Retail Round-Up June 6th 2011
HMV close to securing £210m refinancing deal
Embattled entertainment retailer HMV is thought to be close to securing a refinancing deal to ensure its future. HMV chief executive Simon Fox is understood to have negotiated a two year deal worth about £210m with its lenders RBS and Lloyds. It is also in talks to sell off its Canadian arm, which is expected to fetch just £5m. The retailer has issued a string of profit warnings this year and warned that it was in danger of breaching its banking covenants. HMV has been diversifying in the face of declining music sales, expanding into live music and also focusing on technology in its stores.
Asda mulls bid for Iceland
Asda is mulling a bid for frozen food specialist Iceland, which is being sold by collapsed Icelandic bank, Landsbanki. The plan reinforces Walmart’s ambition to grow its overseas business as its domestic sales remain flat. The retailer entered the UK through its £6.7bn Asda acquisition in 1999 and stepped up its grocery market share last year through its £770m takeover of Netto. Rival grocer Morrisons is also interested in buying the frozen food retailer and is thought to be on the verge of appointing advisers to lead its bid.
India to welcome foreign supermarkets within months
India is set to open its doors to foreign supermarkets within the next four months as it looks to welcome multi-brand grocers as majority partners for the first time. A committee in India, formed to explore de-regulation in the sector, is understood to have submitted a favourable report, and Ministers are preparing to put the proposal to Cabinet. The move will come as welcome relief for British retailers which see huge growth potential in India. With current laws, retailers are limited to single brand retail and cash and carry operations. Conditions on relaxing the laws are likely to include obligations on new entrants to invest heavily in “back-end” warehousing, food processing and refrigerated transport networks and to recreate jobs in rural India. It has suggested that supermarket giants such as Tesco, Carrefour and Walmart will play a vital role in revolutionising the sector by investing heavily in logistics and food processing.
Sainsbury’s targets Nectar holders with new car insurance plan
Sainsbury’s is targeting Nectar card holders in a drive to ramp up its car insurance business. Via a new partnership with RBS Insurance, members of the Nectar loyalty scheme can get 15% off their car insurance premiums and will also pocket double points on their shopping with the supermarket for a two-year period. Sainsbury’s Finance chief executive, David Fisher, said “our aim is to significantly grow our insurance business over the next five years and motor insurance is key to this strategy.”
Waitrose unveils Love Life healthy range
Waitrose has launched its largest sub-brand range of products since the Essential range, dubbed Love Life. The 270-strong range of “nutritionally balanced” products will reach stores on 30 June. Love Life was introduced to meet demand from Waitrose customers to boost wholefood ingredients and avoid saturated fats in their diets, the supermarket said.
Top retailers guide on responsible kids marketing
The UK’s biggest retailers have issued guidelines for the sector on selling and marketing clothing to children ahead of the publication of a Government-commissioned report that is expected to criticise shops that sell risqué clothes for kids. Nine retailers - including Tesco and Sainsbury’s - have launched a document that spells out what styles, fabrics and marketing tactics are appropriate.
Groupon eyes £460m fund from IPO
Daily deals site Groupon is looking to raise about $750m (£460m) by floating on the US stock market. Groupon’s Initial Public Offering could be the second biggest internet company listing on the US stock market since Google in 2004, which valued the company’s market capitalisation at more than $23bn (£14bn). Groupon shunned a $6bn takeover offer in December last year.
Keri Link is a consultant on the Interim team.