Sports Direct swoops on House of Fraser
The retailer, run by Mike Ashley, is acquiring all of the group’s 51 stores, and its stock. It’s not clear what this means for the company’s 17,000 staff, though.
In a statement, it says:
Sports Direct International plc (“the Company” or “the Group”) announces the acquisition of the business and assets of House of Fraser from the administrators of House of Fraser Limited, House of Fraser (Stores) Limited and James Beattie Limited, the House of Fraser group’s main operating companies (the “Operating Companies”), for a cash consideration of £90 million (the “Transaction”).
Pursuant to the Transaction, the Group has acquired all of the UK stores of House of Fraser, the House of Fraser brand and all of the stock in the business.
For the year ended 28 January 2017 (the last date to which statutory accounts are available for the parent company of the Operating Companies and prior to the appointment of the administrators), the House of Fraser group had gross assets of £946.3m and made £14.7m net profit.
GDP: the key charts
Here’s the breakdown sector-by-sector, confirming that Britain relied on its service sector for growth in the last three months, with construction also making a positive contribution.
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ONS: UK trade deficit has worsened
“The economy picked up a little in the second quarter with both retail sales and construction helped by the good weather and rebounding from the effects of the snow earlier in the year.
However, manufacturing continued to fall back from its high point at the end of last year and underlying growth remained modest by historical standards.
“The UK’s trade deficit noticeably worsened as exports of cars and planes declined sharply while imports rose.”
The total UK trade deficit widened by £4.7bn to £8.6bn in the three months to June 2018, due mainly to falling goods exports and rising goods imports.
Manufacturing falls into recession
The construction sector also had a good quarter, expanding by 0.9%.
But the industrial sector shrank by 0.8% in April-June. That includes a 0.9% contraction across the UK manufacturing base.
That means UK manufacturing is now in recession....
UK ECONOMY GREW BY 0.4%
That’s up from 0.2% in the first three months of the year, as the economy got back up to speed after the bad wintery weather.
More to follow!
Sterling hits 13-month low
Sterling shed three quarters of a cent in nervy trading to hit $1.2740, its lowest level since June 2017.
This means that the pound has shed 10% of its value since April, as worries over a hard Brexit have intensified.
But today’s falls are also due to the US dollar’s strength. Nervous traders are piling into the dollar, in the face of a mounting financial crisis in Turkey.
The Turkish lira has gone through the floor this morning, tumbling a staggering 12%.
Turkey’s finance minister (who happens to be the president’s son in law) is due to unveil “a new economic model” on Friday, which will include plans to cut the country’s budget deficit.
Investors, though, are losing faith - and increasingly alarmed about the central bank’s independence.
As Charlie Robertson of Renaissance Capital puts it:
“The markets have lost confidence in the triumvirate of President Erdogan, his son-in-law as finance minister and the [central bank’s] ability to act as it needs to.”
A decent recovery across construction, manufacturing and services is expected to show 0.4% growth, with the timing of Easter, a Royal Wedding and warm weather set to paint a decent picture of economic activity.In an hour we discover if he’s right....
Hopes of a “pre-pack” deal to salvage parts of the business (with Sports Direct?) still seem high…
Sky News are reporting that Mike Ashley, founder of Sports Direct, is close to agreeing a deal to take control of the company.
It’s not clear, though, how many of the company’s stores he would take on.
He told investors this morning:
“This has been an extraordinarily challenging six months in which the business has delivered so many critical elements of the turnaround plan.
Despite the very recent termination of the transaction between Cenbest and C.Banner, I am confident House of Fraser is close to securing its future.”
House of Fraser appoints administrators
The retail chain, which employs over 17,000 people, has been forced to turn to Ernst & Young as administrators after days of negotiations with billionaire tycoons Mike Ashley and Philip Day, and the retail turnaround fund Alteri Investors.
The company’s 59 stores are all set to open as usual on Friday, while EY attempts to arrange a sale. Some 31 stores were previously earmarked for closure under an earlier restructuring plan, so HoF’s staff now face fresh uncertainty.
In a statement to investors, the company says:
My colleague Sean Farrell explains how HoF could now be broken up:Court hearings are expected to take place at 7:30 am today, at which orders will be sought appointing individuals from Ernst & Young LLP as administrators of each of the Operating Companies with immediate effect.
Significant progress has been made towards completing a sale of the Group’s business and assets. The proposed administrators are expected to continue to progress those discussions with a view to concluding a transaction shortly after their appointment.
The group needs about £50m after C.banner, the Hong Kong-listed owner of Hamleys, pulled out of plans to raise £70m to invest in House of Fraser.
Most industry experts expected any rescue to involve putting House of Fraser into administration to allow a new investor to buy its most attractive stores without taking on loss-making sites. Plum locations include shops in Glasgow as well as Bluewater in Kent, Manchester, Belfast and Meadowhall in Sheffield.
The agenda: UK growth figures expected to show growth rebounding
Today we discover how Britain’s economy is faring, when growth figures for the second quarter of 2018 are released.
Economists expect that GDP increased by 0.4% in April-June, as businesses got back up to speed after the Beast from the East hit growth.
If they’re right, this would mean the economy grew twice as fast as in the first quarter of the year. But it’s still lacklustre growth in historic terms, extending the generally weak growth since the Brexit referendum in 2016
Laith Khalaf, senior analyst at Hargreaves Lansdown, says growth should have picked up in the last few months - even though consumer confidence is subdued.
The second quarter was altogether brighter, with good weather, a Royal Wedding and the World Cup all driving consumer behaviour. The latest ONS retail sales data suggests that food and drink sales have been positively impacted by the sunshine and the football, while spending in pubs also increased by 9.5% year on year in June according to Barclaycard’s consumer analysis.
Not all parts of the UK economy have been making hay in the sunshine however, with big ticket items particularly under pressure. Household appliance sales fell 14.8% in the year to June according to Barclaycard, and the football combined with the warm weather led to a June drop in sales for non-food retailers according to the ONS.