Attention to Retailtag:www.egpropertylink.com,2009:/blogs/retail-property//762008-01-09T16:10:00ZMovable Type Enterprise 4.21-enThe Morning Aftertag:www.egpropertylink.com,2008:/blogs/retail-property//76.214972008-01-09T15:17:30Z2008-01-09T16:10:00ZThe post-mortem on the Christmas period is coming in and it does not make pretty reading.Jim
average prediction of 2.9%.
Individual stories vary (and the Guardian has a cute way of monitoring incoming reports here) but the one that has captured today's headlines is Marks & Spencer's announcement that sales fell by 2.2% over the third quarter's trading which, at time of writing, has wiped 20% off their share price to leave them at 398p - below the 400p Philip Green was looking to pay in 2004.
Retailers are now looking to the Bank of England to cut interest rates at its meeting this week to stimulate spending. The Bank will probably not do more than a quarter-point cut owing to continuing inflation risks which may lower borrowing costs, but will probably not be enough to shake the public mood that battening down the hatches is the best thing to do at the moment. Retailers may well take the same approach with their expansion plans - particularly in light of the fact that the rise in food prices (set to continue) is inflating the figures of the market as a whole. There is 14 million sq ft of retail scheme floorspace set to come online this year - how much of it will be occupied is another question]]>
Too little, too late?tag:www.egpropertylink.com,2007:/blogs/retail-property//76.194392007-12-07T12:21:31Z2007-12-07T12:53:58ZYesterday's interest rate cut was welcomed by retailers and consumers alike and comes as the industry faces another anxious Christmas trading period.Jim
Experian footfall figures for November show shopper numbers on the high street, reflecting the start of the Christmas rush, down 2.9% on 2006, indicating the seasonal boost is later than expected. This tallies with ONS figures for October showing a 0.1% slide in sales. The cut in interest rates should make shoppers loosen their purse strings a little more, but a combination of early discounting and the the low rate of inflation once food prices are discounted (electrical goods, a major investment at Christmas, are barely registering a 1% rate) plus a disappointing first weekend in December means that the industry will struggle to show satisfactory year-on-year growth.]]>
The commentary on the commissiontag:www.egpropertylink.com,2007:/blogs/retail-property//76.167732007-11-01T11:47:58Z2007-11-01T12:53:05ZYesterday's preliminary report from the competition commission on supermarkets has managed to leave the investigated being happiest with the outcome and those hoping for a tough verdict pretty disappointed.Jim
Yesterday's preliminary report from the competition commission on supermarkets has managed to leave the investigated being happiest with the outcome and those hoping for a tough verdict pretty disappointed.
Much of the liberal commentariat has been united in reaction at the commission's verdict, believing it to be a bad thing (Guardian, Independent) whilst a note of 'read the small print' is sounded by the Telegraph and FT and Robert Peston at the BBC. Richard Hyman, also in the Telegraph, points out that the supermarkets provide a service that enables other aspects of our current lifestyle. The supermarkets are generally happy (Waitrose, Asda, Morrisons and unspoken commission target Tesco), others happy as long as further action gets taken (the NFU, BRC, the British Property Federation, Spar and the Federation of Wholesale Distributors) and the small stores are plain unhappy (FSB). ]]>
up following the announcement.]]>
Virgin territorytag:www.egpropertylink.com,2007:/blogs/retail-property//76.143482007-09-18T09:20:54Z2007-09-18T09:56:28ZVirgin has sold the Virgin Megastore chain to a management buyout team.JimVirgin has sold the Virgin Megastore chain to a management buyout team called Zavvi Entertainment Group for an undisclosed sum. The total sum paid is not the only question remaining - Who has funded the buyout? What's their strategy? (Zavvi has already announced plans to open new stores in Liverpool, Belfast and Bristol over the next year.) Will they continue to push towards selling more DVDs and computer games, reducing their reliance on physical music sales? What is the future for download service Virgin Digital, set to be rebranded? I have no idea, but it will be interesting to see if Zavvi's expectations match the sales reality.]]>
Summers Not So Hottag:www.egpropertylink.com,2007:/blogs/retail-property//76.137462007-09-05T09:13:40Z2007-09-05T11:43:16ZAnn Summers announced recently that profits almost halved last year. In the 12 months to June 2006 pre-tax profits fell from £3 million to £1.5 million.Jim
Ann Summers lingerie, as seems customary in the media when reporting on this retailer or for that matter any lingerie retailer or even such an unprepossessing subject as permitted use of warehouse space (EG 04/08/07 for the original article with helpful photographic example). But I won't, for I think the story can speak for itself without such gratuitousness. Also the security settings at the office don't let me look at the Ann Summers site (and I'm not going to google for pics after the fallout from the "Ronald McDonald" + "sex pest" search).]]>
profits almost halved last year. In the 12 months to June 2006 pre-tax profits fell from £3 million to £1.5 million. Worryingly, although 12 new stores opened, overall sales fell from £117 million to £110 million.
The thing that strikes me to write about this is that both the Telegraph and Retail Week mention the increasing competition that Ann Summers faces from high street retailers which are now selling limited ranges of sex toys - Superdrug and Boots are name-checked. This seems to me to be an over-simplification of the fall, a post-Tesco assumption that if a product can be bought at a mainstream retailer at a relatively cheap price then it will always be favoured over the specialist shop. Whilst this might be true when applied to chart music or clothing basics, I don't think the model holds up for sex toys and the like.
Ann Summers first found success with its parties, which created a friendly atmosphere and removed the traces of seediness from buying sex toys or sexy lingerie and helped promote the idea that such things were healthy and, above all, fun. This sense of being the friendly face of sex shopping has stuck with the retailer and has been at the centre of their customer service ethos - attempting to recreate that welcoming atmosphere instore.
However, the retail market for sex toys is still young and still not a high-street fixture. Its only a couple of years ago that Ann Summers was banned from advertising in jobcentres and sex shops often meet objections to new openings from local residents. Ann Summers remains the only truly national chain and the competition it does face comes from other areas. Those who are happy to buy their sex toys on the high street, if not using Ann Summers, are more likely to go to an independent retailer such as London's Ssh than pop into Boots on their lunch hour and grab a vibrator with their strawberry yoghurt. The impact of the internet has particular relevance for the sector. For the hardcore (so to speak) veteran customer there is the opportunity to tailor their selections from a far wider selection than any high street store can offer and for those still shy of buying such items in public there is the guarantee of anonymity.
Ann Summers' drop in sales then, does owe something to the same problems that have affected high-street specialists over recent years, but losing their market share to chemists or supermarkets is not the main one. Having been the first to make a mainstream success from the sector they now must work out how to hold on to that position against the new generation of competitors.]]>
Arbitration's what you need, if you want to be a record breakertag:www.egpropertylink.com,2007:/blogs/retail-property//76.135822007-08-31T15:30:06Z2007-08-31T16:01:20ZA recent rent review arbitration between Standard Life Investments and Homebase has had the side effect of setting a new record rent in DIY retail.Jim
Standard Life Investments and Homebase regarding Homebase's unit at the Ladymead Retail Park in Guildford has had the side effect of setting a new record rent in DIY retail of £35 per sq ft, beating the previous mark of £27.50. This is likely to be a one-off though, as rents generally in this market have stagnated over the last couple of years owing to a lack of demand. Ladymead is an exceptional case though, being the only retail park in the area and having open A1 consent. Property Week highlights that some retailers, including B&Q and Sainsbury's, have begun to buy in leases where rent reviews are due. B&Q has also embarked on a remodelling programme at several of its stores to downsize and sub-let to other retailers.]]>
Midlands' Mixed-Use Mixed Timestag:www.egpropertylink.com,2007:/blogs/retail-property//76.133012007-08-23T15:18:20Z2007-08-23T16:34:43ZTwo prominent mixed-use developments in Birmingham had significant pieces of news over the last week.Jim
Land Securities, Hammerson and Henderson, is set to sign a development agreement with the council for the £600 million Martineau Galleries scheme. The council has been looking for a development partner since 1998 for the scheme, which will comprise 2.9 million sq ft of mixed-use development linking the Bullring shopping centre to the Eastside regeneration zone.]]>
Mailbox scheme, the UK's largest mixed-use development, collapsed after it failed to achieve bids close to its asking price. In April, the Birmingham Development Company (BDC) appointed CB Richard Ellis to sell the 1.5 million sq ft Mailbox for £230 million and its second phase, the 500,000 sq ft Cube, which is due to open in 2010, for £70-100 million. Just one serious bid of £185 million for the Mailbox element alone came in from Chester Properties with US-based Rockspring Property Investment Managers. Sources said the Cube was the main stumbling block, with the purchaser having to make a three-year forward commitment to the scheme. Observers, who do love their examples, have commented on is as a sign of the declining investment market in general, and the uncertainty exacerbated by the credit crisis in particular. This reflects findings in DTZ's (formerly Donaldson's) recently published Shopping Centre Commentary for 2007 that show IPD direct and indirect funds sold more shopping centres than they bought in 2006, both by value and by number of schemes. In this climate and with the particular rival schemes in Birmingham on the way (a proposed £100 million redevelopment of New Street Station and Warner Estates' Pallasades Shopping Centre, the proposed City Park Gate urban quarter and the Martineau Galleries), BDC could be holding onto their cube for a while.]]>
If the glass is half-empty, its because Tchenguiz has the other halftag:www.egpropertylink.com,2007:/blogs/retail-property//76.125252007-08-03T15:51:01Z2007-08-03T16:07:43ZMitchells & Butlers confirmed yesterday that plans for a £4.5 billion property joint venture have been suspended.Jim
Mitchells & Butlers confirmed yesterday that plans for a £4.5 billion property joint venture have been suspended. The pub company has been in talks with financiers to finance a 50:50 joint venture with Robert Tchenguiz's R20 investment vehicle, involving approximately 1,300 pubs and £240 million of rent. City analysts had previously been skeptical about the likelihood of such an arrangement, as I mentioned in an earlier post. The company said: "The Board believes that it is now not possible to execute the joint venture due to the current disruption of the debt markets which has resulted in a significant widening of credit spreads." Nils Pratley details the context and potential pitfalls here. ]]>
An Elephant Never Forgets, It Just Takes A Really Long Timetag:www.egpropertylink.com,2007:/blogs/retail-property//76.121682007-07-25T15:59:01Z2007-07-31T15:18:15ZAs an adopted South Londoner and regular frustrated user of its roundabout, I was pleased to see the long-delayed announcement that Lend Lease has finally been selected as the preferred developer for the redevelopment of Elephant & Castle.Jim
Lend Lease has finally been selected as the preferred developer for the redevelopment of Elephant & Castle. The Australian developer, in a consortium with Elliot Lipton’s First Base and Oakmayne Properties, had beaten shortlisted rival St Modwen with Salhia Real Estate. The masterplan for the 170-acre site, designed by Ken Shuttleworth’s MAKE and released by the council last August, aims to create a sustainable "non-car parking destination", with 6,000 homes and 800,000 sq ft of retail.]]>
Stratford, the Park Place development in Croydon and the redevelopment of the Overgate Centre in Dundee. Lend Lease is expected to hold talks with Midlands-based St Modwen, which owns the shopping centre (voted London's ugliest building last year) at the heart of the scheme, about progressing the £1.5 billion project. The shopping centre is scheduled for demolition in 2010, but if anything has characterised plans for this area it has been the myriad delays and frustration that have held up the long-needed regeneration. Inital plans were unveiled in 2001, when Southwark Land Regeneration, a partnership between Godfrey Bradman's European Land and Frogmore Estates, was the selected developer for the site. But the inability of the developer and Southwark Council to reach an agreement on commercial and financial terms for the scheme led to the partnership breaking up. Some discontent has already been sounded by developers over the council's conduct. In May it emerged that the council would only be taking up 100,000 sq ft at the site as it would be signing a 25-year £7 million pa lease for 200,000 sq ft at Great Portland Estates' Tooley Street scheme on the South Bank. Lend Lease and St Modwen were both to some extent relying on the council to take 300,000 sq ft to house its 5,400 staff in a new civic centre at the heart of the site. Unlike last time, enough political will and, perhaps more importantly, fear of repeating the mistakes of the past, exists to ensure flaws like this shouldn't significantly derail plans. The Elephant is going up in the world. Although those who live there wonder if they will be coming with it.]]>
Buy something new todaytag:www.egpropertylink.com,2007:/blogs/retail-property//76.118402007-07-18T08:56:50Z2007-07-18T10:21:11ZThe Financial Times reports today that Delta Two has offered 610p a share for Sainsbury's, valuing the supermarket group at about £12 billion.Jim And we're off! The Financial Times reports today that Delta Two has offered 610p a share for Sainsbury's, valuing the supermarket group at about £12 billion. Sainsbury's has not made a statement yet, but the family or management are understood not to support the bid. This would be consistent with their position since the bid by CVC was rebuffed in April. The FT says "Delta Two is now considering two options: making a full-blown takeover bid or using its shareholding to force a restructuring of Sainsbury’s property portfolio." This would require the support of Robert Tchenguiz who has a declared 5% stake in the grocer, although this is likely to be closer to 10% with derivatives. That support would almost certainly be forthcoming given his previous vocal support for an Opco-Propco arrangement that would return cash to shareholders.]]>
What will happen over the next few weeks could be influential not just for the future of the Opco-Propco model in retailing, but for REITs, private equity investment and the UK grocery market. Speaking in June, chief executive Justin King, while saying he had a “completely open mind” about using property to issue commercial mortgage-backed securities, said it would not be in the best interest of the group to split into a property company and operating company. Property Director Peter Baguley was more forthright about the prospect at Estate Gazette's Retail Summit in May, saying that "no one shareholder" was going to dictate company policy in a thinly-veiled dig at Tchenguiz.
It may seem that the sensible advice would be of the "if it ain't broke" variety. But let's remember that we're not just talking about money here. We're talking about a LOT of money. When Sainsbury's revalued its property portfolio in spring, it stood at £8.6 billion, a massive 65% above the book value. The possibility of returning a large amount of cash to shareholders looks easy, especially when the company is basking in the feelgood factor of its successful recovery. How long that recovery could be sustained if such a move did take place looks less certain. UBS warned in May that establishing a separate property company would reduce profit margins and the supermarket would be at greater risk from competitors' price reductions. In June, the management team announced a strategy to acquire more of the freeholds and long leaseholds on its stores, such as those in Bournemouth and New Cross, the latter acquired with adjacent sheds for £47.7 million in May. It has plans to spend £2.5 billion, funded by operational cashflows, to develop more than 50% of its property estate, building extensions on 75 of its supermarkets, developing 30 new supermarkets, 100 new convenience stores and refurbishing 190 existing stores. The property portfolio is unquestionably at the centre of plans to consolidate and improve its position. There is a possibility that a compromise might be reached with a portion of the property portfolio released, but that might not be enough for the shareholders and any significant portion would compromise development plans. This is not going to be resolved easily. In fact it may be nasty and brutish. But not short. Pass the popcorn.
Who Wants A Little Bit of Eden?tag:www.egpropertylink.com,2007:/blogs/retail-property//76.116542007-07-13T15:40:49Z2007-07-13T16:00:57ZCoal Pension Properties is seeking £90 million – a 4.28% initial yield – for the freehold interest in its 276,000 sq ft Eden Walk shopping centre in Kingston upon Thames.Jim
Eden Walk shopping centre in Kingston upon Thames. The mall, which is anchored by Marks & Spencer, Habitat, Heals and Sainsbury’s, is situated in the centre of Kingston council’s K+20 Area Action Plan, which aims to dramatically increase the Surrey town’s shopping facilities by 2020. Hammerson, which is advising the council on the plan, has proposed a £500 million mixed-use development on 15 acres of land surrounding Eden Walk, which would include 500,000 sq ft of retail.]]>
Westfield London in Shepherds Bush, but new and improved schemes in Walton-on-Thames and Staines.]]>
Pop Goes Fopptag:www.egpropertylink.com,2007:/blogs/retail-property//76.111422007-07-04T08:34:40Z2007-08-01T09:12:33ZErnst & Young has appealed for buyers to take on individual Fopp stores, following the collapse of the chain last week.Jim
Ernst & Young has appealed for buyers to take on individual Fopp stores, following the collapse of the chain last week. It was appointed joint administrator and receiver for the independent music retailer on Friday.
Rescue talks with Virgin Megastores failed last week, though they were perhaps optimistic considering Virgin froze its store acquisition programme in April as part of a review of the business that aimed to stem losses of more than £100 million over the last two years. Taking on further debt would seem to be a curious choice, but according to The Times, Virgin was prepared to inject a big rescue loan and take a 10% stake in a new entity that kept the Fopp brand, but a source close to the deal said: "In the end the numbers just didn't add up and suppliers to Fopp would not support it." This follows rumours of HMV discussing buying some of Virgin's stores.
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announcing that profits had halved to £48.1 million, its been a pretty gloomy week for high street music retailers that throws into sharp relief what HMV chief executive Simon Fox calls their "profoundly changing" market. The most immediate of these profound changes stem from the internet, the challenge of which which only HMV has met with any strength, establishing itself as the UK's second most visited site behind Play, with some 11% of traffic according to Hitwise. Virgin lies 10th in the list, with 1.44% of traffic, behind even WH Smith.
The digital downloading market continues to grow, but global music sales overall are in their seventh straight year of decline with no change expected soon. Fopp, with its branching out into comedy nights, film screenings and instore gigs, as well as a progressive pricing policy, had seemed to offer a response by balancing the value of a chain and the familiarity of a local specialist record shop. But by overreaching for the former, it may have shown that the future for music retailers will have limits. HMV confirmed last week that by 2010 it still expects 80% of HMV's sales to come from its high street stores. 80% of what is another question.
Update 31/07/2007 - HMV is set to open six Fopp stores including, crucially for me, the one down the road in Covent Garden. They will continue to trade under the Fopp name, which HMV has the rights to.]]>
Two Pints Of Lager, Make a Packet on REITs Pleasetag:www.egpropertylink.com,2007:/blogs/retail-property//76.93352007-05-15T16:01:25Z2007-07-04T08:33:51ZEnterprise Inns is continuing to investigate becoming a REIT.Jim
Enterprise Inns is continuing to investigate becoming a REIT, according to Caterersearch.com. The news saw shares lifted more than 6% to 772p.]]>
Mitchells & Butler was considering it earlier this year, though now looks set to rule out the prospect in the short term as Punch Taverns did earlier this month. Will one of the other big groups (Marstons, JD Wetherspoon, Whitbread) take the plunge?
Edit 04/07/07 - It emerged today that Greene King is planning an operating company-property company split. It is looking for a joint venture partner for 35% of its estate not already used to back previous securitisations. The group’s unsecuritised estate of 872 pubs is valued at about £700 million.]]>
Marks and Sparks favours the parkstag:www.egpropertylink.com,2007:/blogs/retail-property//76.92422007-05-11T09:24:09Z2007-05-11T09:34:48ZMarks & Spencer it is to take a 49,000 sq ft store at the Cardiff City retail park. What does this say about the changing retail landscape in Cardiff?Jim
announced it is to take a 49,000 sq ft store at the Capital Retail Park which will form part of Cardiff City FC's new stadium development. What does this say about the retailers thoughts on the changing retail landscape in Cardiff?]]>
Capital Shopping Centres and Land Securities, who are behind the redevelopment of the St David's Centre objected to the new 400,000 sq ft park as it could damage the city centre retail pitch. Such concerns have held the development up in planning limbo for over two years.
But perhaps Marks & Spencer is more concerned about the change in the city centre. With the St David's developers declaring that an aim of the redeveloped centre is to
"provide connectivity between the new public spaces, such as squares and tree lined boulevards. Improved pedestrian links with existing retail areas of the city will create a through flow, as well as opening up areas linking to other developing areas of the city such as the Old Brewery Quarter and Bute Square."
The traditional prime pitch of the city has been the western half of Queen Street, which leads into the St David's Centre and Queens Arcade, with shops, such as M&S, that front onto Queen Street acting as conduits into the malls and picking up extra footfall.
But with a 250,000 sq ft John Lewis due to open at the southern end of the scheme, connecting up the new "developing areas" and opposite Helical Bar's redevelopment of the David Morgan building and its 50,000 sq ft TK Maxx, the previous flow of pedestrians could be drastically changed and M&S's position as not only the top department store, but the 'top' department store in town looks certain to be taken.
So the relocation to the new park allows M&S to expand and become part of a new destination scheme with an anchor store (Costco) that doesn't threaten its demographic. But with another store at Culverhouse Cross in East Cardiff that picks up weekend retail-park traffic and westbound customers from Cowbridge, Llantrisant, etc, will the new store have enough pull to stand on its own?]]>
The traditional prime pitch of the city has been the western half of Queen Street, which leads into the St David's Centre and Queens Arcade, with shops, such as M&S, that front onto Queen Street acting as conduits into the malls and picking up extra footfall.
But with a 250,000 sq ft John Lewis due to open at the southern end of the scheme, connecting up the new "developing areas" and opposite Helical Bar's redevelopment of the David Morgan building and its 50,000 sq ft TK Maxx, the previous flow of pedestrians could be drastically changed and M&S's position as not only the top department store, but the 'top' department store in town looks certain to be taken.
So the relocation to the new park allows M&S to expand and become part of a new destination scheme with an anchor store (Costco) that doesn't threaten its demographic. But with another store at Culverhouse Cross in East Cardiff that picks up weekend retail-park traffic and westbound customers from Cowbridge, Llantrisant, etc, will the new store have enough pull to stand on its own?]]>