Business to Business News

Hammerson’s development plan, approved in August 2006 for the New Retail Quarter in Sheffield, is jeopardised as the Council has delayed approval of a revised design which included modification in appearance of a multi-storey car park.

Though council members appreciated changes to the design, they asked for further improvements in the metal grille-like appearance.

Hammerson warned that the council’s response was jeopardising its £600m project making the company take a hard look, despite receiving widespread support for the project from experts and public.

Hammerson’s project director, Carolyn Kenney, dismissed rumours that the project was on hold and claimed the company was taking a prudent approach though no major scheme, including Sevenstone, was likely to commence before summer.

Hammerson believes that the planning board’s reaction was giving negative message to the John Lewis group whose department store was supposed to anchor the quarter.

The English Partnerships, Sheffield City Council and Creative Sheffield are in partnership in Hammerson development of new retail heart for Sheffield. Spread on 860,000sq.ft. it would house a John Lewis department store on 260,000sq.ft. in addition to residential accommodation.

As per the initial plan, construction was supposed to start in 2008 and the first retail building, with car park and John Lewis store, was to come up in 2011.

Cash strapped motorists struggling to afford fuel costs, have started flocking to pay-as-you-go clubs across the UK.

Reports from the UK’s one of big four car-sharing companies, City Car Club, indicated 46% rise in its membership in last ten months, taking current membership to 2,200.

Vast majority of more than 700 motorists who joined the club this year, were registered in last few weeks, as prevailing credit crunch and ever rising running costs made owning of a car more expensive. They are now using cars of the club, parked at specific places, by paying charges per journey.

Edinburgh’s car club is growing as the fastest clubs in the UK as large number of drivers is abandoning vehicles to cut household bills.

There is big fall in sales of new cars close to 19% in Edinburgh this year, as reported by Society of Motor Manufacturers and Traders.

Keith Stark, manager of the City Car Club, Scotland, informed that number of motorists joining the club has shot up recently due to credit crunch, making it grow as the fastest car clubs in the UK close to surpassing even London in size.

According to RAC’s data analysis, on an average a motorist is able to cut running cost of a family car by £1,300 for journey of 4,000 miles per year by switching to car-sharing.

Retailers, unaware of European Union legislation coming into force from 30 November, are faced with suspension of products if not registered before the deadline.

All European Union firms manufacturing or importing products enhanced by chemicals would be required to ‘pre-register’ those items on or before 30 November 2008. These goods cover stonewashed jeans to paints.

The British Retail Consortium (BRC) had issued guidelines on pre-registration process for small and medium sized retailers last month. Its policy adviser Edward Cooke said that BRC was very much concerned about these retailers who were unaware of ‘Reach’ (Registration, Evaluation, Authorisation and Restriction of Chemicals).

Products of retailers who fail to pre-register would be pulled out of the shelves. The chemicals would then be required to go through costly full registration process.

According to WSP Environment & Energy’s David Symonds, Reach was not just for deadly products like weedkillers, it could cover even general products like shoe polish or shampoo.

Retailers have been cautioned by the head of Chemical Industries Association, Steve Elliott, that Reach follows the mantra “no data, no market”. He also claimed of evidence that Reach’s IT system was so much flooded with pre-registration requests that it could crash any moment.

Recession is casting gloom on Ad firms with poor outlook for global spending in the remaining 2 months of the year and for 2009.

Aegis, the advertising and marketing group, warned that it was finding it difficult to forecast clients’ spending budget on ads in the remaining two months of the year despite good results for the first three quarters.

Deepening uncertainty in the financial markets and global economy becoming gloomier day by day it was difficult to predict accurately as to how much its clients would be spending on product advertisements.

Aegis stated that last three months were most significant for its business, with increase in seasonal advertisements, performance incentives and project close-outs. But it saw big reduction in visibility, making company more cautious about yearly outcome.

The gloomy assessment caused big fall in Aegis shares which fell 13% to 55p before recovering to 59p.

According to Panmure Gordon’s media analyst, Alex de Groote, shares are not likely to bounce due to strong possibility of negative growth for longer period.

Across the channel, Publicis, the French advertisement group has forecast marked slowdown for the ad industry in the coming year.

Publicis chairman Maurice Levy commented that industry would be facing difficult last quarter of 2008 and major slowdown in 2009.

Many businesses are stocking up on ink and toner cartridges as they prepare more in-house advertising in the run-up to Christmas. Utilising store posters and banners rather than media such as TV and radio to save money.

Missing airport service targets has cost £7 million to the erring airport owner BAA. Britain’s largest airport group failed in meeting service targets at Gatwick and Heathrow, including seating and security queues.

BAA has also been warned over consistent failures in achieving benchmarks for signage, cleanliness and seating at some terminals.

BAA has been ordered by the Civil Aviation Authority (CAA) to pay back landing fees of £7.34m to two of the biggest airlines at the airport along with highest ever charge of £1.65m for missing new security queuing targets at Heathrow in April. The minimum waiting time for passengers has been halved as per the new service standard.

CAA reported that overall security queuing time had improved significantly during April to September in comparison with last year. New guidelines of April 2008 stipulate that passengers at highly congested Gatwick and Heathrow departure gates should not be made to queue for more than five minutes for security checks 95% of the time, against earlier waiting period of a minimum of 10 minutes.

Barring initial substandard performance at the opening of Heathrow Terminal in March, CAA reported that BAA met 5 minutes target at Heathrow and Gatwick. It pointed out that Terminal 3 did not meet targets for departure lounge seat availability and Terminal 4 failed in achieving benchmarks for piers, while Gatwick was performing consistently below standard for directions, seating, cleanliness and piers services.

BAA spokesperson informed that the group was working on plans to improve seating, cleanliness and signage standards at some terminals of Heathrow and Gatwick.

Pubs in Britain are selling 20% fewer pints than they were selling 3 years ago as the toughest trading environment continued to make them struggle.

Sales volumes in pubs, for 3 months to September end, declined by 8.1% according to data released by the British Beer & Pub Association. This deterioration in performance is not skewed by the smoking ban in public places introduced in July 2007. This has dashed the sector’s hopes that the ban would be withdrawn or suspended for some time.

The situation is not different in supermarkets and off-licences where a 6% decline in sales is reported, the first drop since early last year, although some industry insiders were dismissing it as supermarket price wars before Christmas.

Trading at Globe Pub Company, owned by Robert Tchenguize, has worsened to such an extent that it led to triggering a “cash trap” clause in a securitised debt agreement, which bars the company from dividend distribution. Loan recall demands from Icelandic bank Kaupthing has forced Tchenguiz, one of highest-profile entrepreneurs in Britain, to sell stakes in Sainsbury’s and Mitchells & Butlers at more than £800m loss.

Punch is another pub badly affected by the slump. It has decided not to pay a final dividend this year.

A large number of lessee publicans have become critical of Punch, Globe and other landlord groups known as pubcos. A member of Fair Pint campaign group, Brian Jacob, alleged that pubcos had been acting irresponsibly the same way as some bankers have been since many years.

Oil giant BP has smashed all forecasts and registered a 148% rise in its 3rd quarter profits, reaping huge benefits from record oil prices during the summer.

The soaring profit figure is likely to invite protests from the public which had been hit hard by the huge rise in oil prices.

BP gained a 5.5% rise in share prices and decided to pay 14 cents a share dividend in December which is up 60% in terms of sterling and 30% in dollar terms.

Tony Hayward, BP’s chief executive, admitted that high oil prices in the third quarter boosted absolute results, although oil prices fell sharply since then.

Oil had touched an all time high of $147 a barrel in July, but it fell more than 50% amid fears of recession.

BP, the second largest oil producer in Europe, next only to Royal Dutch Shell, registered $10bn (£6bn) replacement cost profit up from $4bn in July to September last year. Revenues jumped to $103bn from $71bn, a rise of 45% over the quarter.

Hayward claimed that the company was geared up to weather the financial storm and make best use of business opportunities arising from downturn. He added, the company’s balance sheet was strong and it had committed less of a portfolio to high-cost options.

Analysts had apprehensions about the impact of a sharp decline in oil prices on BP, but the progress made by the company in restructuring of crude-processing division affirmed that performance would not be affected adversely.

The economic downturn could not put a dent in the sales growth of Reckitt Benckiser, the maker of Harpic bleach, Finish dishwater tablets and Strepsils lozenges. It has raised its sales forecast for the full year, since it continued to remain the shoppers’ choice as the premium-priced brands.

Chief executive, Bart Becht, reported a net revenue growth of 10% over 3 months to the end of September and raised like-for-like full year revenue target to 9% from 7%, and upgraded profit target of 11% to a minimum 11%.

Becht informed that the company was aiming for a full year growth rate of 9% on net revenue which would be second best year of growth since the merger in 1999. He considered this as pretty good achievement in prevailing market conditions.

Becht dismissed apprehensions that Reckitt’s brands were vulnerable to customer trading down. He brushed aside concern, with an emphatic “No”, that company was losing business to private labels.

He noted that Reckitt’s revenue growth was mainly due to premium-priced products, which suggested that shoppers were surely trading up. Becht supported his argument by citing success of Finish dishwasher tablets and air freshener Airwick Freshmatic.

Finance director Colin Day informed that profit growth in the fourth quarter might come down marginally since company would be investing in seasonal marketing campaign to ensure continuity of sales momentum into the New Year.

Retailer John Lewis, which is regarded as the performance barometer of the high street, presented its figures which pointed to big slump in consumer confidence and high street sales.

The John Lewis department store chain reported that trade was down by dismal 7.6% in 7 days to October 18, making it fifth consecutive week of fall in sales.

The retailer explained that different timings of school break in different parts of the UK affected sales adversely. Only one store, Aberdeen registered higher sales compared with last year while 17 other stores were down over 10%. The worst affected outlet was Peterborough which witnessed 25% slump as compared to last year.

Online business of the department store also experienced rapid slowdown in growth. JohnLewis.com which was registering annual growth of 20% until recently, could grow only by 5.7% on last year.

The general decline in growth was also reflected in a survey which revealed that internet spending were up only 15% in September, compared with 73% growth witnessed 12 months earlier.

The worst performer of the John Lewis department stores was homewares, down 13.5%. Electricals and technology stores were down by 10%.

The company claimed that if it was tough for John Lewis, it would even be tougher for others. The company was aiming to outperform wider market with high sales and was confident of continuing to do so.

Travelodge, the budget hotel chain, has good news for the job seekers. While everyday headlines have been flashing news about job cuts and closures, Travelodge announced plans to open 22 new hotels across the UK before Christmas.

The £125m investment, which will create 450 new jobs, is part of the group’s ambitious drive to increase the existing 350 hotels to 1,000 by 2020.

Implementation of the big plan is going to commence with the opening of hotels in Devizes, Hereford, Barking and Stevenage in this month. Further hotels will be coming up in mid-November and December at Torquay, Middlesbrough, Wolverhampton, Cardiff’s Atlantic Wharf, and Edinburgh.

450 new staff are to be recruited immediately for posts ranging from managers, housekeepers, receptionists and staff for bars.

According to Paul Harvey, Travelodge’s managing director for development, more customers were shifting to budget hotels since credit crunch was forcing people to change their spending habits. He added that group was pursuing new growth and looking to add 4,000 new rooms in 2009.

The group is aspiring to be the biggest chain in London by adding 7,000 rooms before the Olympics 2012.

Travelodge was acquired from Permira by Dubai International Capital in 2006. It was the first budget hotel launched in the UK in 1985. It has 339 hotels, employing 5,000 people. It had 6.5 million customers last year.