Businesses in financial trouble

[mavhc]

Why would you need to be rich? There's going to be loads of empty buildings soon as businesses realise working from home is cheaper and better, and shops close

[LeMarchand]

Why would you need to be rich? There's going to be loads of empty buildings soon as businesses realise working from home is cheaper and better, and shops close

 

Have you never seen a town centre housing development?

 

They are almost invariably expensive flats for rich people/investors, not housing for the Average Joe - let alone housing for low income peeps.

 

Portsmouth's Gunwharf Quays was always intended to be "luxury", but this is the way most tend to go.

 

 

Word on the street has it that the local council leader in our town wants to push any shopping to a new development that (allegedly) just so happens to be going on land he owns and go for something similar near us.

[mavhc]

That was when there was low supply and high demand.

[6Foot2]

My home town isn't one where you would think 'That's a place I want to live'

 

The town centre, the industrial area, and farm fields on the outskirts of the town are all being developed/built upon.

 

I couldn't afford to buy any of these new properties but the most expensive are the 'rabbit hutches' in the town centre.

 

Who buys these places?

 

^ Rhetorical.

[LeMarchand]

That was when there was low supply and high demand.

 

There's still low supply and high demand for affordable housing.

[mavhc]

That's because we keep building houses by hand, artisanal hand crafted houses are expensive.

 

Need factory built houses and 3d printing, more robots, less humans.

 

But that's a different topic

[TechMonkey]

Most of the cost of a house though is the land. No amount of automation will solve that issue.

[6Foot2]

Debenhams set to close putting 12,000 jobs at risk

 

Debenhams website is having trouble keeping up with demand after the launch of the sales:

 

[Arthur]

Takeovers, scandal and debt - the colourful decades that ended in Debenhams' downfall

 

As a stand-alone business, under Terry Green, the newly-demerged Debenhams announced big expansion plans and opened more than a dozen new stores.

 

But only two years later, Mr Green rocked Debs by quitting to join BHS, which had just been bought by his namesake - not relative - Philip Green.

 

He was replaced by Belinda Earl, who had been a 'Saturday girl' at her local Debenhams in Plymouth as a teenager, under whom the business flourished.

 

The private equity industry noticed.

 

Ms Earl and her finance director, Matthew Roberts, controversially helped buyout firm Permira launch a £1.54bn takeover bid in July 2003.

 

They ended up being outbid later that year by Baroness Retail, a rival consortium formed by CVC Capital, Texas Pacific Group and Merrill Lynch Global Private Equity, which eventually triumphed with a £1.7bn knock-out.

 

Out went Ms Earl and in came a team of executives who had previously made their name with a turnaround of the Homebase do-it-yourself chain.

 

Shortly afterwards, the team raised money against its property assets, before in February 2005 they raised £450m from a sale and leaseback deal involving all of Debenhams freehold properties including its flagship store on London's Oxford Street.

 

It meant that, along with other measures such as cutting capital expenditure and squeezing suppliers, the new owners of Debenhams more than trebled their investment in less than three years.

 

Only, as it turned out, at the expense of future growth and profits.

 

The sale-and-leaseback deals saddled Debs with expensive overheads and store leases stretching 30 years into the future just as shoppers were increasingly moving online.

 

When Debs returned to the stock market in May 2006, with a valuation of £1.675bn, it was a much-denuded business from the one taken private three years earlier.

[caffrey]

BonMarche now too https://www.bbc.co.uk/news/business-55159180

 

Going to be a much worse Christmas for some people

[sted]

Why would you need to be rich? There's going to be loads of empty buildings soon as businesses realise working from home is cheaper and better, and shops close

and without the businesses that these apartments will be built into no reason to go into the city centre so why would you want to live there?

[paulkerton]

and without the businesses that these apartments will be built into no reason to go into the city centre so why would you want to live there?

What?

😂😂

 

How many under 40's do you know that were rushing into a Jeager or a Dorothy Perkins?!

 

You do realise that not all businesses will be going under, and city centres are more than just shopping locations.

 

All of these businesses who are going bump were massively struggling anyway, and they're going bump now to make sure they avoid the tax liability changes on going into administration that kick in this week.

 

Let's not pretend Arcadia, Bon Marche, Edinburgh Woolen Mill and Debenhams were pictures of business health before the lockdowns. They were struggling, and struggling badly.

Even John Lewis was. Other stores are doing perfectly well, because unlike every one of the ones that have gone into administration, they offer things people are interested in, and evolved with the times.

 

Yeah, some businesses will have found it hard during the lockdown, but others will have operated pretty well, and survive out the back of it fine, even if they have less capital.

Some businesses will operate more in a work-from-home situation, but many will still need and operate some kind of office spaces in city centres for staff gatherings, group meetings and work situations where face-to-face is still preferable to video calling.

 

We will still have lots of cultural space, with live performances and gig venues and places to go out and socialise with each other.

 

And wouldn't it be nice to have cities and towns with unique shopping experiences rather than just offering the same shops with different layouts up and down the country?

 

City centres are going to change, they aren't becoming ghost ghettos.

[mikeprice]

As said above

 

and they're going bump now to make sure they avoid the tax liability changes on going into administration that kick in this week

 

 

ahhhh

 

now it makes sense

 

I will have to check out what this means - thanks

[6Foot2]

Link: Mike Ashley's Frasers Group in Debenhams rescue talks [bBC News]

 

Mike Ashley's Frasers Group has confirmed it is working on a possible last minute rescue of Debenhams.

 

The department store chain is currently set to shut all its stores by the end of next March, putting 12,000 jobs at risk, after administrators failed to find a buyer for the business.

 

Mr Ashley has bought other struggling High Street businesses and used to be a major shareholder in Debenhams.

 

But Frasers said there was "no certainty" it could save the chain.

 

One of the biggest issues, it said, was the collapse into administration last week of another High Street giant, Arcadia, which is the biggest concession holder in Debenhams department stores.

 

Liquidators moved in to Debenhams' stores on Wednesday to start clearing stock after a potential rescue deal with JD Sports fell through.

 

Mike Ashley, who founded Sports Direct and also owns House of Fraser, had already made an offer for Debenhams when it was initially put up for sale in April.

 

But this approach, thought to be in the region of £125m, was rejected as too low, leaving JD Sports as the last remaining bidder.

 

It is understood Mr Ashley was only interested in taking on about 30 stores out of 124.

 

In a statement issued on Monday, Frasers Group said that while it "hopes that a rescue package can be put in place and jobs saved, time is short and the position is further complicated by the recent administration of the Arcadia Group".

 

"There is no certainty that any transaction will take place, particularly if discussions cannot be concluded swiftly."

 

'Last play'

 

Mr Ashley has made no secret of his desire to acquire Debenhams in the past.

 

He built up a 29% stake in the chain, but saw his £150m holding wiped out last year when the company fell into administration and then ended up in the hands of its lenders, a consortium led by hedge fund Silverpoint.

 

Stockbroker Shore Capital said the latest bid could be Mike Ashley's "last play" on the retailer.

 

In a note, it said any potential rescue deal would centre on the chain's "current and future stock position" and that it was unclear how many Debenhams stores would survive given many were located near to House of Fraser shops.

 

"Frasers is known to be a hard negotiator and will probably walk away rather than over pay," it added.

 

Before Debenhams went into liquidation, the business had called in administrators twice in two years, most recently in April.

 

The 242-year-old retailer has struggled for years with falling sales and rising debts as more shopping moved online. But its position became untenable in the pandemic as non-essential retailers were forced to close for prolonged periods.

 

The firm had already trimmed its store portfolio and cut about 6,500 jobs since May as it struggled to stay afloat.

[Danp]

When the announcement of Debenhams was made last week I said to my wife, I bet Mike Ashley will be sniffing about again soon.

[Andrew_C]

Based on the state of the two local Debs, they won't be rushing to retain them. "Tired" isn't really strong enough.

[Arthur]

Paperchase on the brink of administration

 

Stationery chain Paperchase is on the brink of administration after most of its stores were forced to close over the Christmas period.

 

The firm has filed a notice to appoint administrators, a move that will give it breathing space from its creditors while it works out a rescue plan.

 

The company has 127 stores and about 1,500 employees.

 

The second lockdown in November came at a crucial period for the firm, which makes a high proportion of sales then.

 

Just under half its sales, 40%, come from trade in November and December.

 

Paperchase said: "The cumulative effects of lockdown one, lockdown two - at the start of the Christmas shopping period - and now the current restrictions have put unbearable strain on retail businesses across the country."

 

The company went through an insolvency process, known as a Company Voluntary Arrangement or CVA, almost two years ago to cut costs.

 

The chain now has 10 working days to find a solution.

 

Paperchase said its strong online trading had not made it "immune" from the impact of shop closures across the country.

 

"Out of lockdown we've traded well, but as the country faces further restrictions for some months to come, we have to find a sustainable future for Paperchase," it added.

 

"We are working hard to find that solution and this [notice of administration] is a necessary part of this work. This is not the situation we wanted to be in.

[Arthur]

Boohoo 'set to buy' Debenhams' online business for £50m

 

Internet fashion retailer Boohoo has reportedly agreed to buy the online business of Debenhams, in a move which will see the department store chain close its remaining high street shops, according to sources close to the deal.

 

The transaction may be announced this week, according to the Financial Times. The newspaper said it understands the purchase price is likely to be around £50m.

 

The department store chain, which traces its roots back 243 years, entered administration in April 2019.

 

It had been trying to find a buyer since last summer, but its administrators said they had not received “a deliverable proposal” at the time of its liquidation in December. As of that month, it had 124 UK stores.

 

Debenhams’ finances, which had been shaky prior to the pandemic – owing to the shift away from the high street in favour of online shopping – were badly hit by retail closures imposed by the government to curb the spread of the virus in the spring.

 

ASOS emerges as contender in Topshop bidding war following Arcadia breakup

 

ASOS has emerged as a serious contender in the bidding war for Topshop as a narrowing field of bidders vies for control of one of the high street’s best-known fashion brands.

 

The brand is part of Sir Philip Green’s fashion empire Arcadia which collapsed into administration last year. It is being auctioned off alongside the group’s other brands which include Dorothy Perkins, Burton and Miss Selfridge.

 

Arcadia, which employed 13,000 people across 500 outlets, has been the biggest high street casualty of the pandemic.

 

High street rival Next, which was working with the US hedge fund Davidson Kempner, pulled out of the auction on Thursday. In a statement, the consortium said it had been “unable to meet the price expectations of the vendor” amid speculation that Topshop, Arcadia’s prime asset, could fetch between £250m and £300m.

 

The remaining bidders in the Arcadia auction are thought to include Shein, a Chinese online fashion retailer and Authentic Brands, the US owner of the Barneys department store. Online group Boohoo is also thought to be still involved.

 

If ASOS wins the day it would be bad news for Topshop shop staff as it is an online business which does not operate any stores. ASOS chief executive Nick Beighton has played his cards close to his chest but analysts say Topshop would be a good fit; it already sells the brand on its website and serves a similar demographic.

[Arthur]

Thorntons to close all its UK high street stores putting 600 jobs at risk

 

Chocolate retailer Thorntons is the latest well-known high street brand to fall victim to the Covid crisis, announcing the closure of all its 61 stores, with the likely loss of 600 jobs.

 

The Thorntons brand will remain on offer in supermarkets and other retailers, while its factory in Alfreton, Derbyshire, will make more chocolate for international markets.

 

The 600 staff whose jobs are at risk will receive relocation support if they apply successfully for vacancies at Thorntons’ sites in Alfreton or Greenford in west London, the company said.

 

Coronavirus pandemic lockdowns have hit Thorntons particularly hard because they have occurred during its peak times, including Christmas and two consecutive Easters.

 

The closures will represent the latest departure of a longstanding high-street name. Thorntons blamed the changing dynamics of the high street and the shift to online retail, as well as the pandemic, for its decision.

 

Thorntons was already struggling before the pandemic. In the year to the end of August 2019 it reported a loss of £36m, only a slight improvement from the £38m loss the year before.

 

Joseph Thornton founded the company in Sheffield, using the slogan “Chocolate heaven since 1911”. It floated on the stock market in 1987, but has since struggled with competition from international rivals.

 

Thorntons was bought in 2015 by Ferrero, the Italian chocolate manufacturer, in a £112m deal. At the time of the buyout Thorntons ran 242 stores in Britain and Ireland.

 

The company has abandoned an earlier strategy of investing in new store formats and cafes in an attempt to stave off the structural forces hitting bricks-and-mortar retail.

[mikeprice]

Thorntons to close all its UK high street stores putting 600 jobs at risk

 

Sad news - best ice cream on the high street!!

 

- but seriously - feel sorry for the shop workers - rough time to get a new job at the moment

[Fazza]

Sad news - best ice cream on the high street!!

 

- but seriously - feel sorry for the shop workers - rough time to get a new job at the moment

 

I'm very glad I no longer work in the Retail Sector as it's just not a nice time for them right now.

 

Thorntons have missed 2 Easters and 1 Christmas on the High Street which is their peak times for trade - online sales have gone up 71% so it's no surprise they are sadly closing all their stores permanently. They need to concentrate on online sales and team up with one of more supermarkets to sell their chocolate.

[Danp]

I'm very glad I no longer work in the Retail Sector as it's just not a nice time for them right now.

 

Thorntons have missed 2 Easters and 1 Christmas on the High Street which is their peak times for trade - online sales have gone up 71% so it's no surprise they are sadly closing all their stores permanently. They need to concentrate on online sales and team up with one of more supermarkets to sell their chocolate.

 

Agree. Although, I feel like their products are not as unique as they used to be. Seeing a box of Thorntons meant you knew someone had specifically gone into one of their shops and picked that out. Now, you can grab a box in Asda.

[LeMarchand]

I'm very glad I no longer work in the Retail Sector as it's just not a nice time for them right now.

 

Me too!

 

I do worry that the now Covid-hastened death of the "physical" retail sector can't be a good thing for jobs. It used to be possible to get a job in retail with basic qualifications and either stick with it or (if you had the drive/skills) move on up the ladder, but now it's getting to be that supermarkets are the only option - and by all accounts they are brutal if you're a manager who doesn't make targets.

[mavhc]

If you only differentiate on price, then you're not going to have great entry level jobs.

 

Still waiting for Brand showrooms to start existing more, central location, professionals to demo things for you, "this is why you want to buy the high end Sony stuff over random thing you found online, also we can order it for you to be delivered to your home tomorrow, and set up if you'd like". No need for a large store with the actual items to buy taking up expensive space.

[Zammo]

If you only differentiate on price, then you're not going to have great entry level jobs.

 

Still waiting for Brand showrooms to start existing more, central location, professionals to demo things for you, "this is why you want to buy the high end Sony stuff over random thing you found online, also we can order it for you to be delivered to your home tomorrow, and set up if you'd like". No need for a large store with the actual items to buy taking up expensive space.

 

There is definitely some market for that kind of thing, but it can only be niche or bespoke orders.

 

Apart from the mega rich, you will end up in a situation where the majority happily walk in, see the demo and then buy online from amazon or whoever. Most people these days are savvy enough to do that

 

A business that has all those over heads will need to put *very* significant margins on to the orders they place on your behalf as they will never get near the economies of scale to compete on price.