The US electronic retailer is aspiring to rein the UK market by opening 200 stores in the long run. This aggressive push has surpassed expectations of all the competitors and analysts in the market.
Best Buy and Carphone had announced joint venture in May, wherein the US company agreed to buy 50 per cent stake for £1.1bn in exchange of Carphone allowing partnership in its existing retail operations.
Carphone which did not comment on the news is setting out details for the roll-out at a trading update scheduled for October 2008. The company will resolve issues pertaining to investment and cash cost per store and prepare broad format for the store.
The Best Buy venture will pose a serious challenge to DGS International’s Currys and PC World Chains since it is undergoing restructuring amid consumer downturn.
The Carphone shareholders are sceptical about the Best Buy deal due to involvement of numerous variables. Analysts are concerned about the unclear dividend policy and apprehend that the new partnership would be under control of Best Buy management.
The 200-store UK plan will unfold with launch of five stores next year. The pace of further roll-out will be decided by the success of these stores. Mean time, both the partners will decide whether to sell freezers and cookers alongside musical appliances and laptops.
Papua New Guinea’s largest palm oil producer New Britain Palm Oil will build a processing plant in the UK with investment of £18m, to produce refined palm oil. The company aims to meet the growing demand from European Union. It claims that users will be able to buy the palm oil fully traceable down to the tree from which it originated.
Palm oil is used in different products including chocolates, bread, margarine and shampoo. It is also used as a bio-fuel.
Environmental campaigners have been protesting against the increasing use of palm oil since its production causes destruction of parts of the rainforest. As a result wild life, particularly in Indonesia and Malaysia is endangered with habitat loss.
New Britain Palm Oil which owns best plantations in the world, claims that it does not destroy any rainforests since no plantation is done on high conservation land.
According to chief executive officer, Nick Thompson, New Britain Palm Oil will be the first producer to provide full traceability of sustainable palm oil product to its customers. This will increase company’s intimacy with the UK and EU customers.
Over 95 per cent of company’s current palm oil output is sold in EU for use in food products. One in ten products displayed on shelves in supermarkets contain palm oil.
1.6 million customers of British Gas are accusing the company of misleading them over 35 per cent rise in gas bills. Out of the 10 million gas customers, 1.6 million pay their bills by direct debit since the company has been charging them lower tariff than those who paid by cheque. It has now emerged that they will be required to pay 7 per cent more, after company’s announcement of 35 per cent rise. The bills will increase from £588 to £834 on an average per year, amounting to rise of 42 per cent.
The consumer group director of campaigns of Energywatch, Adam Scorer, remarked that it was but natural for the consumers to get outraged over the whopping increase of 42 per cent. According to him consumers have every reason to feel being misled by the company.
Although British Gas announced price increase of 35 per cent on average, it did not clarify that direct debit customers would have to pay 42 per cent more on average. The increase in charges is 35 per cent for customers making payments in cash or by cheque, and 30 per cent for those that use pre-payment meters.
The company has also introduced regional pricing as a result of which some householders will pay £24 a year more than those in other regions, for the same consumption of energy. The campaigners are opposing the regional pricing policy stating that it is unjustifiable to penalise those who stay far away from gas terminals.
Coffee giant Starbucks posted its first ever quarterly loss in the current financial year. The company is however quite confident of registering good performance during the year, not withstanding the setback.
As per the company’s information, business in the UK has suffered due to the down slide in customer visits to its stores. But the company is pushing ahead its deal with SSP, the food service company, to set up 150 Starbuck outlets at the train stations and airports in the UK and Western Europe.
Starbucks is going to close 600 outlets in the US and nearly two third of its stores in Australia.
According to chief executive Howard Schultz, decline in consumer spending is affecting the coffee business, but he is pleased with the overwhelming response it received for the recently introduced Vivanno smoothie drink which was test-marketed in the UK to improve afternoon traffic to the Starbucks outlets.
Starbucks is holding firmly to its profit forecast of 90 cents to 1 dollar per share. Schultz who took over as CEO in January, 2008 is confident about the success of company’s transformation agenda. Starbucks will be taking bold initiatives to face the economic challenges posed by the strained economy. These initiatives include revamping of breakfast sandwiches on its “new food platforms”, and aggressive promotion of its customer loyalty cards.
HSBC has cautioned that conditions in financial markets are currently at their toughest ‘for several decades’ after suffering a 28 per cent fall in half-year profits.
Europe’s largest bank HSBC saw its profits in the first six months of the new year drop by a whopping $3.9bn to $10.2bn (£5.2bn). Its North American arm incurred a $2.8bn loss. The firm also announced $3.7bn in latest credit write-downs. HSBC has been among the leading banks worst hit by the continuing credit crunch, whose financial toll extends into billions.
The bank has already announced write-downs in the value of its existing assets largely linked to the US housing market slump - of well over $15bn. HSBC shares fell by over 1 per cent immediately after it announced its results. HSBC announced that it would hike its shareholder dividend by 6 per cent. In spite of the steep fall in profits, HSBC stated its performance had been much ‘resilient’ given the present market turbulence.
Market analysts concluded that the £5.2bn half-year profit of HSBC would be higher than that of all the other top British banks combined. This not only reflected the bank’s intrinsic strength in rapidly growing Asian markets but also its much cautious approach to lending.
With many British households now looking to cut down on spending and also the fact that they are able to access the internet at office, the internet providers believe growth over the summer is going to be slower. Already the demand for high-speed internet is falling, a fact which is worrying the industry.
Take the case of market leader BT that managed to add 103,000 new broadband users in the three months (to end June), down from nearly 150,000 in the previous quarter, and 174,000 users last year. It now boasts total 4.5 million broadband users.
The BT chief executive, Ian Livingston, stated that new technologies that it plans to roll out over the next few years would result in greatly increasing download speeds and could also push growth, but that prospect is a little way off, market men believe.
No surprise, BT shares were hit and experienced their biggest day’s fall since the time of dotcom bubble burst. Investors noticed a dramatic drop in first quarter cash flow. They were unnerved by revelations that margins at the firm’s closely watched IT business has gone backwards, and also the fact that its pension fund is suffering.
Kingfisher, the UK listed company, will be signing an agreement with Group Adeo for sale of its underperforming Italian subsidiary Castorama for €560m (£441m). Group Adeo is an independent French DIY retailer.
Kingfisher which owns do-it-yourself retailer B&Q is initiating important measures to achieve a turnaround. The sale news resulted in soaring of Kingfisher’s share price to 124.2, a gain of 5.8p. The Italian unit has 31 stores with employee strength of 2,200. It registered a profit of £29m last year.
Kingfisher plans to pay back its debt of £1.5bn, with the cash it would receive from the deal. Chief executive, Ian Cheshire, has decided to cut out the entire debt by the end of current year. He played down speculations about company’s plan to improve its balance sheet through sale of other businesses.
Cheshire had charted seven-point action plan to improve company performance. The plan included expansion of business in Eastern Europe and France, reduction of working capital and measures for turnaround in China.
According to Cheshire, sale of Castorama was the right move in its journey of turnaround and hinted at unfolding of many initiatives in the next 4 years.
Summer weather had improved Kingfisher’s like-for-like by 0.2 per cent.
Innocent; the popular fruit juice maker of the UK is facing threat of being forced out from business, even as it prepares to celebrate a decade of business next year. Innocent, the independent company, registered spectacular growth in the business with the introduction of smoothies in the UK.
According to Richard Reed, one of the three founders of Innocent, company is facing an extremely competitive global giant PepsiCo, who has specifically targeted Innocent by launching smoothies this year.
Innocent sells its famous smoothies in eleven countries in the world, and its three founders, according to Sunday Times Rich List, have a net worth of £41m each.
Some of the industry observers feel that Innocent has grown with its ethical image but the onslaught of bigger competitors is making it deviate from this path. This charge has been denied by Reed. Defending the company’s ethical image, he insists that Innocent considers it responsible for providing natural and healthy smoothies to people. It buys raw fruits from reliable farms and makes use of hundred per cent recyclable bottles. He asserts that Innocent has become more innocent with the growth of its business.
Innocent is currently doing good business in smoothies and enjoys market share of 70 per cent in the UK market of £169m. However the company is under threat from giant rivals like never before.
Online auction website eBay has cautioned that sales will be a bit lower than expected in the present quarter as it looks to cope up with a weakening global economy. The words of caution came even as eBay posted an increase in net income ($460m or £230.2m) over the past quarter to June, from $376m in the corresponding quarter a year earlier.
Investors were disappointed by the company’s ‘prudent outlook’, with full-year projections maintained unchanged. The US-based firm is fighting against ‘trust problems’ among its users. It overhauled its feedback system earlier this year, banning sellers from posting negative comments about buyers.
The firm is currently appealing against a French court ruling that it pay 40m euros to LVMH, the luxury goods giant that owns the Christian Dior and Louis Vuitton brands, for allowing web-based auctions of fake copies of its branded goods.
Attracting users to its shopping websites is proving to be difficult for eBay. It stated the number of new active users rose by 1 per cent during the quarter, even as listings increased by 19 per cent.
eBay has launched an International Ad Division. With the Ad Division advertisers and agencies can buy multinational and cross-territorial campaigns.
Two teams have been setup to support the Ad Division. The office in London will house the international sales team (headed Philip Rinn) while the back-end ad operations and analytics team will be situated in Bern, Switzerland. The new Ad Division was setup after the eBay team came across demand for international campaigns in multiple territories.
With the launch of the Ad Division, eBay aims at offering flexible solutions for international agencies and advertisers. International agencies and advertisers will fid it easy as they do not have to deal with sales teams in local markets they can interact on eBayadvertising online platform for multinational campaigns.
This would give advertisers and agencies access to eBay’s 80 million users. With the use of consumer data advertisers will issue a contextual, demographic or behavioural advertisements. The eBay team is in talks with varied global brands for the Ad Division.
The team believes that their offering through the Ad Division will add value to the advertisers across various spectrums. The best part is now advertisers can not only benefit from homepage ads but can also make use of the small categories in eBay. The sales team based in London will even sell campaigns and strategic partnerships across all eBay sites.