May 28th, 2012

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Government announces Portas pilots

Monday, May 28th, 2012

The UK government has revealed the 12 centres to pilot Mary Portas’ recommendations to revitalise their high streets.

Bedford, Croydon, Dartford, Bedminster, Liskeard, Margate, Market Rasen, Nelson, Newbiggin by the Sea, Stockport, Stockton on Tees and Wolverhampton will all receive a portion of the £1.2m package.

Applications flooded in to government via Youtube from towns desperate to turnaround the fortunes of their ailing high streets. The government said that over 370 applications were made from across the country. Local government minister Grant Shapps said that he would launch a second round of the competition with 12 additional pilots to be announced by the end of July.

“I’ve been deeply touched by both the quality and creativity of the bids and the momentum Britain’s first town teams have generated in just a few short weeks,” said Mary Portas. ”It is now clearer to me than ever that Britain wants its town centres revitalised and the energy and accountability for that needs to rest with the people who live and do business there. My sincere congratulations to everyone who entered.”

The towns will be awarded £100,000 to implement the plans which will include elements of the proposals put forward in the self-styled Queen of Shops’ High Street Review, and a dedicated contact point in government to provide advice and support in identifying and overcoming challenges to local business growth, free support fro industry leaders, and opportunities to meet and discuss with fellow pilots.

It said that towns with unsuccessful bids would still benefit from the pilots, with the best ideas to be shared to help struggling high streets across the UK.

However, KPMG has questioned the outlook for communities that did not win the bid.

“But what now for the other high streets across Britain, who face the same challenges, but without funding and without help? While unsuccessful bidders will automatically be considered for the next 15 places released on the Portas Pilots scheme, communities must not pin their long term hopes for their high street on securing funding second time around,” said KPMG Helen Dickinson.

“Instead the town teams who have worked so diligently on their bids must continue to work together. Effective cooperation between town stakeholders is at the heart of a town’s success.

Dickinson also questioned whether the tide of consumer sentiment can be turned as for many, the high street is no longer viewed as the prime shopping destination.

“We must not be blind to the elephant in the room. The retail sector itself is undergoing fundamental structural change, as evidenced by the ongoing retrenchment of chain retailers to higher volume locations. The demise of many troubled UK high streets is due to the proliferation of obsolete tertiary or poor secondary sites and the closure of stores by service (as opposed to retail) operators whose services are electronically transferrable and hence have moved their operations online,” argues Dickinson.

She says retail landlords must consider what to do with empty cites in some town centres. “This may mean converting them back into residential use, or making them more attractive to those sectors still pursuing expansion plans such as leisure, coffee shops, convenience food chains and charities. Local Authorities will need to be flexible when considering change of use applications, viewing them in the context of what the modern High Street looks like now, and not basing their decision on the stereotypical mix of shops that we were used to seeing in the past.”

Versace may consider IPO as it looks for investment

Monday, May 28th, 2012

Italian family-owned fashion house Versace may seek outside investors and could consider an initial public offering to fund growth and help it better compete in the global luxury industry, a top executive said on Friday.

Versace, known for its glamorous gowns worn by pop icons such as Madonna and Lady Gaga, returned to profit last year for the first time since 2009, when it started a turnaround to rebuild its international market share.

The family has always cherished its independence, but needs financial ammunition after luxury peers such as Prada, Salvatore Ferragamo and Brunello Cucinelli have successfully tapped the stock market in less than a year.

“The management is studying some advisors, but no solution has yet been decided,” Chief Executive Gian Giacomo Ferraris said in a text to Reuters.

Italy’s weekly il Mondo said on Friday Versace had picked Goldman Sachs to seek a partner or study other financial solutions for the medium term, which may include the issue of financial instruments such as bonds.

Ferraris said the group has not yet given a mandate to an adviser. A steering committee meeting is due later on Friday. Versace said it could also opt for an initial public offering if advised to do so, but no decision has been taken. The Versace family has recently considered opening up the business to investors while keeping control of the house.

In March, Ferraris told Reuters that any deal would not take place before 2014, when he aims for core earnings (EBITDA) of 20 percent of sales compared to around 11 percent last year. EBITDA rose 73 percent to 38.7 million euros in 2011.

Platinum-blonde designer Donatella Versace, sister of late founder Gianni Versace, owns the group with her brother Santo and her daughter Allegra, who has 50 percent and joined the board last year.

Privately-owned Italian fashion group Roberto Cavalli has also said it wants to deliver on its turnaround plan before looking to a possible sale or initial public offering.

PPR signs MoU with Yoox for online venture

Monday, May 28th, 2012

French luxury goods group PPR is looking to set up an e-commerce venture with Italian online fashion retailer Yoox after signing a memorandum of understanding (MoU) last week.

The agreement aims to define guidelines for the joint management of the e-commerce operations of some of PPR’s luxury brands. The MoU includes Bottega Veneta, Yves Saint Laurent, Alexander McQueen, Balenciaga, Stella McCartney and Sergio Rossi brands.

PPR and Yoox intend to continue negotiations to close a definitive agreement in the coming months.

The announcement follows reports last week that shares in Yoox surged after reports emerged that the company was allegedly in talks with PPR to set up an online venture.

Rue21 Q1 Profit Rises

Monday, May 28th, 2012

Apparel retailer Rue21 Inc. Thursday said its profit for the first quarter increased 20.6 percent from last year, driven mainly by a double-digit revenue growth.

Warrendale, Pennsylvania-headquartered rue21 reported first-quarter profit of $11.6 million or $0.46 per share, compared to $9.6 million or $0.38 per share last year. On average, six analysts polled by Thomson Reuters expected earnings of $0.43 per share for the quarter. Analysts’ estimates typically exclude one-time items.

Net sales for the quarter grew 18.9 percent to $205.6 million from $172.9 million last year. Analysts estimated revenues of $204.10 million for the quarter.

Comparable store sales, or sales in stores open for at least a year, for the quarter were up 1.7 percent on top of a 5.2 percent increase last year.

Gross margins for the quarter inched down to 38.8 percent from 38.9 percent last year.

Looking forward to second quarter, the company expects earnings in a range of $0.32 to $0.34 per share. Analysts currently estimate earnings of $0.34 per share for the quarter.

For the second quarter, rue21 expects low single digit comparable store sales.

For the fiscal year 2012, the company now expects earnings to be in a range of $1.76 to $1.81 per share, up from previous guidance of $1.74 to $1.79 per share. Analysts currently estimate earnings of $1.79 per share for the quarter.

RUE closed Thursday at $27.00, down $0.17 or 0.63%, on the Nasdaq. In after hours, the stock further dropped $0.90 or 3.33%.

Tesco launches virtual window shopping tool

Monday, May 28th, 2012

Tesco, the UK’s largest retailer, has launched virtual window shopping for its F&F range at three of its stores in London.

By teaming up with technology firm Aurasma, Tesco will display posters of F&F clothing in the windows of Covent Garden, Dean Street and Tooley Street flagship Metro stores.

Customers can download an app by Aurasma and point their smart phones at the posters so the pictures change to moving images. Shoppers can order the products to pick up at one of the central London stores or have them delivered to another address.

Emily Shamma, Tesco clothing online director, said: “This is really exciting new technology that we think our customers will enjoy using. It’s a great opportunity to help us to reach new customers who may not be familiar with our full F&F collection.”

In addition, F&F will also open its first ever pop-up shop in Covent Garden, to coincide with the Queen’s Diamond Jubilee. It will open to customers for four days from 30 May to 2 June. Customers will be able to try on clothing using the F&F virtual fitting room service.

Marks and Spencer’s market share slipping?

Monday, May 28th, 2012

Retailer Marks and Spencer has reportedly suffered a slowdown in clothing sales during the start of its new financial year.

According to information from the Financial Times, during the seven weeks ended 19 May, the retailer saw like-for-like women’s wear sales fall 19% year-on-year.

Marc Bolland, chief executive of M&S, refused to comment on current trading when the high street bellwether announced on Tuesday its first year-on-year fall in underlying pre-tax profit for three years, beyond saying that the start of the first quarter had been “tough”.  Bolland defended the retailer’s clothing sales climbing just 0.2% over the year saying: ”I think we’ve done well in a difficult environment.”

However, figures obtained by the FT suggest that womenswear sales from UK stores open at least a year fell by about 19 per cent year on year in the seven weeks to May 19. Like-for-like men’s wear sales dropped 7%, lingerie sales fell 4% and home furnishing like-for-like sales declined 3%.

The newspaper added that this suggests like-for-like general merchandise sales were down 11% and questioned whether M&S is losing market share.

The newspaper said the week trading will put more pressure on Bolland. The performance during the seven weeks compares to sales last year being boosted by Easter, the royal wedding and hot weather.

The performance over the first seven weeks of M&S’s financial year also compares with the period a year ago, when trade was boosted by Easter, the royal wedding and soaring temperatures. In the 13 weeks to July 2 2011, M&S reported flat UK general merchandise sales. It will update on its first quarter trading on July 10, giving it another six weeks trading in the reporting period.

Meanwhile, Kate Bostock, executive director of general merchandise for M&S, unveiled theretailer’s clothing strategy last week, which includes changes to its design and merchandise teams and increasing the amount of clothing it sources on a fast-fashion basis.

The weak trading will heap more pressure on Mr Bolland, who was forced this week to abandon the ambitious sales targets he unveiled in November 2010, when he set out his strategic blueprint for M&S, after a downturn in the UK consumer economy.

The figures will also make grim reading for Kate Bostock, the head of M&S’s non-food business, who over the past six months has been courted by Asos, the online fashion retailer.

The group has been running a series of promotions, such as 20 per cent off all women’s dresses, and most recently, 20 per cent off all women’s tops.