BHS fails M&S test

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Pre-tax profits at Sir Philip Green’s BHS stores plunged 60 per cent last year. Things have picked up since the year end on April 1 but it looks like Philip’s attempt to tackle M&S head on, which he announced when he lost the battle for control of M&S, has failed. Philip will no doubt have plenty to say on this when our reporters talk to him later (he usually does). In the meantime, he has said: “The results for the last financial year are obviously disappointing. I stated at the end of last year that profits would be down significantly due to internal ranging mistakes, particularly in womenswear. This has resulted in significant increases in markdown and therefore margin erosion.” Perhaps BHS could use a little help from the Fashion Retail Academy that Philip helped set up. It promises to teach “all of the practical and vocational skills needed for the challenging and fast paced world of fashion retail”.

BHS’s figures are not the only bad news from the high street. HMV said like-for-like sales fell 3.7 per cent in the twelve weeks to September 23 and margins fell too. Trading at Waterstone’s seems to have been particularly disappointing. HMV’s shares (down 40 per cent from the highs of early 2005) are up a touch this morning.

Royal & Sun Alliance is at last ridding itself of its troubled US business by selling it to the unit’s management. It will have to absorb a £443m loss in the process, including the injection of £158m of capital. But – having amassed $2.7bn of underwriting losses over the last 10 years, never once made an underwriting profit in that time and had a rights issue to help fund the business three years ago – RSA looks well shot of this business. If the management team, all run-off specialists, can scratch some value out of this business over the next four years, RSA will get £158m back. The key point, though, is that the US business has been holding back RSA’s stock for years. Today, the shares are up 3 per cent, possibly reflecting the fact that RSA has effectively lost the poison pill that prevented people bidding for it.

Isoft says it will remain involved with the NHS IT contract despite Accenture pulling out, as we reported this morning. It also says any potential litigation with Accenture over the contract had been annulled. Its shares are up 17 per cent as a result.

Peter Dicks, former chairman of Sportingbet, is due back in court in New York today to see if he will be extradited to Louisiana. We will have a reporter there.

We also have a strong trading statement from the London Stock Exchange, saying business was good over the summer, and an update from Icap which has left some fearful about its growth prospects. No more details yet on the merger talks the two held this summer. A trading update from GCap went down better than many of its statements have done recently: the company says business has improved recently.

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