve by 20%.
The new brand will be used online and across social channels before being introduced into stores as they are upgraded or opened. It is being highlighted in an autumn ad campaign with a ‘do a bit of Debenhams’ theme.
Improvements at stores in Reading, Cambridge, Leicester and Sheffield’s Meadowhall have seen space remodelled in a way that Debenhams says showcases products and improves the customer experience. Fashion is displayed by genre and by ‘new in this week’, while there are new approaches to merchandising for lingerie, jewellery and watches. At Meadowhall, the redesigned beauty department now occupies a third more space and a fifth of the area is operated directly by Debenhams. At Reading and Leicester elements of the beauty hall redesign have been introduced in order to encourage customers to browse and discover new ranges.
A quarter of Laura Ashley’s revenue now comes from online. The fashion-to-homewares business, a Top100 retailer in IRUK Top500 research, said that online revenue of £59.7m in the year to June 30 represented 25% of total revenues of £257.3m, down from £277m a year earlier as eight stores closed. Ecommerce sales grew by 4.1% on a like-for-like basis – while total like-for-like retail sales fell by 0.4%. Pre-tax profits, before one-off costs, came in at £5.6m – but after one-off costs related to store closures and property, pre-tax profits stood at £0.1m, down from £6.3m a year earlier.
Chairman Dr Khoo Kay Peng said continued margin pressure and the impact of a changing retail landscape had contributed to the fall in profits.
“We are, however, encouraged by the progress and continued growth being made by our online business and will be launching a new digital platform in the weeks to come. We are also pleased with the 9.7% like-for-like growth of our fashion business in what is an extremely competitive sector.”
Laura Ashley sells online and through 160 UK stores, as of June 30. Over the coming year it plans to close five stores and open two new ones. During the year, 34% of sales were from home accessories, 29% from furniture, 20% from decorating and 17% from fashion.
In international markets, it said its Chinese digital platforms continued to grow, and that it had signed a new licensing partner in Thailand.
Prime members made more than 100 million purchases in Amazon’s 36-hour shopping Prime Day event – despite reported outages and strikes. Together they spent £766m ($1bn) with Amazon itself and with Amazon sellers around the world.
According to Amazon’s own figures, Prime Day saw a “record number” of Prime members across 17 countries including first-time subscribers in Australia, Singapore, the Netherlands and Luxembourg buying worldwide bestsellers including Fire TV Stick, Alexa Voice Remote and Echo Dot. The second day saw the biggest sales for smart-home devices in Amazon’s history, with over a million devices sold. Its inaugural Whole Food Market Prime Day deals saw strawberries becoming the biggest seller.
Best-selling categories included toys, beauty, PCs and computer accessories as well as apparel and kitchen products.
In the week leading up to Prime Day, millions of customers streamed the Unboxing Prime Day. Amazon Music hosted a concert featuring Ariana Grande, PUBG Squad Showdown hosted by Twitch Prime, with customers in London, Tokyo and Milan joining a live celebration.
Beyond Amazon, UK retailers showed a 13% uplift in sales across high-performing computing and high-tech products, with sales surging by 22% during Prime Day and browsing 17% ahead, according to data from Criteo. World Cup fever helped boost a 17% jump in sports sales.
But, Prime Day, which was initially created four years ago as “a one-day shopping event with more deals than Black Friday,” was marred by reports of employee strikes and outages. The site crashed after the sale launched with Lovethesales.com saying that this would have been an embarrassing and costly start to Prime Day, costing Amazon as much as £195m in lost UK sales.
John Gillan, Managing Director for the UK and Northern Europe at Criteo said: “A technical glitch saw Amazon’s servers crash under the volume of shoppers and is likely to have caused some bargain hunters to look elsewhere for deals. But regardless of the cause, it’s clear that yet again this year non-Amazon retailers benefit from Amazon Prime Day. My advice to those retailers now is to continue to deliver an exceptional shopping experience across all channels.”
Game Digital has emphasised the importance of customer experiences in its retail business with news of the first two Belong gaming arenas to be developed through its partnership with Sports Direct.
Game and Sports Direct opened their first new joint Belong arena on August 17, a site with space for around 50 people to play the latest games on the latest hardware, at Westfield Stratford. A second at Lakeside Thurrock opens in September with around 25 spaces. These arenas are bigger than previous arena, which could accommodate an average of 19 gamers, and so, says Game, represent “a significant step forward in our optimisation and expansion of the Belong business”.
Game’s strategy chimes with a wider trend of giving customers experiences alongside retail products that has been seen at retailers from Evans Cycles, through organised cycle rides, to John Lewis, with a concierge-style approach to department store retailing.
Game Digital, a Top50 retailer in IRUK Top500 research, said in a year-end trading update that it expected its revenue to be slightly down in its 2018 full financial year, at around £780m, down from £782.9m last year. During the year, it said, it had seen strong but less profitable sales of new digital and hardware products but experienced “continued challenges” in its pre-owned business.
Game’s strategy has also focused on reducing the costs of its store estate through lease renegotiations and a reorganisation of the head office and distribution centre staff.
Homebase has announced plans to close 42 stores over the next 16 months, putting 1,500 jobs at risk as part of a CVA plan.
The move marks another eddy in a turbulent few years for Homebase and these latest closures are a subsequent measure to revive the struggling DIY retailer after it was bought for £1 in May by restructuring company Hilco.
While Homebase appears to be yet another High Street store in trouble because of the web, it is slightly different. Back in 2016, Homebase was thriving, reporting sale growth of 6.8% and operating profit of 10.7% in its financial year ending February 2016. At that point, however, it was bought by Australian DIY chain Wesfarmers, owners of the Bunnings Warehouse chain down under.
Wesfarmers, however, totally misread the UK DIY market, rebranding many Homebase stores as Bunnings and changing them from increasingly focussing on homewares and DIY to attract more female and family ‘day out’ shoppers to hardcore, Screwfix obsessed heavy DIY-ers.
The plan failed. This year, its sales declined to 4.8% on the like-for-like (LFL) basis, and Wesfarmer gave up and sold the chain for a £1.
Emily Stella, Lead Analysts at Global Data comments: “New Homebase owner Hilco plans to rebrand all 24 Bunnings stores back to Homebase by autumn 2018, reduce the estate to around 200 stores. Hilco has had success in failing businesses in difficult sectors, HMV being a prime example, but Homebase needs to claw back those female shoppers it worked so hard to capture to differentiate itself.”