Latest: Paperchase, Thomas Cook, Debenhams
Sainsbury’s and Asda may sell stores in merger plan
Sainsbury’s has more than 1,400 shops, of which about 800 are convenience stores, while Asda has more than 600.
The deal had looked less likely to come to fruition after the Competition and Markets Authority said last month that it was “likely to be difficult” for the chains to address competition concerns. The CMA had considered either blocking the merger entirely or forcing the sale of “assets and operations”, including stores, or even scrapping one of the companies’ names.
Sainsbury’s chief executive Mike Coupe responded with dismay to the findings and today’s statement from the Mr Coupe and his Asda counterpart Roger Burnley points out what they see as weaknesses in the CMA’s case.
“We have asked the CMA to correct significant errors in its provisional findings. CMA’s analysis ignores both the evidence and the realities of how customers shop today,” they said.
“The CMA has applied a threshold for identifying local areas of concern that does not fit the facts and is far below the most conservative standards applied in previous cases. This means that the CMA identifies an area of concern where an Asda and a Sainsbury’s store are within seven minutes’ drive time of each other, irrespective of whether there are one or six competitors in the same area. Essentially, a competition test that ignores competition.
“Furthermore, the CMA’s remedy proposal is impossible to implement. It is prohibition in all but name and deprives customers of lower prices, better quality and better service”.
The Competition and Markets Authority has until 30 April to publish its report on the tie-up between Sainsbury’s and Asda.
Paperchase’s creditors have agreed to a company voluntary arrangement which will see rents reduced on almost 100 of the stationer’s stores.
Of these, 28 will pay 50% rent for three months before the company decides whether to close the shops or seek a rent-free period.
A small number of loss-making sites are expected to shut their doors as part of the process. A futher 70 will have rent tied to the turnover of the individual stores, which Paperchase said would better align its costs with footfall and trading.
The other 45 stores will not be affected.
The chain called in KPMG earlier this year, when it was reported to be weighing up a number of options including a sale to a new owner and store closures.
Travel firm Thomas Cook is closing 21 stores and cutting more than 300 jobs and holidaymakers increasingly book their trips online.
The company said 102 customer-facing roles would be axed as a result of the store closures, while it planned to cut a further 218 jobs “following a review of the retail workforce”.
It said 64% of all its bookings in the UK were made online last year, adding that the job cuts and store closures were part of plans to “streamline” the business.
Four stores in Scotland will close: Aberdeen, Cumbernauld, Glenrothes and Kirkintilloch.
Troubled department store chain Debenhams is seeking an injection of up to £200m from existing lenders as it tries to keep Sports Direct’s Mike Ashley at bay.
Mr Ashley is offering a £150m loan as part of a deal that would put him in charge. Sports Direct has a near-30% holding in Debenhams.
Lenders have until Thursday next week to approve the cash call, which the firm says will allow it to restructure.