Retail news round-up on September 16, 2014: Vodafone slams Phones 4u management over retailer’s collapse, Asos sales growth and margins hit by warehouse fire, N Brown sales fall as it realigns business.
Vodafone slams Phones 4u management over retailer’s collapse
Vodafone has “strongly rejected” claims it acted improperly in pulling out of Phones 4u and instead blamed the decision on the retailer’s owners’ decision to load it with high-interest debt.
The retailer, owned by BC Partners, collapsed into administration on Monday, putting 5,596 jobs at risk across its 720 stores and concessions.
EE followed Vodafone and O2 by pulling its support from Phones 4u.
Vodafone said negotiations regarding renewing its contract with Phones 4u collapsed because the retailer was unable to offer competitive terms, owing to its debt repayment obligations.
A Vodafone spokesman told The Telegraph: “Phones 4u was offered repeated opportunities to propose competitive distribution terms to enable us to conclude a new agreement, but was unable to do so on terms which were commercially viable for Vodafone in the current UK market conditions.
“We were told by the Phones 4u management team that they had little commercial flexibility due to their debt repayment obligations, but that they had a number of alternative strategies in place if we couldn’t reach an agreement with them.”
Asos sales growth and margins hit by warehouse fire
Fashion etaier Asos has reported rising sales but weaker margins in the three months to August 31 after a fire at one of its warehouses impacted trade.
Retail sales were up 15% to £240m, with the UK up 33% and overseas up 6%. However, retail gross margin was down about 640 basis points.
Asos chief executive Nick Robertson said: “Our UK performance remained strong over the final quarter, with sales increasing 33%. Our International business grew 6% or 14% in constant currency. However, due to the fire at our Barnsley distribution centre, we lost sales during the quarter of between £25m and £30m with a retail gross margin impact of c.200 basis points. After adjusting for insurance proceeds, we expect profit before tax for the year to be in line with market expectations.”
N Brown sales fall as it realigns business
Multichannel retailer N Brown has reported first-half group revenues were down by 0.6% while like-for-likes slipped 0.5%.
Chief executive Angela Spindler said the retailer’s efforts to change the focus of its brands, reduce credit sales from high risk areas and the re-phasing of its mailing programme has impacted sales. “However, we have improved the quality and profitability of our sales,” she said.