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Bad news for high St retailers continues-getting grim out there.


sancho panza

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15 minutes ago, sancho panza said:

Which sector are you in Kibuc? Are you clothing online? You know I'm asking for specifics for purely selfish reasons so please feel free to not repsond.Azzuri has written some interesting posts from the travel sector and there's nothing like coalface reports from what you consider reliable sources.

Yes, it's quick fashion (fancy term).

 

It's supposed to be easier for online-only retailers, but "easier than high street" is a very low bar and does not mean it's easy at all. There's only so much growth you can squeeze out from cannibalising high street, and it's only delaying the inevitable.

 

The only way to sustain growth after that is to expand your reach and go global, but that presents a host of new challenges.

 

The obvious one is the capital expenditure required to sell world-wide while still maintaining your core offering in terms of delivery times and returns policy. These are critical, as the only way people are gonna shop for fashion online is if they can buy & return with minimum fuss. It's not an electronic gadget you can read hundreds of reviews of beforehand. Clothes need to be tried on. That means distributing your warehouses geographically and maintaining stock levels between them. Some beauty products cannot be shipped by air, so that's another layer of complexity in your delivery chain. Aside from your physical infrastructure, your IT needs to be able to support localisation, zonal pricing, 24h customer care as opposed to just European working hours etc.

 

The less obvious issues are legal challenges. For example, one of online retailers which should not be named has recently opened a warehouse in US to provide better delivery options for US-based customers. However, by doing so it made itself subject to a multitude of laws that have to be observed and followed by all retailers having physical presence in the US - and a warehouse is deemed such presence. That retailer has been quickly server a lawsuit for lack of accessibility features on their website (to support blind/handicapped users, cause we all know how blind people love their online fashion) and is forced to burn considerable IT resources on fixing the issue.

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Wow what a shocker - a pre Christmas profit warning from Asos Plc. I’ll take a look at the detail later.

Debenhams Plc share price getting hammered (among others I expect ).

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1 hour ago, Ash4781b said:

Wow what a shocker - a pre Christmas profit warning from Asos Plc. I’ll take a look at the detail later.

Debenhams Plc share price getting hammered (among others I expect ).

To see so many retailers down today on just this one shock profit warning was incredibly revealing about the direction of consumer confidence and the bigger picture. Brexit is just a sideshow, much bigger factors at play such as credit saturation and global factors rolling over, am I right in thinking >60% of ASOS sales are overseas?

Set your reminders for Wednesday afternoon, can't think of a more anticipated Fed rate decision in a loooooong time. Will most likely make or break any prospect of a final parabolic rally.

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11 hours ago, Democorruptcy said:

If he's buying assets on the cheap that would make sense but with such as House of Fraser he's buying leases and busy negotiating to lower rents. Maybe he's going for the too big to fail approach and the governbankment handouts that could involve? "Let me go under and there is no high street and xm job losses". Size is power?

He could be someone to get onside about council fat cat pay. Near me previously free car parks are becoming chargeable. I see parking meters as fat cat pension machines. Increased parking charges because fat cats think the "cuts" don't apply to their trough, will reduce his footfall. 

A company name or brand can be an asset; think how much it costs in advertising to develop a positive image etc...if you walk around a Sports Direct you will see how many he has done this with I.e Karrimor, Slazenger, Everlast etc.

OK, he/SD may have a bad reputation in the UK but these are international brands that he trades with outside of SD...perhaps he is thinking of using the Debenhams brand as an international version akin to Harrods?

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13 minutes ago, MrXxx said:

A company name or brand can be an asset; think how much it costs in advertising to develop a positive image etc...if you walk around a Sports Direct you will see how many he has done this with I.e Karrimor, Slazenger, Everlast etc.

OK, he/SD may have a bad reputation in the UK but these are international brands that he trades with outside of SD...perhaps he is thinking of using the Debenhams brand as an international version akin to Harrods?

SD is like a cemetery of brands.  The quality of some has gone down a lot since they have taken over.  Not that I ever cared of brands but I hate picking something up and it's completely mis-sized and with poor quality control.  At this point I don't trust any brand in SD, may as well just pick the cheapest stuff there.

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16 minutes ago, Bear Hug said:

SD is like a cemetery of brands.  The quality of some has gone down a lot since they have taken over.  Not that I ever cared of brands but I hate picking something up and it's completely mis-sized and with poor quality control.  At this point I don't trust any brand in SD, may as well just pick the cheapest stuff there.

Sumitomo which owns the Dunlop tyre company bought back the Dunlop clothing business from Sports Direct a few years ago. I like to think because it was damaging the tyre brand.

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2 minutes ago, Castlevania said:

Sumitomo which owns the Dunlop tyre company bought back the Dunlop clothing business from Sports Direct a few years ago. I like to think because it was damaging the tyre brand.

Now Sports Direct's plan makes sense!

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53 minutes ago, Sugarlips said:

Is Debenhams proper finished? Surely there is some value in the brand ie takeover target (if thats still a thing?!) It gone from 200 to under 5 in the last decade

https://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GB00B126KH97GBGBXSSMM.html

I think so.I don't know the brand is worth much

The whole dept store thing is finished as well.Spend some time in John Lewis watching the tills.There's huge chiun ks of those stores losing money.

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4 hours ago, Barnsey said:

To see so many retailers down today on just this one shock profit warning was incredibly revealing about the direction of consumer confidence and the bigger picture. Brexit is just a sideshow, much bigger factors at play such as credit saturation and global factors rolling over, am I right in thinking >60% of ASOS sales are overseas?

Set your reminders for Wednesday afternoon, can't think of a more anticipated Fed rate decision in a loooooong time. Will most likely make or break any prospect of a final parabolic rally.

I saw a clip of C4 news of Ashley testifying to a parliamentary committe.He compared UK High St to a person dead in the swimming pool.Some MP said 'how can  you save it?' AShley goes,'you can't they're dead'...I did laugh.

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8 hours ago, kibuc said:

Yes, it's quick fashion (fancy term).

 

It's supposed to be easier for online-only retailers, but "easier than high street" is a very low bar and does not mean it's easy at all. There's only so much growth you can squeeze out from cannibalising high street, and it's only delaying the inevitable.

 

The only way to sustain growth after that is to expand your reach and go global, but that presents a host of new challenges.

 

The obvious one is the capital expenditure required to sell world-wide while still maintaining your core offering in terms of delivery times and returns policy. These are critical, as the only way people are gonna shop for fashion online is if they can buy & return with minimum fuss. It's not an electronic gadget you can read hundreds of reviews of beforehand. Clothes need to be tried on. That means distributing your warehouses geographically and maintaining stock levels between them. Some beauty products cannot be shipped by air, so that's another layer of complexity in your delivery chain. Aside from your physical infrastructure, your IT needs to be able to support localisation, zonal pricing, 24h customer care as opposed to just European working hours etc.

 

The less obvious issues are legal challenges. For example, one of online retailers which should not be named has recently opened a warehouse in US to provide better delivery options for US-based customers. However, by doing so it made itself subject to a multitude of laws that have to be observed and followed by all retailers having physical presence in the US - and a warehouse is deemed such presence. That retailer has been quickly server a lawsuit for lack of accessibility features on their website (to support blind/handicapped users, cause we all know how blind people love their online fashion) and is forced to burn considerable IT resources on fixing the issue.

Thanks for the detailed answer Kubic.The insights I've gained from some of the posters here is in credible.That story about teh US jsut shows how all that glitters online isn't gold.

Novice punters like myself don't really understand the complexities/importance of having a strong logistical network in terms of sizes/retunrs/delivery.I jsut sort of assumed you couldn't really lose if you're wholly online.

Are there any indicators you'd watch for to distinguish between retail going from High St to online, and/or to differentiate between retail suffering a more general declien as currently appears to be the case?

Edit to add: After reading the above ,it's intriguing andperhaps  a sign of the times that you've such a good working knowledge of the PM miners.

 

 

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9 hours ago, Sugarlips said:

Is Debenhams proper finished? Surely there is some value in the brand ie takeover target (if thats still a thing?!) It gone from 200 to under 5 in the last decade

https://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GB00B126KH97GBGBXSSMM.html

Debenenham does not have a brand.

Most of the stuff it sells are other companies brands.

It does have some - 10y ago, when little spy was very little, he used to get odds and sods from there. He had a few nice coats.

Now that hes growing like mad, we dont shop there. Or any where expensive. Just buy him big trosures and give him and belt.

Saying that, littler spy manges to wear out stuff bought from Primark - it really is that that cheap n crappy.

 

 

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52 minutes ago, spygirl said:

Debenenham does not have a brand.

Most of the stuff it sells are other companies brands.

It does have some - 10y ago, when little spy was very little, he used to get odds and sods from there. He had a few nice coats.

Now that hes growing like mad, we dont shop there. Or any where expensive. Just buy him big trosures and give him and belt.

Saying that, littler spy manges to wear out stuff bought from Primark - it really is that that cheap n crappy.

 

 

Doesn't need to sell its own products to have a brand presence /value I.e Aldi, Harrods, Amazon...it costs money to form a name (hence why they have PR depts), so why shouldn't the name be considered an asset?...well, unless its a Ratners :-) :-) :-)

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12 minutes ago, MrXxx said:

Doesn't need to sell its own products to have a brand presence /value I.e Aldi, Harrods, Amazon...it costs money to form a name (hence why they have PR depts), so why shouldn't the name be considered an asset?...well, unless its a Ratners :-) :-) :-)

Aldi - cheap. Brand is sourcing cheap and stackign high.

Harrods - posh expensive stuff.

Amazon - online delivery.

Debs - mid priced stuff that they never have in stock.

 

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39 minutes ago, spygirl said:

Aldi - cheap. Brand is sourcing cheap and stackign high.

Harrods - posh expensive stuff.

Amazon - online delivery.

Debs - mid priced stuff that they never have in stock.

 

I view shops, especially the big stores as the storefront for online shopping. Go and have a look, choose, go back home and buy online cheaper. 

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21 hours ago, sancho panza said:

I think so.I don't know the brand is worth much

The whole dept store thing is finished as well.Spend some time in John Lewis watching the tills.There's huge chiun ks of those stores losing money.

JL doubled its floor space 8n tge 10 years. Insane.

They got in external management who believed the hype.

JL are too pricey for 70% of area.

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Debenhams has no chance. I don't see any future for it.

And on another note, ludicrously bad weather again for most of today - should stop footfall in shops and restaurants as people are not going to want to go out in it.

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It's even made the front page of WOlf

https://wolfstreet.com/2018/12/18/europes-retail-sales-meltdown-before-christmas/

Retail Melts Down Before Christmas in the UK, Spreads to Continent

by Don Quijones • Dec 18, 2018 • 11 Comments

After “the worst-on-record unbelievably bad” November, even e-commerce gets hit, not just brick & mortar, on fears Christmas sales could be terrible. 

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

With just one week left before Christmas, Europe’s fashion retail sector is showing little sign of yuletide cheer. On Monday, the shares of UK-based online fashion and cosmetics retailer Asos Plc plunged 37% to £26.14 after the company warned that Christmas shopping on its web platform had got off to a disastrous start. The stock rout, the company’s worst in almost five years, wiped more than £1.4 billion of its value and raises fears that Europe’s high street malaise may be spreading from bricks-and-mortar stores to e-commerce. Since its peak in January 2018, shares the stock has plummeted 65%.

Asos slashed its full-year sales-growth guidance for the year to August 2019 from 20-25% to 15% on the back of a “significant deterioration” in sales in November, which was followed by just a slight uptick in December. The company laid much of the blame for its weak performance on big price cuts across the market, which had forced it to sweeten its promotions to attract customers.

“In fashion we are seeing an unprecedented level of discounting, certainly something I have not seen before, and that’s across the board,” said Asos chief executive, Nick Beighton, adding that the disposable incomes of Asos’s twenty-something customers were still well below the levels they were at a decade ago. “It’s more than just the Brexit-related factors,” he said.

Another possible reason for Asos’ shrinking sales is the over-indebtedness of consumers in its domestic UK market. British household finances, among the most solvent a generation ago, are now among the most indebted of the Western world. According to official data, unsecured consumer debt (not including housing related debt) last year reached a record high of more than £205 billion (€227 billion). PwC says that by its measure, it’s almost £100 billion higher.

This summer the Office for National Statistics (ONS) warned that the accumulated deficit of UK households was equivalent to 1.2% of GDP. That compares with a surplus in France equivalent to 2.7% of GDP and a surplus equivalent to 5.1% in Germany. But that’s scant comfort for Asos, whose sales in France and Germany, which account for over half of its EU sales, are also languishing. On Black Friday, the company knocked 20% off everything, as it did in previous years, but to little avail. Its rivals went lower.

News of Asos’ sales warning sparked a frantic sell-off on Monday of other online retailers such as Boohoo Group Plc, whose shares plunged 13.7%, and Zalando SE (11.6%), as well as store operators like Marks & Spencer Group Plc (4.5%), Next Plc (4.6%) and Hennes & Mauritz AB, the owner of H&M stores (8.5%), compounding concerns that Christmas sales could be exceptionally bad this year. On Tuesday the shares staged a recovery but not to pre-Monday levels. Asos’ stock clawed back less than 5% of the value lost.

Mike Ashley, the founder of discount retailer Sports Direct, last week described November as “the worst on record, unbelievably bad”. Sports Direct recently reported a 27% fall in half-year profits after taking over the insolvent department store chain House of Fraser for £90 million in August. Since then the department store has clocked up additional losses of £31.5 million and Sports Direct’s shares have slumped over 45% since hitting a 52-week high of £4.36 in July.

Holders of retail debt are also feeling the pain. UK department store chain Debenhams’ £200 million of bonds due July 2021 have plummeted 36 pence on the pound since the start of 2018 — on surging fears of a default.

Even Europe’s two biggest high street behemoths, Spain’s Inditex and Sweden’s Hennes & Mauritz, are finding life a little harder this Christmas. Last week, Inditex, whose subsidiaries include Sara, Massimo Dutti, Bershka and Pull&Bear, missed sales and profit forecasts, which it blamed on an unusually warm September and adverse currency moves.

The fast-fashion group, founded 33 years ago by Europe’s richest man, Amancio Ortega, operates some 7,500 stores in 93 countries. It generates over half its sales in currencies other than the euro. But thanks to its centralized sourcing and distribution model, a sizable chunk of its costs are in euros, meaning that when important emerging market currencies fall, as has happened this year, the company’s margins can suffer. At constant exchange rates, the group claims it would have reported nine-month earnings growth of 14%. Instead it had to make do with a meager 3% rise, to €3.07 billion.

It was less than expected. Indeed, the company is on track for its weakest full-year earnings growth in at least four years, according to Bloomberg. Since reporting its latest sales figures, Inditex’s market cap — the largest in Spain and one of the largest in Europe — has shrunk by 15%, to €73 billion. Barring a dramatic turnaround in the next two weeks, the world’s largest fashion retailer will notch up its second consecutive year of declining share prices, which are now down 36% since hitting a historic peak of €36 in June 2017.

Inditex’s biggest rival, H&M, is in similar straits, having seen its shares tumble by over 16% since the beginning of December. Unlike Inditex, it has been slashing its store prices. Yet despite reporting local-currency sales growth of 6% during the September-to-November period, the company is still heading for a third straight year of declining profits as a result of slowing footfall at its core brand stores, which are struggling against online competition.

But if Asos’ recent tribulations are any indication, even the online competition may now be struggling. “This goes against the script,” said Stephen Lienert, a credit analyst at Jefferies. “It was supposed to be bricks and mortar that’s dying and online is the future, but that headline gets ripped up today,” he said.

While other online retailers such as Boohoo and Zalando predictably deny having similar troubles to Asos, if sales in December don’t dramatically improve on Europe’s high streets and e-commerce platforms, the New Year could bring with it a flurry of profit warnings, or even worse. By Don Quijones.'

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https://www.dailymail.co.uk/news/article-6512495/High-Streets-UK-appear-DESERTED-just-six-days-Christmas.html

 

Do they know it's Christmas? High Streets across UK appear DESERTED with just five days until the big day (as retailers bemoan surge in online shoppers)

Lots of blaming online shopping, but only last week they revealed online sales were also down.

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Nick Karavanas, 33, who owns Popclub Vintage in The Corridor, Bath, said that this Christmas has 'definitely been worse than last Christmas', adding 'we're down about 40 per cent compared to last year'
To be fair I think the hipster vintage cloth fad died regardless.

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