John Lewis Oxford Street, London

Given how long it’s been since the weekly trading figures for John Lewis department stores last recorded a year-on-year fall in sales, it’s little wonder that the 2.2% sales drop announced today seems to be causing a few jitters. 

On the back of this month’s VAT increase and an apparent “astonishing” plunge in consumer confidence, it’s inevitable that any sign of a wobble in trading at the UK’s retail bellweather will catch the eye of commentators. We’ll have to wait for future weeks’ figures to see whether this fall is merely, as John Lewis suggests, a weather-skewed blip, or if it does mark the beginning of something more unpleasant. 

John Lewis Leicester

For the half year as a whole, however – which ends with next week’s figures – it’s hard to argue that a 10% year-on-year rise in sales is anything but impressive, even if the stellar rise in online sales (38.9% up year on year) does to some extent mask a comparatively less strong performance from John Lewis’s shops. Of those, the half-year performances at Cambridge (+9.4%), Leicester (+8.8%) and Oxford Street (+8.1%) are the most improved.

Thinking about the John Lewis sales figures brought to mind my third ever blog post – a whole 170 posts ago – written back at the height of the recession in July 2009 when weakened retailers, post-Woolies, were still dropping like flies. It’s worth placing today’s 2.2% John Lewis sales drop in the context of the trading picture that I described back then. By way of reminder, here’s some of what I wrote 18 months ago:

Giving a picture of slightly longer-term trends, the comparisons given for the current half-year, rather than just the last week, tend to be more insightful.

These remind us just how challenging John Lewis’s trading was between February and April – even after what is now 13 successive weeks of positive figures compared to 2008, Cambridge is still the only physical store to have enjoyed better sales (up 1.5%) over the current 24-week period than it did during the same stretch a year ago.

In contrast, it’s interesting that John Lewis’s worst performing store over the last 24 weeks has been John Lewis Bristol at the out-of-town Mall at Cribbs Causeway, where sales are down a whole 12.5% compared to last year.

Comparing figures for that half-year with the most recent one show just how much things have improved. Cambridge’s recent +9.4% performance is clearly much better than the +1.5% that I wrote about in July 2009, while Bristol – down 12.5% year on year back then – is currently registering a sales fall of only 0.6% for the current half year. Of course, the flipside is that these comparisons remind us how bad things could yet get, if all the worst fears of a double-dip recession are realised.

John Lewis Bristol. Photograph by Mark Leaver

While Bristol was the weakest performing John Lewis store in early 2009, it’s interesting that current half year figures award that slightly dubious status to Newcastle. Sales at the former Bainbridge are down 3.5% compared to a year ago, with Liverpool (-1.3%) the only other store to record a sales decrease of more than 1%.

However, just as I observed back then that the Bristol store’s figures were undoubtedly impacted by the recent opening of Cabot Circus, one must imagine that the opening of Newcastle’s Debenhams-anchored St Andrew’s Way, in February last year, has had a similar effect on the John Lewis up here. In the same way as Bristol’s figures have now smoothed out, it will be interesting to see what the JL weekly stats for Newcastle look like once the opening of the Eldon Square extension is no longer skewing the year-on-year comparisons.

Even with the overall boost in sales and footfall that the Eldon Square extension has surely given Newcastle city centre, it was always likely that there would be some cannibalisation of existing stores. However, the apparent impact of Debenhams’ opening raises interesting questions about how far Newcastle could support any more upmarket department stores, with House of Fraser, Selfridges and Harvey Nichols all having been linked to the city at various points in the last twenty years.

Maybe we should just be content with our John Lewis, Fenwick and Debenhams – after all, since the closure of Joplings last year, it is still two more department stores than Sunderland has…

Out with the old, in with the new at Robbs (12 Jun 2010)

With just over a week now passed since Beales’ takeover of Robbs of Hexham was confirmed, details of what the welcome change of ownership might mean for the historic 192-year-old store are starting to become clearer.   

First up, it’s worth remarking that Beales buying Robbs is truly the the best possible outcome that could have been hoped for. After years of unsettledness, Robbs is now in the hands of a long-established company with a good track record in running market town department stores, and whose own fortunes are on the up – under the leadership of new Chief Executive Tony Brown – after a wobble a few years ago. Crucially, Robbs’ future now seems more secure than at any time since Merchant Retail’s ownership between 1987 and 2005.

Remarkably, Robbs is also – as yet – the only store from David Thompson’s 19-strong Vergo chain to have been saved following the company’s collapse into administration. There is no news on the future of Joplings in Sunderland or any of the other shops in the south west and east of England, despite Chris Dawson – owner of The Range – confirming that he has “bid on some of Vergo Retail’s stock and stores”.   

This week’s Hexham Courant talks excitedly of a “New era of investment for Robbs”, and the Beales era certainly gives lots of cause for optimism – not just for Robbs, but in reinforcing Hexham’s overall position as a successful retail centre. So, what do we know so far? 

1) The Robbs name is staying: Keeping the Robbs name is not a big surprise – when Beales has acquired stores before, it has tended to retain the local brands where one exists. Robbs will, however, be marketed as ‘part of the Beales family of stores’, as seen already in Beales’ half-page ad in this week’s Hexham Courant. 

Robbs ad in Hexham Courant, 12 June 2010

Despite the retention of the Robbs name, I hope that one of the first things Beales does is to replace the store’s tired and faded exterior signage – after many years of use, it is surely a much paler shade of blue than was ever intended. Adopting a tasteful white on black fascia – similar to that used at Beales’ recently opened Fareham store – will not only improve the store’s appearance significantly, but it will also be a powerful and very visible statement of Beales’ intent to invest and improve.

Robbs' Fore Street frontage

2) The post office and food hall are staying put too: While one or two Beales stores sell gift food, none to date have had a food hall; however, Robbs’ food hall has been cited in the past as the most profitable part of the business, so keeping and improving it does make good sense. The Courant quotes Beales boss Tony Brown as saying “I spent 19 years with Asda – I can do food!” 

Robbs sign facing Hallgate (30 May 2010)

3) Beales has signed a 15-year lease with the building’s owners, Buccleuch Group: This is significant – it is a much longer lease than Vergo Retail ever signed, and indicates that Beales wil be investing for the longer term, seeing Robbs through to its 200th birthday and beyond. Certainly, Buccleuch’s previous plans to redevelop the site – which made more sense before the economic downturn, and when Robbs’ ability to recover from its previous administration was still unclear – look now to have been definitively shelved. 

Robbs' Priestpopple frontage (12 Jun 2010)

4) The store will see a two-year programme of refurbishment, starting immediately: The store will relaunch officially on 1 September, by which time there will have been a first phase of refurbishment – including a new cosmetics hall – and the introduction of new, more upmarket brands and concessions. The Courant has Tony Brown praising John Lewis and Fenwick, and stating that Beales will “try to get that type of quality and brand-mix” for Robbs. 

Talk of bringing in younger brands to run alongside the ‘classic’ fashions that have dominated Robbs in recent years makes good sense, and reflects the shift that Beales has recently been implementing across its store estate. It’s important, of course, to still cater for the grey pound, but it’s right that Robbs also develops its appeal among younger shoppers – after all, getting younger people into the habit of shopping at Robbs will be key to building the store’s long-term success. 

5) Robbs will open on Sundays for the first time? Merely speculation on my part, but given that all Beales’ existing shops are open on Sundays, it’s reasonable to expect that the Hexham store will follow suit in due course. 

Beales logo

Paying a visit to Robbs yesterday was quite an interesting experience – the ‘Store Closing’ signs have obviously gone, replaced by ones that proclaim ‘Under New Management’. The shop is also in the midst of a ‘Clearance Event’ – in other words, Beales getting rid of all the random stock that it has inherited for its £250,000. 

Meanwhile, there were plenty of signs, just eight days into its ownership, of Beales bringing in its own stock, with large areas of the shopfloor piled high with boxes marked as ‘internal transfers’ from other stores in the group – Lego from Bolton, china from Horsham and kitchenware from Yeovil. Given the challenge ahead – with Beales needing to carry out clearing, restocking and refurbishment, all at the same time – it will be fascinating to see the store as it evolves and improves over the coming months.

Robbs - under new management (12 Jun 2010)

Incidentally, regarding that £250,000 figure, one or two people have asked me whether that seems a really cheap price for Beales to have paid for Robbs. In my view, it does seem quite a low figure for “all assets, brand, intellectual property and employees” – i.e. the Robbs business – given that it includes the Robbs name, all the fixtures and fittings, and whatever stock was left in the store at the time of purchase. Obviously, the building itself – owned by Buccleuch Group – isn’t part of the deal.

Of course, the flipside is that Robbs will require a lot of investment to bring the store environment up to scratch, is currently a loss-making business, and employs 76 members of staff – all risks and responsibilities that Beales is taking on. However, if Beales can turn Robbs around, I would expect it to recoup its investment fairly quickly.

After all, go back to the last financial year before David Thompson first bought Robbs and Joplings (under his Owen Owen vehicle, in 2004), and you see that the two stores made a combined profit of £2m. Even three years later, when the three-store-strong Owen Owen business collapsed in 2007, Robbs was supposedly still profitable. With the experience and purchasing power that comes from a portfolio of 13 stores, and as a member of the Associated Independent Stores buying group, I would fully expect Beales to turn Robbs back to profit within a couple of years.

After all, there’s tremendous goodwill that still exists among local people, hence the fate of Robbs being front page news on the Courant for the last six weeks on the trot. I suspect that almost all shoppers in Hexham want Robbs to be a success, but in recent months the previous management risked alienating even the most ardent supporters. Indeed, commenting on Vergo’s tenure, even Beales’ Tony Brown has described “the way this store has been managed over the last three years [as] almost sinful, with a lack of investment and under-stocking two of the main reasons for its lack of success”.

As I noted before, however, Beales was barely in a position itself to have bought Robbs in 2007, given its own travails at the time. The irony is that while Vergo gave Robbs three of the least satisfying and successful years of its long history, that stay of execution back in 2007 ensured that the business was still around to be saved, by a much stronger and growing Beales, in 2010.

Looking forward then, the prospects for Robbs in the coming years are surely much rosier than those of the recent past. Beales’ plans promise to keep and celebrate all that’s well-loved about the business already, while also bringing in some much-needed fresh ideas. There is also, finally, the investment to back those ideas up, and to give Hexham back the vibrant, quality department store that it’s been missing for so long.

Robbs of Hexham

If you read the Hexham Courant, you’ll have seen the extensive coverage in Friday’s paper of Robbs’ impending closure, following the announcement, by the administrators MCR, that the department store will close within four weeks. The Courant devoting three pages to the story is hardly surprising given Robbs’ status as the largest and most prominent store in Hexham town centre – its closure is big news, and is bound to deal a short-term blow to the town’s appeal as a retail destination.

As I appended to my blog post last week, Robbs is one of nine loss-making Vergo Retail stores already earmarked for closure, while a buyer is sought for the ten remaining shops. However, just as Robbs was saved with days to spare three years ago, so there remains hope that someone could again step in and rescue the store from the brink.

With that prospect of rescue – however faint – in mind, I was pleased to have a chat last week with the Courant’s Helen Compson, talking about what the future of Robb’s might look like. You can see Helen’s article, featuring my comments, here. So who, if anyone, might be in the frame to take over Robbs this time?

To be honest, there are few plausible candidates. As I suggested to Helen, independent department stores – the most likely suitors – have been on the wane for years, with many longstanding names closing down (Cardiff’s David Morgan, for instance) or being swallowed up by larger rivals (such as Beatties and Jenners by House of Fraser, Roomes by Morleys, and Williams & Griffin and Bentalls by Fenwick).

Of those indies that remain, many are individual department stores that are very much associated with a particular place (Atkinsons in Sheffield or Rutherfords in Morpeth, for example), or are small chains focused upon particular parts of the country – such as the six-strong Morleys group in London, which has reportedly already ruled itself out of acquiring any Vergo shops due to the poor geographical fit with its current portfolio.

There are, however, a handful of operators who could conceivably come to Robbs’ rescue.

Allders

Allders in Croydon. Photograph by Neil Clifton

Croydon-based department store Allders appears to be thriving following its 2005 purchase by Jaeger owner Harold Tillman – recent successes, for example, include attracting online lingerie retailer Figleaves to open its first physical outlet. Go back just a few years, however, and Allders was itself the victim of Vergo-style over-expansion, with the then 45-strong UK-wide chain collapsing into administration in 2005.

Today, the massive 319,000 sq ft Croydon store is the only one left trading under the Allders name, after Tillman bought up both the Allders brand and the lease on the Croydon premises. Of the remaining Allders sites, many were bought up by Bhs, Primark and Debenhams.

Since Allders’ resurrection, rumours of a renewed expansion for the business have persisted, with Tillman mentioned as a possible suitor for both Robbs and Joplings (in Sunderland) last time those stores went into administration in 2007. No indication of Allders’ interest has yet emerged this time, however; indeed, Joplings and Derrys (in Plymouth) would be more likely targets than Robbs if Allders were to once again seek the flagship, city centre sites that characterised its previous incarnation.

Beales

Beales' flagship store in Bournemouth. Photograph by David Lally

If anyone’s going to snap up Robbs, Bournemouth-based Beales is surely the hot favourite, with several factors in its favour:

• Location: with its portfolio stretching from Poole in Dorset to Kendal in Cumbria, there is a geographical logic to Beales taking over a store in neighbouring Northumberland.
• Demographic: Beales’ locations, ranges and concessions see it targeting a similar market to Robbs – with the ‘grey pound’ prominent – though its recent move into ecommerce and investment in men’s young fashion has demonstrated the chain’s determination to modernise its image and widen its appeal.
• Store type: Beales tends not to compete with the big department store chains in large city centre locations, but is more usually found as the anchor store in slightly smaller towns and cities – very similar to Robbs’ status within Hexham.

Perhaps most importantly, Beales unusually finds itself in a healthier position now than it was in 2007. After snapping up several unwanted Bentalls stores from Fenwick in 2002 and a former Allders site in Horsham in 2006, Beales was seen as “underperforming” at the point when Robbs was last on the market, with one analyst rather bluntly claiming that “[It is] going nowhere without a bid and [there is] no sign of one at present”. In May 2007, just as Robbs was being ‘saved’, Beales was announcing its second profit warning in three months (suggesting that no interim dividend would be paid), and was gearing up to close its department store in Ealing.

Fast forward three years and, reinvigorated under the leadership of ex-Bhs man Tony Brown, things look much more promising for Beales. Only last month, it opened its first new store in four years, a 14,000 sq ft shop in Fareham, Hampshire under a new ‘Beales for Men’ fascia, while the retailer must surely have benefited from its tie-up with George Davies’ new venture, GIVe. Crucially, Beales has also made clear in recent months that it’s interested in acquisitions, with fashion industry journal Drapers also querying in the last few days whether this might materialise into an interest in selected Vergo stores:

Indie department store chain Beales is likely to keep a close eye on the administration process. Beales is on the acquisition trail after shareholder and property entrepreneur Andrew Perloff upped his stake in the 11-store chain to 29.7% in February. The group is believed to be interested in leasehold opportunities, pushing it to the front of the pack of potential interested parties. Beales chief executive Tony Brown said only that the business was looking to expand.

Additionally, the Drapers article suggests that possible suitors may find Robbs one of the more attractive stores within the Vergo portfolio, quoting an unnamed retail source who told the magazine that “a potential buyer could return Robbs of Hexham or Derrys in Plymouth to profitability with the right landlord deal and a store revamp”.

That landlord deal point is, of course, absolutely key, given that the Robbs premises are owned by Buccleuch Group, rather than by Vergo Retail itself, and that Buccleuch’s redevelopment plans for the site are still simmering in the background. Against this backdrop, any potential purchaser of the Robbs business will surely demand assurances regarding the store’s ability to continue trading, in the long term, from that site, with or without whatever redevelopment might take place.

David Thompson

One name I didn’t mention in my interview with Helen is David Thompson, Vergo Retail’s owner. Having taken Robbs into administration (as part of Owen Owen) and then bought it out again (as Vergo Retail) three years ago, there would be nothing to stop Thompson doing the same this time – just as former MK One business partner Elaine McPherson has done with Ethel Austin, taking the business into and out of administration in both 2008 and 2010.

Frankly, however, this prospect must be a non-starter, particularly after what the Courant says are Thompson’s recent assurances that Robbs was “thriving” – something of a contrast to MCR’s statement last week that Vergo “could not continue to trade in the short term without implementing immediate cost saving measures”. True, as the only option on the table in 2007, Thompson’s last-minute rescue of the store gave Robbs a welcome stay of execution, and hope – now dashed – that he was after all the right man to build a viable future for the business.

This time – if Robbs is to be worth saving at all – staff, concession holders, suppliers and customers will surely demand new ideas, and proper investment. Time is running out, however, to find out whether those new ideas might come from Beales, Allders, or someone else entirely.

Thank you to Dr Neil Clifton for the use of the photograph of Allders, and David Lally for the shot of Beales. The photographs are © Copyright Neil Clifton and © Copyright David Lally respectively, and both licensed for re-use under the Creative Commons Licence.

The iconic Joplings store in Sunderland

Department and home store retailer Vergo Retail has gone into administration, placing a question mark over the future of the 19-store business – including the iconic Robbs department store in Hexham and Joplings in Sunderland.   

Sarah Bell and Steven Muncaster, partners at MCR, have been appointed joint administrators, with the stores set to trade as normal while the company’s position is reviewed and a buyer sought. However, the middle of a recession is barely the best time to be selling an ailing retailer, as MCR’s recent experiences with Ethel Austin and the kidswear retailer Adams demonstrate. 

While Ethel Austin limps on as a rump of 90 stores, Adams has vanished from the high street completely (though is reportedly due to return in the autumn). For the sake of Vergo Retail’s 900+ employees, a happier outcome must be hoped for this time; sadly, however, the chances of any purchaser snapping up the entire loss-making Vergo chain is surely slim. 

Vergo's Robbs of Hexham store

It’s all a far cry from the hope and expectation that has accompanied the recent growth of the Vergo Retail business. As regular readers of Soult’s Retail View will know, Vergo Retail had an acquisitive 2009, snapping up a succession of closure threatened Co-op department and home stores. These were added to the portfolio of three large department stores – Robbs, Joplings and Lewis’s – that it rescued from the brink of closure following the administration of Owen Owen in 2007. 

Back then, it was difficult trading at Lewis’s that brought the whole Owen Owen business tumbling down, despite Robbs and Joplings both reportedly being profitable. This essence of a decent business provided some logic to the scenario of David Thompson – who had taken Owen Owen into administration in the first place – buying the business back under the new Vergo Retail banner. 

This time, despite the previously announced closure of the flagship Lewis’s store in Liverpool (set to close by June this year, ostensibly due to the impending redevelopment of the building by its owners Merepark), it seems that Vergo has simply ran out of time – and money – to turn its enlarged business over to profit: 

“Unfortunately the Company has endured periods of financial loss. It has made efforts following the recently announced closure of the Lewis’s store in Liverpool, to seek new finance to restructure the business but has been unsuccessful in finding a going concern solution. Like many retailers, it has experienced a difficult trading environment during the economic downturn.” (MCR*)  

From a North East perspective – and that of an occasional shopper in both Robbs and Joplings – Vergo’s collapse is a cruel blow to the dedicated, friendly and hardworking staff in those stores who have worked so hard to bring them back to life over the last three years. 

Equally, as the Hexham Courant reported on Friday, it’s devastating and unacceptable to those concession holders who look set to lose out on getting what they are owed – in a repeat, for many, of what happened when Owen Owen went into administration – due to all payments passing through Vergo’s own tills. 

Even if Robbs is saved, those concession holders who are reportedly owed thousands of pounds can be forgiven if they think twice about staying put – assuming, of course, that their small businesses even survive the hit. The variety of concessions, including many independents, is a core part of Robbs’ appeal, and any new owner will need to work hard to win them over. 

For now, however, we must just watch, wait, and – if we wish them to survive – do our best to support the threatened stores at this most difficult and uncertain of times. 

UPDATE – 11 May 2010: The administrators have announced today that nine of Vergo Retail’s loss-making stores – including Robbs and Joplings – will close within four weeks. Joplings was established in 1804; Robbs in 1819 – events over the next four weeks will determine whether or not 2010 sees the sad end of both these iconic department stores. 

* UPDATE – 21 May 2010: Financial information released by MCR^{[broken link removed]} shows that, for the year ended 26 January 2008, Vergo Retail made a total loss of £2.416m from a turnover of £15.824m. This, of course, was based on only the three stores that were in the Vergo portfolio at the time – Robbs, Joplings and Lewis’s.

Screenshot of holding page (15 Feb 2010)

Google ‘Vergo Retail’, and the likelihood is that you’ll currently find Soult’s Retail View among the top few search results. Indeed, since this blog launched in July, five of the top ten searches that people have used to find the site have related to the Liverpool-based department store operator, with the Ipswich store proving particularly popular:

• hollister newcastle: 262
• vergo ipswich: 252
• vergo retail: 145
• vergo retail ipswich: 84
• wilkinsons logo: 81
• clas ohlson: 63
• co-op department store norwich: 48
• hollister eldon square: 47
• vergo department stores: 47
• woolworths closing down: 47.

I suspect that the main reason why this blog has consistently shown up so highly in Google has been for want of much competition: other than a dedicated site for its famous Lewis’s store in Liverpool [broken link removed], Vergo has lacked any online presence of its own to date.

However, given the evident interest from people searching for information about its stores, I’ve always thought that Vergo has been missing a trick, and wondered how long it would be before a company website appeared. Consequently, even though it may mean that my own Vergo-related traffic takes a hit, I was  pleased to see that a holding page is now in place at