Catalogue and online clothing retailer Boden will continue to distribute hard copies of the catalogue despite the vast majority of its orders being taken online.
Majority owner Johnnie Boden said the catalogue remains vital to the process because people like to browse them before switching to the internet to order. Boden, who owns 60 per cent of the shares, told the Independent newspaper when the firm had launched web only products they 'did not work very well.' Nine out of ten orders are now made online.
The firm distributes 50 million catalogues a year and he admitted that cutting back on distribution would save the company money. Last week it said international sales had overtaken the UK for the first time in the past few months and that the US accounts for $200 million sales. It also delivers to Germany, Japan and India.
At home, the first part of the year has been difficult but sales saw improvement in April. Boden also said he had no plans to sell the business baring 'an amazing corporate deal that falls into our lap'.
The most recent accounts for Boden show sales in the year to December 2011 increased 6 per cent to £246 million. However, profit plunged 45 per cent to £18 million.
Saturday, 18 May 2013
Friday, 17 May 2013
Amazon Under Fire Over Tax - Again...
Online retail giant Amazon has received a barrage of criticism over revelations that money received in Government grants last year exceeded corporation tax payments.
The retailer has filed accounts at Companies House that show it paid £2.4 million in corporation tax on annual sales of £4.3 billion. The tax paid was eclipsed by a cheque handed to the firm by the UK Government for £2.5 million in grants.
The company is domiciled in Luxembourg and therefore pays less tax. It argues that it pays all the taxes due in the countries where it operates despite its tax efficient financial arrangements. But Labour MP Nick Smith described the payment as 'pathetic'.
Amazon and other large US corporations including Google and Starbucks have found themselves at the centre of a tax avoidance row in the UK. Amazon's low tax liabilities have prompted calls from bricks and mortar firms including Sainsbury's, John Lewis and Dixons asking the Government to address the issue and create a 'level playing field'.
MPs yesterday questioned Google's European chief Matt Britten and accused him of employing 'devious, calculated and unethical' methods to reduce its tax liabilities.
The retailer has filed accounts at Companies House that show it paid £2.4 million in corporation tax on annual sales of £4.3 billion. The tax paid was eclipsed by a cheque handed to the firm by the UK Government for £2.5 million in grants.
The company is domiciled in Luxembourg and therefore pays less tax. It argues that it pays all the taxes due in the countries where it operates despite its tax efficient financial arrangements. But Labour MP Nick Smith described the payment as 'pathetic'.
Amazon and other large US corporations including Google and Starbucks have found themselves at the centre of a tax avoidance row in the UK. Amazon's low tax liabilities have prompted calls from bricks and mortar firms including Sainsbury's, John Lewis and Dixons asking the Government to address the issue and create a 'level playing field'.
MPs yesterday questioned Google's European chief Matt Britten and accused him of employing 'devious, calculated and unethical' methods to reduce its tax liabilities.
Thursday, 16 May 2013
Health and beauty retailer Boots is poised to launch a major international expansion for its online business.
Boots will launch a new site called International.Boots.com in Europe with 23,000 products. The strategy will begin next month with a site in Ireland and then progress to other countries in mainland Europe.
The Irish site will act as a trial for the roll-out, said Alex Gourlay, chief executive of health and beauty at the group's UK business.
Yesterday the the retailer's owner Alliance Boots said trading profit increased 6.1 per cent to £1.27 billion and total group sales fell 2.6 per cent to £22.4 billion. Alliance Boots, which last year agreed a merger with US giant Walgreens, has begun to launch products in newly opened Walgreens stores. The US drug store also has a Boots area on its web site with about 300 products.
Like-for-like sales at its Boots business fell 0.7 per cent while trading profit at the UK increased 8.8 per cent to £813 million. Online sales increased 17 per cent. Mobile accounted for 25 per cent of visits and 45 per cent of orders were click and collect.
Boots will launch a new site called International.Boots.com in Europe with 23,000 products. The strategy will begin next month with a site in Ireland and then progress to other countries in mainland Europe.
The Irish site will act as a trial for the roll-out, said Alex Gourlay, chief executive of health and beauty at the group's UK business.
Yesterday the the retailer's owner Alliance Boots said trading profit increased 6.1 per cent to £1.27 billion and total group sales fell 2.6 per cent to £22.4 billion. Alliance Boots, which last year agreed a merger with US giant Walgreens, has begun to launch products in newly opened Walgreens stores. The US drug store also has a Boots area on its web site with about 300 products.
Like-for-like sales at its Boots business fell 0.7 per cent while trading profit at the UK increased 8.8 per cent to £813 million. Online sales increased 17 per cent. Mobile accounted for 25 per cent of visits and 45 per cent of orders were click and collect.
Wednesday, 15 May 2013
US Shoppers Reject Online Tax
A survey of more than a thousand US citizens has indicated that 61 per cent have rejected plans to impose an online sales tax.
The effects of the tax are expected to hit British retailers (see our post on May 6) because companies will have to facilitate collecting the tax and sending funds to individual states. That could mean filling dozens of tax returns every month.
The US senate last week supported the Marketplace Fairness Act by 69 votes to 27 but, perhaps unsurprisingly, US shoppers are less enamoured. It will need to be approved by the House of Representatives before it becomes law.
In the survey, by postal firm Endicia, 61 per cent said they didn't support the tax, 44 per cent of respondents said they would buy fewer products online if it came into force and 12 per cent said they would buy more products at traditional stores near their homes. However, 40 per cent said it would make no difference to their shopping habits.
A total of 74 per cent of the 1,095 respondents had heard of the legislation, 60 per cent said the changes would be bad for the US economy, 39 per cent approved the bill and one third of those who approved said it would bring a level playing field for traditional bricks and mortar retailers who cannot avoid sales taxes.
At present responsibility for declaring the tax is on the individual shopper who then should fill in a state tax return. However, few do. The proposed legislation will shift responsibility to retailers according to the state where the purchaser lives.
Online retailers with less than $1 million in annual internet sales would be exempt from collecting taxes.
The effects of the tax are expected to hit British retailers (see our post on May 6) because companies will have to facilitate collecting the tax and sending funds to individual states. That could mean filling dozens of tax returns every month.
The US senate last week supported the Marketplace Fairness Act by 69 votes to 27 but, perhaps unsurprisingly, US shoppers are less enamoured. It will need to be approved by the House of Representatives before it becomes law.
In the survey, by postal firm Endicia, 61 per cent said they didn't support the tax, 44 per cent of respondents said they would buy fewer products online if it came into force and 12 per cent said they would buy more products at traditional stores near their homes. However, 40 per cent said it would make no difference to their shopping habits.
A total of 74 per cent of the 1,095 respondents had heard of the legislation, 60 per cent said the changes would be bad for the US economy, 39 per cent approved the bill and one third of those who approved said it would bring a level playing field for traditional bricks and mortar retailers who cannot avoid sales taxes.
At present responsibility for declaring the tax is on the individual shopper who then should fill in a state tax return. However, few do. The proposed legislation will shift responsibility to retailers according to the state where the purchaser lives.
Online retailers with less than $1 million in annual internet sales would be exempt from collecting taxes.
Tuesday, 14 May 2013
Small Orders Make Online Less Profitable, Says Officeworks
The managing director of Australian office supplies retailer Officeworks said it is more difficult to make money online because orders are smaller.
Speaking at the Retail World conference in Melbourne, Mark Ward said his firm made 13 per cent of its sales online but less than 10 per cent of its profits despite lower staff and rental costs, according to The Australian newspaper.
'We are selling more online than we ever were before. But we are selling them for less as basket sizes have come down because we have made life so convenient for the customer,' he said.
He said it was not so much a problem as an issue for the firms supply chain because of the larger number of transactions and the lower profitability in the future.
Myer managing director Bernie Brookes said online was 'potentially' more profitable but wasn't today. However, he said over the past 18 months Australian retailers have got 'fully in the game and understand the opportunity' presented by the internet.
He pointed to Britain and the US where he said 15 of the top 20 retailers were tradtional bricks and mortar retailers.
Speaking at the Retail World conference in Melbourne, Mark Ward said his firm made 13 per cent of its sales online but less than 10 per cent of its profits despite lower staff and rental costs, according to The Australian newspaper.
'We are selling more online than we ever were before. But we are selling them for less as basket sizes have come down because we have made life so convenient for the customer,' he said.
He said it was not so much a problem as an issue for the firms supply chain because of the larger number of transactions and the lower profitability in the future.
Myer managing director Bernie Brookes said online was 'potentially' more profitable but wasn't today. However, he said over the past 18 months Australian retailers have got 'fully in the game and understand the opportunity' presented by the internet.
He pointed to Britain and the US where he said 15 of the top 20 retailers were tradtional bricks and mortar retailers.
Monday, 13 May 2013
Ocado 'Playing With Fire' Over Waitrose Contract
Grocery delivery firm Ocado may have irreparably damaged its relationship with Waitrose as talks with Morrisons turn into a 'soap opera,' a leading analyst has warned.
Stockbroker Shore Capital also estimated that if Ocado's partnership with Waitrose were to collapse it could lose 75-80 per cent of sales overnight.
Waitrose, owned by the John Lewis Partnership, has reacted badly to Ocado's recent talks to offer its delivery service to Morrisons. Waitose says its name is painted on the side of Ocado's vans and a tie up with Morrisons would be damaging.
Waitrose managing director Mark Price said this weekend he would seek to block any deal. He also revealed that he told that to former Morrisons chief executive Marc Bolland when he approached Price to seek his reaction to a possible tie up between the Bradford-based Morrisons and Ocado four years ago. Morrisons is now run by chief executive Dalton Philips while Bolland is at Marks & Spencer.
Waitrose with Ocado contract runs to 2020 but small print in the deal allows the supermarket an opportunity to break away in 2017.
Shore Capital analyst Dr Clive Black said in a report released to investors this morning: 'Whilst Ocado states that any agreement with Morrison's would not be a conflict with Waitrose, we see the mood of Mr. Price & Co, as being deadly serious. As such, Ocado may have irreparably polluted a commercial relationship upon which it is dependent and it must lead to a greater chance of a break in 2017 in our view.'
He continued: 'Indeed, the tie-up with Morrison and Ocado may be taking on a soap opera feel, something that we cannot believe that Dalton Philips' and the Board of profitable Morrison welcome. That said it is just another episode in a series that we deem to have a very poor story line.'
Morrisons has said that, while talks with Ocado continue, it has other options that will still allow it to launch an online food delivery service. Ocado has said the talks with Morrisons do not include the possibility a takeover by the supermarket.
Black said: 'We believe that Ocado is 'playing with fire' in speaking to another British supermarket group, as it tries to utilise its substantially greater fulfilment capacity, because the group's umbilical cord to Waitrose may be cut sooner than we anticipated and Ocado cannot exist as a commercial entity without Waitrose in our view.'
In Early trading Ocado's shares fell more than 8 per cent to £2.04 which values the retailer at £1.3 billion according to lse.co.uk.
Marks & Spencer, Morrisons and Waitrose have been linked to a possible acquisition of Ocado but Black said he could not see a buyer paying for the firm at this level of valuation.
Key Boden Executive Leaves
One of catalogue and online firm Boden's key executives Cathy Carrington-Birch has left the company.
Carrington-Birch was buying and merchandising director across women's, men's and Mini Boden. She has been with firm for more than 13 years and is understood to be on gardening leave.
It is not yet clear where Carrington-Birch is headed next but a number of larger retailers including Marks & Spencer are recruiting talent to help better connect with shoppers and also drive their online businesses.
It is not yet clear where Carrington-Birch is headed next but a number of larger retailers including Marks & Spencer are recruiting talent to help better connect with shoppers and also drive their online businesses.
She started at Boden in 1999 as merchandising director and is understood to have contributed heavily to the success of the catalogue and online retailer.
The most recently available figures show the retailer's sales increased 6 per cent to £246 million. However, profit plunged 45 per cent to £18 million. Chief executive Julian Granville blamed the slump on rising cotton prices and insisted the retailer would not compromise on quality for short-term profit gain.
Wiggle.com Signs up to Click & Collect
Online cycling retailer Wiggle.com has signed a deal with CollectPlus to offer its customers a click and collect service.
The web site has used the CollectPlus returns service for the past two years and this will extend the partnership to deliveries.
The deal will give Wiggle access to 5,000 shops and convenience stores which are part of the CollectPlus delivery scheme. CollectPlus estimates the network serves about 87 per cent of the UK's urban population live within a mile of a collection point and 88 per cent of the rural population live within 5 miles.
CollectPlus also works with brands including Asos, Superdry, House of Fraser, Karen Millen, Littlewoods and Arcadia brands including Miss Selfridge and Evans.
'As a retailer with a rapidly growing customer base, we are always looking for ways to simplify the delivery journey, and this partnership does exactly that. This new option alongside our existing returns offer with CollectPlus is helping us to develop and sustain a more seamless offer for our customers,' said Nicholas Pink, Wiggle operations & programme director.
The web site has used the CollectPlus returns service for the past two years and this will extend the partnership to deliveries.
The deal will give Wiggle access to 5,000 shops and convenience stores which are part of the CollectPlus delivery scheme. CollectPlus estimates the network serves about 87 per cent of the UK's urban population live within a mile of a collection point and 88 per cent of the rural population live within 5 miles.
CollectPlus also works with brands including Asos, Superdry, House of Fraser, Karen Millen, Littlewoods and Arcadia brands including Miss Selfridge and Evans.
'As a retailer with a rapidly growing customer base, we are always looking for ways to simplify the delivery journey, and this partnership does exactly that. This new option alongside our existing returns offer with CollectPlus is helping us to develop and sustain a more seamless offer for our customers,' said Nicholas Pink, Wiggle operations & programme director.
Sunday, 12 May 2013
Comment: the Ocado Debacle
Falling out with your one and only business partner, as Ocado seems to have done, looks like a suicide mission.
Worse still, its discussions with Morrisons are on the verge of descending into fiasco.
Last week it insisted that any deal with Morrisons would not affect its long standing partner Waitrose. Then yesterday Waitrose boss Mark Price spoke out threatening to block any deal.
In the meantime, negotiations with Bradford-based Morrisons have dragged on and only a few days ago Morrisons finance director Trevor Stain said: 'We are not dependent on Ocado to go online. We may or may not work with them.'
Amid all this Ocado's share price has rocketed since February not far off doubling the price to over £1.3 billion. Last year it made a pre-tax loss of £600,000.
So, what is going on? Waitrose managing director Mark Price said yesterday: 'I would never knowingly sign a contract with Ocado that agreed to them working with another retail competitor. We have moved to defcon one [to find more of our own warehouses] because we don’t know where this is going to end up and we are now working on adding considerable extra capacity to Waitrose.com,' he told the Sunday Telegraph.
It sounds a little like Waitrose is worried it might end up getting edged out for a bigger and more lucrative partner.
Price also revealed that former Morrisons boss Marc Bolland, now chief executive at Marks & Spencer, had approached him four years ago over a possible partnership with Ocado and he had told him the same thing.
We have also heard that Waitrose has its eye on two sites as possible distribution centres as it tries to rebalance in anticipation of nay further falling out with Ocado.
We have been told that Waitrose.com currently makes about £300 million sales a year on an annualised basis. Its Acton distribution centre accounts for about £50 million. If we assume its business with Ocado is more than twice its own sales it has a long way to go before being self-sufficient.
Meanwhile, the Telegraph says Price will ask his lawyers to examine any deal between Ocado and Morrisons to ensure there is no breach of contract.
Ocado seems to be caught between a rock and a hard place. Its chief executive Tim Steiner, which has the Waitrose name on its vans, still insists there would be no conflict of interests.
So what is Ocado playing at?
This is a company that, to outsiders at least, has always deftly walked the line between raising new money from loyal investors and running a business whose future has always been more golden than its present.
It has done a good job of convincing investors that its worth more than its balance sheet would suggest. It talks about the value of its intellectual property and taking the model - a highly automated warehouse that undoubtedly makes filling bags more efficient (if far more expensive) than getting staff to do it in supermarkets or 'dark' stores. It's also a company not known for its humility and it could be argued that has been a big factor in bringing it this far since the dark days of the post-dot.com boom.
But it seems to be playing a game of blink with Waitrose - with far more risk on its side of the table than that of the John Lewis Partnership-owned Waitrose. What is more, upsetting the fine balance it has achieved between breaking even, finding new investment and paying the bills could be disastrous.
Worse still, its discussions with Morrisons are on the verge of descending into fiasco.
Last week it insisted that any deal with Morrisons would not affect its long standing partner Waitrose. Then yesterday Waitrose boss Mark Price spoke out threatening to block any deal.
In the meantime, negotiations with Bradford-based Morrisons have dragged on and only a few days ago Morrisons finance director Trevor Stain said: 'We are not dependent on Ocado to go online. We may or may not work with them.'
Amid all this Ocado's share price has rocketed since February not far off doubling the price to over £1.3 billion. Last year it made a pre-tax loss of £600,000.
So, what is going on? Waitrose managing director Mark Price said yesterday: 'I would never knowingly sign a contract with Ocado that agreed to them working with another retail competitor. We have moved to defcon one [to find more of our own warehouses] because we don’t know where this is going to end up and we are now working on adding considerable extra capacity to Waitrose.com,' he told the Sunday Telegraph.
It sounds a little like Waitrose is worried it might end up getting edged out for a bigger and more lucrative partner.
Price also revealed that former Morrisons boss Marc Bolland, now chief executive at Marks & Spencer, had approached him four years ago over a possible partnership with Ocado and he had told him the same thing.
We have also heard that Waitrose has its eye on two sites as possible distribution centres as it tries to rebalance in anticipation of nay further falling out with Ocado.
We have been told that Waitrose.com currently makes about £300 million sales a year on an annualised basis. Its Acton distribution centre accounts for about £50 million. If we assume its business with Ocado is more than twice its own sales it has a long way to go before being self-sufficient.
Meanwhile, the Telegraph says Price will ask his lawyers to examine any deal between Ocado and Morrisons to ensure there is no breach of contract.
Ocado seems to be caught between a rock and a hard place. Its chief executive Tim Steiner, which has the Waitrose name on its vans, still insists there would be no conflict of interests.
So what is Ocado playing at?
This is a company that, to outsiders at least, has always deftly walked the line between raising new money from loyal investors and running a business whose future has always been more golden than its present.
It has done a good job of convincing investors that its worth more than its balance sheet would suggest. It talks about the value of its intellectual property and taking the model - a highly automated warehouse that undoubtedly makes filling bags more efficient (if far more expensive) than getting staff to do it in supermarkets or 'dark' stores. It's also a company not known for its humility and it could be argued that has been a big factor in bringing it this far since the dark days of the post-dot.com boom.
But it seems to be playing a game of blink with Waitrose - with far more risk on its side of the table than that of the John Lewis Partnership-owned Waitrose. What is more, upsetting the fine balance it has achieved between breaking even, finding new investment and paying the bills could be disastrous.
Saturday, 11 May 2013
Comment: Online Retail Taxes?
This is turning out to be a year of change for the online retailing in the UK.
Major bricks and mortar retailers beyond the usual names are starting to wise up to the phenomenon and finally getting a grip. But so are Governments.
First in the US (see our blogs over the last few weeks on how it might affect UK retailers) and, soon, back home in Britain. This week Sainsbury's boss Justin King complained there was no 'level playing field' on tax and that the burden unfairly fell more heavily on bricks and mortar retailers than those online.
Its the long running debate over the burden of business rates finally taken to its logical conclusion. Why should a shop pay more tax on its property when its sales and profit are falling? Why not base taxes more squarely on sales and profit? Whether you agree with King or not, his comments come at a sensitive time. Next week the Government will begin releasing submissions they have received from interested parties ahead of yet another major inquiry into the retail sector.
The Business, Innovation and Skills Select Committee will then begin holding public meetings in Parliament later this month and online retailing will be a key theme. So will tax - thanks to the raging debates over rising business rates in a collapsing high street and taxes paid - or rather not paid - by large multinational online retailers like Amazon.
King has a point. He says: 'Clearly that is not a level playing field and the Government is going have to think hard about how it rebalances that tax take. There is a difference between bricks and mortar retailers - who pay rates, National Insurance and all the other domestic taxes that are due - and online retailers who by virtue of their lack of physical presence in the high street don’t contribute in the same way.'
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| Supermarket boss wants a 'level playing field' on tax |
Supermarkets are big tax payers - largely because they employ lots of people, own or lease lots of property and, let's be honest, because they are firmly based in the UK find it difficult to escape paying their due like others can.
The irony that their race to take shoppers out of town centres has decimated high streets will not be lost on politicians (and any argument that their convenience stores are now helping rebalance that - and believe me, they do make those arguments - must be taken with a giant pinch of salt). But that doesn't mean to say other points they make aren't valid.
So the twists and turns of the debate over the next two or three months will be fascinating to follow. Is it fair to have a local property-based tax? Is it time to put an end to unfettered out of town development and boost towns? Is it right for the Government to level the playing field just because one part of the industry is more successful and bring everyone down to the same, tax-burdened level?
We get the feeling that this is one Government review of the retail sector that will not sit collecting dust for the next two years as the Mary Portas one has done.
As a journalist friend of mine said recently: parliamentary committees do a lot of things but one thing they never do is nothing.
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