Retail

Smiths’ new boss should break it up

26 Sep 2007

Where Philip Bowman goes, a sale usually follows. He got a good price for drinks business Allied Domecq and utility Scottish Power. Investors will hope the new chief executive can sprinkle similar magic dust on Smiths Group. A breakup of the UK conglomerate looks overdue.

Supermarket price-fixing probe misses the point

20 Sep 2007

The OFT has accused the big supermarkets of rigging dairy prices. But even if true, it's unlikely shoppers will have suffered. Real pricefixing should be punished. But fierce competition means what retailers cream off in one place, they usually give back in another.

High street poorly placed for UK slowdown

19 Sep 2007

Easy credit and a frantic space race have left some retailers saddled with high debt and fixed costs. For some, sales are already declining. That could make them more susceptible to likely consumer pursetightening. As always, expect the supermarkets to be the main beneficiaries.

Leveraged loan market shows signs of life

14 Sep 2007

The repricing of some of KKR s debt for Alliance Boots shows how banks and borrowers can share the pain when investors go on strike. While that shifted a tiny bit of Boots' £9bn debt mountain, the outlook is still glum. Funding new deals may yet get more expensive.

Spending of the rich may be the next shoe to drop

10 Sep 2007

Consumer spending accounts for the bulk of US economic activity. And the biggest spenders by far are the country s most wealthy. But even rich spendthrifts may start pulling in their horns. The housing market collapse has finally started to worry the carriage trade.

Carrefour property deal not all it seems

31 Aug 2007

The French supermarket s plans to spin off a chunk of its real estate is a flashy way of doing very little at least in economic terms. By setting up a listed property company, Carrefour can mark its property to market. But such financial engineering can work both ways.

Ackman chose wise target in Target

21 Aug 2007

Poorly run companies make easy pickings for activists. But they can also leave funds terribly exposed to losses if their efforts flounder. Pershing Square's $2bn Target stake might seem odd given the retailer's strong results, which give Pershing downside protection.

Don’t count Wal-Mart out just yet

14 Aug 2007

WalMart shares tumbled 5% after the retail giant slashed its earnings forecasts on weakness in consumer spending. But there are some bright spots. WalMart won't turn the ship around overnight, but it has the makings of a contrarian bet.

Sainsbury’s board should focus on shareholder value

8 Aug 2007

By that measure, the Qatari fund s £12bn offer for the supermarket group looks attractive. But the board may think financing is an issue. It could argue that the UK regulator won t accept a highly leveraged Sainsbury s. It shouldn t rush to make that claim.

Mattel’s headaches may have just begun

2 Aug 2007

But while the immediate financial damage appears limited, the longerterm fallout could be no fun for the toymaker's shareholders. Discovery of lead paint on toys it manufactured in China prompted a massive recall of some popular Mattel products.

Starbucks needs bigger jolt than price hike

30 Jul 2007

The coffee chain is taking advantage of its premium brand to pass along higher prices to its customers. But while a price hike is a good strategic move, the company may need a much bigger jolt to perk up its sluggish stock price.

Sainsbury’s should bite the Qataris’ hands off

27 Jul 2007

Facing a £12bn bid from Delta Two, the UK retailer's board has two things to consider: is a bid is high enough? And is it deliverable? The offer ticks the first box. And while deliverability isn t quite so clear cut, it could be unwise to let this bid fizzle out. Facing a £12bn bid from Delta Two, the UK retailer's board has two things to consider: is it high enough? And is it deliverable?

Boots debt discount betrays banks’ bearish view

25 Jul 2007

KKR s banks are holding £5bn of senior debt they couldn t sell. But they are offering firesale prices to move £1.75bn of riskier loans. They seem unwilling to bet that the market will improve enough to sell that debt profitably. That s a truly bearish credit bellwether.

Sports Direct should be taken off the pitch

24 Jul 2007

A profit warning has left the UK retailer trading at less than half the price it floated at only five months ago. It has been a disgrace. Shareholders should be demanding that Mike Ashley, Sports Direct founder, buys back the 43% stake he sold at the company's flotation price.

Private equity could find Pret a Manger tasty

24 Jul 2007

The UK sandwich chain has prospered at home, but growth has slowed. McDonald s is a shareholder but has lost interest. So it needs new backers to tackle the US market. Growth might not be easy, but at least financiers should know what they are biting into.

Mike Ashley piles his plate ever higher

20 Jul 2007

Stakebuilding, activism, and now a reported bid for Foot Locker. The Sports Direct founder hasn't let up since floating his retail empire. But even the best managers can overdo it: look at Renault s Carlos Ghosn. And unlike Renault, Sports Direct s shares are firmly in reverse.

Qataris put the squeeze on Sainsbury

18 Jul 2007

Delta Two s £12bn bid for the UK retailer beats the last one from CVC. Think more money, fewer conditions, and better political connections. The Sainsbury family may have reservations. But the Qataris might get around them and other doubtful investors by offering equity.

Why blaming the weather is still for wimps

11 Jul 2007

Floods and storms are usually a cue for weatherrelated profit warnings to cross the wires. This year even UK retailer M&S has joined in. Some products suffer when skies are grey. But good retailers bounce back. For the rest, there s always the weather derivatives market.

Prada shouldn’t snub private equity

9 Jul 2007

Selling out to private backers rather than floating may give luxury companies more fuel for their aggressive global growth plans. But IPOs help founding families like the Bertellis keep control. That s also why investors do well to treat such floats with kid gloves.

KKR’s £9bn Boots financing will test Euro market

6 Jul 2007

The buyout group has picked a tricky time to finance Europe s largestever LBO, with deals on both sides of the Atlantic facing resistance. Add the fact the deal is highly leveraged and covenant loose and it is bound to be a tough sell. Other issuers will be watching nervously.