What's going to collapse next...

[sancho panza]

https://wolfstreet.com/2020/03/15/mall-giant-intu-warns-of-bankruptcy-first-the-meltdown-of-brick-mortar-retail-now-covid-19/

Mall Giant Intu Warns of Bankruptcy: First, the Meltdown of Brick & Mortar Retail, Now COVID-19

by Nick Corbishley • Mar 15, 2020 • 31 Comments

Local governments end up buying dying malls to keep them from becoming dead zones.

By Nick Corbishley, for WOLF STREET:

Intu Properties which owns dozens of malls in the UK, including nine of the 20 biggest, as well as a handful in Spain, warned this week that it is on the brink of bankruptcy after declaring losses of £2 billion for 2019 and a debt of £4.5 billion. Its portfolio of properties is still valued on its books at £6.6 billion, down 33% from December 2017. Its shares are now worth just four pennies a piece. Two and a half years ago, before many of its high-profile tenants began dropping like flies, the company was worth more than £2 billion; today it’s worth just £55 million.

Like-for-like net rental income was also down by 9% in 2019, to £401 million, due in large part to some of its once-thriving tenants entering administration or company voluntary arrangements (a form of bankruptcy), as well as an increased vacancy rate.

Now, to stave off its own bankruptcy, Intu desperately needs to raise new funds. Intu’s original plan to raise fresh equity capital, unveiled less than two months ago, already failed. It wanted to raise at least £1.3 billion to fortify its shaky finances, keep its creditors at bay, and avoid defaulting on its huge debt pile. But trying to convince already skeptical investors to inject fresh funds, after its shares have already collapsed to almost zero, at a time when the UK’s retail sector is in the deepest of doldrums, was always going to be a tough sale.

The first major investor to pull out of the equity raise was Hong Kong-based Link Real Estate Investment Trust. Others quickly followed and by last week Intu conceded that its plan had been a complete flop, which it nonetheless blamed on “extreme market conditions,” meaning the coronavirus, which is expected to further decimate store traffic in the coming weeks.

Unless another solution is found, Intu will soon breach multiple debt covenants. This could cause lenders, including HSBC and Royal Bank of Scotland, to take control of its assets — assets they would rather not have and will probably quickly sell.

The company has £190 million of debt maturing and £93 million of swaps payable within the next 12 months, compared to £168 million of cash and £129 million of other available funding facilities. Things get particularly hairy thereafter, with £920 million of debt coming due in 2021, followed by £780 million in 2022, £1.03 billion in 2023 and £670 million in 2024.

Intu’s CEO Matthew Roberts insists that while “a material uncertainty exists that may cast significant doubt on the group and company’s ability to continue as a going concern,” the company still has “options.” Those apparently include “negotiat[ing] covenant waivers” and “alternative capital structures and further disposals to provide liquidity.”

It has already sold a number of properties, including two of its three Spanish properties, in a bid to raise cash and bring down its debt, but now pressure is rising on it to offload some of its most valuable UK properties. But once Intu sells those, it will have precious little left of real value with which to generate income.

Matters are hardly helped by the anemic demand for brick-and-mortar malls in the UK: 2019 saw the lowest level of shopping center transactions since 1993. Many of those belonged to Intu’s rival, Hammerson plc, which offloaded all of its out-of-town retail parks for the knockdown price of £455 million.

In the absence of private-sector buyers, some of those retail parks were bought, at discount, by local and city councils, which last year spent £232 million purchasing shopping centers, accounting for 36% of all shopping center deals according to data from Knight Frank.

Yet even as local governments step in to bail out commercial real estate owners or their creditors and keep local shopping centers alive a little longer or try to transform them into something more socially useful or appealing, the decline-and-fall of bricks-and-mortar retail in the UK continues a pace. Footfall fell in every single month of last year, according to Springboard figures. More and more of the retail spending that does occur is migrating online, where sales now account for 19% of retail sales.

Last year alone, 14,500 stores ending up closing. And that is having a direct impact on both city centers and retail malls, as well as the investors that own them. Open-ended property funds sustained the largest withdrawals on record in 2019, with total outflows of £2.2 billion. In December, the giant UK fund manager M&G suffered a run on its £2.5 billion M&G Property Portfolio and forced it to suspend redemptions. Four months later, the “temporary” ban remains in place.

For Intu, the fallout of the UK’s bricks-and-mortar retail crisis has so far translated into lower occupancy, lower rents, lower revenues, lower valuations, ever-bigger losses and an unpayable debt stack. And that was before the arrival of Covid-19, which threatens to decimate retailers’ supply chains as well as deter or prevent people from going to the mall. By Nick Corbishley, for WOLF STREET.

Oops, the rot runs even deeper than Muddy Waters could have imagined. Read…  First Enron of 2020: Muddy Waters’ Short-Target NMC Health Just “Discovered” $2.7 Billion Undisclosed Debt

[Castlevania]

Who said Finablr the owner of Travelex? I think we may have a winner.

Shares have been suspended after they found some dodgy cheques providing guarantees to some third parties. They’re running out of cash too.

https://www.telegraph.co.uk/business/2020/03/16/travelex-owner-finablr-danger-collapse-finding-100m-mystery/

[Democorruptcy]

Carphone Warehouse

[BoSon]

3 hours ago, Democorruptcy said:

Carphone Warehouse

Seems this is going to be the final nail in the traditional shop outlet and all the online players will capitalise. Amazon announcing thousands of new jobs and higher wages for their workers to cope with surge in online delivery demand, which will only grow as more local shops struggle with little or no custom and the internet shopping giants gain more market share.

[Talking Monkey]

34 minutes ago, BoSon said:

Seems this is going to be the final nail in the traditional shop outlet and all the online players will capitalise. Amazon announcing thousands of new jobs and higher wages for their workers to cope with surge in online delivery demand, which will only grow as more local shops struggle with little or no custom and the internet shopping giants gain more market share.

I reckon a lot of poncy furniture shops will suffer and might go like Barker and Stonehouse. Consumers less keen to hose big money on furniture

[eek]

22 minutes ago, Talking Monkey said:

I reckon a lot of poncy furniture shops will suffer and might go like Barker and Stonehouse. Consumers less keen to hose big money on furniture

Laura Ashley went earlier today - although that should surprise no-one anywhere.

There is a sideboard I want to go with the table we bought at Christmas (before I saw it all with sideboard on ebay for less than what I paid for the table and chairs). If Barker does close I will at least be able to buy it.

 

[TheCountOfNowhere]

https://www.standard.co.uk/business/laura-ashley-files-administration-coronavirus-a4389316.html

 

These companies were screwed anyway.

 

The can finally hit the wall.

[Castlevania]

Who mentioned Cineworld the other week? Cinemas closing in the U.K. If there’s also a nationwide closure in the US then I think Cineworld is most probably finished.

[Wight Flight]

And Woke went broke

https://beta.companieshouse.gov.uk/company/10091893/filing-history

[spygirl]

On 02/02/2020 at 19:20, spygirl said:

Sharon White’s immediate challenges as John Lewis chairman

Key calls on management structure and policy await ex-Ofcom chief as she seeks to turn retailer round

https://www.ft.com/content/33adc46a-4361-11ea-a43a-c4b328d9061c

Corporate leaders from Tesco chairman John Allan to former Kingfisher chief executive Ian Cheshire stressed the former Ofcom chief’s strong interpersonal skills, firm grasp of strategy and ability to learn quickly. 

The last attribute is likely to be the most important as the partnership faces one of the most challenging periods in its 90-year history. Profits at the eponymous department stores are under pressure because of weak consumer confidence and widespread discounting by distressed peers. 

Ohhh. Ethnic basket weaving in yurts!

Top rated Comments

I can think of few markets scarier right now than British retail.. competition is immense. Hiring a career civil servant feels like bringing a toy phone to a knife fight.. 

This is madness, the ship is sinking and you bring in someone with ‘great interpersonal’ skill? Surely you need someone with actual seafaring experience. Merely delaying the inevitable , trim the fat, slim down. Too many complacent partners around. 

 

I write as someone who's spent much of the last 30 years working in retail /consumer.

The group restructuring is a nonsensical cost-wasting disaster, which will utterly distract management and will remove years of experience before being reversed in 3-5 years. Can someone explain to me how an ambient supply chain will be effectively merged with a mixed chilled/frozen/ambient one with completely different replenishment cycles? How are store ops going to be merged? Or the buying (of completely different products) departments?

Whilst I rarely shop in Waitrose, I used to be a regular at JL, but it has sadly lost its way over the last 5 years at least. Its "& Partners" rebranding was pointless, the virtual removal of staff uniforms stupid (it's really not obvious who the staff are now), its product ranging no longer matching its middle England customers (eg. far too many slim fit styles in menswear vs its regular-shaped middle-aged male customers), the recent Sale discounts uncompelling. Its website isn't as bad as many make out, but availability seems an issue.

Charlie Mayfield's stewardship has been a disaster and he has handed retail newbie Sharon White the ultimate poisoned chalice. It's a massive shame.

 

>> Its "& Partners" rebranding was pointless
completely agree - JL appears headed up by thicky twins.

 

>> Its "& Partners" rebranding was pointless
completely agree - JL appears headed up by thicky twins.

 

She ha a pretty full inbox when she started, having to learn 'this business thing' on the go. Should not be a problem for her, she is a civil servant .....

Now 75% of JL's customer base ought  t be locked up for 8 weeks.

 

[Hardhat]

Airbnb owners / runners?

People who are subletting on airbnb (hopefully)

[BoSon]

Nothing will collapse. Like France have already said "no business will fail due to the virus" the UK will prop up all the companies with magic money. They can print trillions to give the illusion all is ok, then when it's all 'back to normal' they simply agree with the other world banks that have done the same to cancel all debt and start again with a new digital currency.

Debt jubilee all round.

It's the only end game they can play.

 

Edit: No idea why I'm bouncing at the idea, I have no debt for them to forgive. Better panic buy some stuff on credit...

Edited March 17, 2020 by BoSon

[TheCountOfNowhere]

Countrywide estate agents looks to be a gonner.  After their share consolidation the share price is 1 penny in old money !!!

Now down 99.997% from peak !!!!

 

Edited March 17, 2020 by TheCountOfNowhere

[gibbon]

3 hours ago, Talking Monkey said:

I reckon a lot of poncy furniture shops will suffer and might go like Barker and Stonehouse. Consumers less keen to hose big money on furniture

Yup, boomers have already done most of their life time consumption and none of the younger generations can afford a house let alone a £5k oak set of drawers etc to stuff into it.

[spygirl]

2 hours ago, TheCountOfNowhere said:

Countrywide estate agents looks to be a gonner.  After their share consolidation the share price is 1 penny in old money !!!

Now down 99.997% from peak !!!!

 

Room for improvement.refurbishment ....

Whilst theres 0.003% theres still hope ...

[spygirl]

3 hours ago, BoSon said:

Nothing will collapse. Like France have already said "no business will fail due to the virus" the UK will prop up all the companies with magic money. They can print trillions to give the illusion all is ok, then when it's all 'back to normal' they simply agree with the other world banks that have done the same to cancel all debt and start again with a new digital currency.

Debt jubilee all round.

It's the only end game they can play.

 

Edit: No idea why I'm bouncing at the idea, I have no debt for them to forgive. Better panic buy some stuff on credit...

Unlikely,.

The debt thats there is in concentrated in companies and idiots like IO BTL and holiday lets.

Only ~30% of UK houses have an finance on them. MMR has been a asuccess in cranking dwn the leverage lunacy.

What peole will get is somethign like ctax releif or maybe a refund of income tax.

At the moment, itjust looks like itll be a slow 2 months for Joe UK.

 

However ......

holiday lets are fucked.

The rpoperry tribes idiots have poured into holiday lets. A lot of he time this will be outside of the mortgage firms TnCs - AFAIK only Leeds BS offer holiday let mortgages.

And that extra spread the Leeds BS has been earning from holiday lets looks like itll blow up in their face.

Lets are being cacnelled at a rapid rate.

l

 

 

[BoSon]

12 minutes ago, spygirl said:

Lets are being cacnelled at a rapid rate.

They can easily reposition them as self-isolation holidays for people that don't want to risk spreading the virus to family members under the same roof, so go off on holiday for a couple of weeks at an all inclusive location where the landlord provides full suite of TV and movie streaming services, unlimited internet, re-stocked food and drink, daily newspaper or books from local library delivery, and other optional extras catering for whatever they want.

Might bag some rock bottom lets and sub let them out doing the above for a premium.

[spygirl]

On 17/03/2019 at 19:44, spygirl said:

Shop fitting used to be lucrative. I know loads of people, mainly chippies, who went into it, even for a short period, to crank up their earnings - weekend and night work. paying double.

It was also busy - shops were always reformatting, rebranding, refitting.

Now, the closest work is putting up big warehouses up and own the M1/A1.

 

https://www.ft.com/content/a0ac5312-6c4a-11ea-89df-41bea055720b

Private equity firm Blackstone has agreed a £120m deal to buy 22 logistics sites across the UK as online shopping soars in response to the coronavirus pandemic.

Blackstone’s purchase of the portfolio from Clearbell Capital, a private real estate fund manager, follows last week’s £4.2bn swoop by rival firm KKR for UK recycling company Viridor.

[AlfredTheLittle]

There's been a big trend the last few years around London certainly, and probably in other places, of renting out a home long term, then splitting it into lots of rooms and subletting them. That business model looks a bit screwed now, though I guess it might be ok if the lockdown doesn't last too long.

[Bedrag Justesen]

On ‎17‎/‎03‎/‎2020 at 12:50, spygirl said:

Now 75% of JL's customer base ought  t be locked up for 8 weeks.

 

Should change the date to 2020 I suppose.

[SillyBilly]

Carpetright could be an interesting one to watch again. Had a bailout back end of last year by their major shareholder and they have another £26M loan maturing by July. I suspect their revenue and profit forecasting to meet repayments may be looking a little more shaky now!

[AlfredTheLittle]

On 17/03/2020 at 16:24, spygirl said:

Unlikely,.

The debt thats there is in concentrated in companies and idiots like IO BTL and holiday lets.

Only ~30% of UK houses have an finance on them. MMR has been a asuccess in cranking dwn the leverage lunacy.

What peole will get is somethign like ctax releif or maybe a refund of income tax.

At the moment, itjust looks like itll be a slow 2 months for Joe UK.

 

However ......

holiday lets are fucked.

The rpoperry tribes idiots have poured into holiday lets. A lot of he time this will be outside of the mortgage firms TnCs - AFAIK only Leeds BS offer holiday let mortgages.

And that extra spread the Leeds BS has been earning from holiday lets looks like itll blow up in their face.

Lets are being cacnelled at a rapid rate.

l

When this is over there'll be less foreign holidays. Might well be good news for holiday lets with more Brits renting somewhere for a week or 2.....

[gibbon]

14 hours ago, SillyBilly said:

Carpetright could be an interesting one to watch again. Had a bailout back end of last year by their major shareholder and they have another £26M loan maturing by July. I suspect their revenue and profit forecasting to meet repayments may be looking a little more shaky now!

Landlords don't like carpets.

[sancho panza]

how many of these will restart operations?

https://www.retailgazette.co.uk/blog/2020/03/schuh-shutters-online-operations-amid-covid-19-outbreak/

Schuh has confirmed that its online operations will be shuttered temporarily alongside its physical stores “to ensure the safety of teams and customers” amid the coronavirus crisis.

The footwear retailer will close its website on Thursday until further notice so that its staff in head office and fulfilment centres are protected from the pandemic.

 

worth a look at the max Intu chart.and then Primark kick you when you're down.

https://www.retailgazette.co.uk/blog/2020/03/coronavirus-primark-withholds-quarterly-rent-to-force-negotiations-with-landlords/

Primark has withheld its quarterly rent in a bid to force landlords to consider revising terms urgently as the coronavirus pandemic decimates the fashion retailer’s trading.

The move pertains to 110 of the value retailer’s leasehold properties in the UK, and the quarterly rent was due yesterday.

Primark has written to landlords asking them for their support on lease agreements to mitigate the unprecedented financial impact of the pandemic on the business.

 

[TheCountOfNowhere]

Remarkable few companies declaring themselves bankrupt so far....bound to be an avalanche at some point