Oxford Street: Vacancy rates back to pre-Covid levels as Euros and Olympics to give London a tourist boost
Commentators were quick to proclaim the end of brick-and-mortar retail and premier shopping districts such as Oxford Street following the coronavirus pandemic.
And until recently, they looked to be on the money.
However, recently, Oxford Street has staged a stunning comeback.
According to the latest data just two per cent of units across Oxford Street are now either vacant or let to “low quality” retail space.
The retail drag has been boosted by booming tourist numbers and big events, a trend that seems set to continue.
Dee Corsi, head of New West End Company, told City A.M she is confident the next few months will see a drive in footfall across the retail drag thanks to events such as the Euros and the Paris Olympics.
She said: “It may have been a wet start to summer, but we are confident that the next few months will see a surge in visitors to Oxford Street and the wider West End.
“We’ve got a fantastic summer of sport ahead, with the Paris Olympics likely to drive a spike in tourists visiting our capital.”
Just last week, the two-day Champions League Festival drove an uplift of 66 per cent week-on week in footfall on some parts of Regent Street.
Corsi added: “We know that visitors to the West End want more than just transactional retail – they want varied, immersive experiences that simply cannot be replicated online.
“Oxford Street is primed to deliver on this this summer, with experiences on the street ranging from John Lewis’ new rooftop restaurant to the soon-to-open Moco Museum at Marble Arch and Selfridges’ iconic beauty hall. There is, quite simply, something for everyone.”
East Side vs West Side
Oxford Street is effectively cut into two by property companies – the eastern end, from Oxford Circus to Tottenham Court Road, and west, from Oxford Circus to Marble Arch.
The eastern trunk is set to be boosted by the opening on Ikea at the site of the former Oxford Street next spring.
According to property agents at Savills, there has been a record 40 deals across the region in the past 12 months, and vacancy rates are in line with pre-pandemic levels.
Sam Foyle, co-head of global retail at Savills, said: “The reduction in [business] rates has made the street more affordable and has encouraged a strong mix of new retailers to commit to new stores in the street.
“There have been a record 40 deals on Oxford Street in the past 12 months, with a number of new deals coming through for the remainder of the year. Vacancy on the street is currently back in line with 2019 levels and competition for space has become fierce.”
It is a positive boost for the shopping district, and the wider London retail economy, which has suffered in recent years due to high inflation and shopping spending less.
High end retailers have also been feeling the pinch, as international visitors are reportedly ditching London due to the removal of VAT free shopping.
Workspace: Flexible office provider calls market bottom as workers return to the City
Flexible office provider Workspace said its “future is bright” after it revealed a 8.7 per cent increase in profit for the year to March.
The FTSE 250 company said demand across its 78 hybrid working buildings also remained strong.
Throughout the year, the business completed 1,238 lettings and 705 lease renewals, worth £53.3m in terms of rent roll. On a like-for-like basis, the company’s rent roll jumped 9.6 per cent.
It reported like-for-like rent per square foot of £44.27, up 10.4 per cent compared to the prior year.
Overall occupancy of its buildings was 88.1 per cent at the end of the fiscal period.
Off the back of the strong results the company announced a 28p per share dividend for the year, up 8.5 per cent. It ended the year with a EPRA net tangible asset value per share of 800p, down 13.7 per cent.
Outgoing boss Graham Clemett, chief executive officer said: “It has been a year of continued progress at Workspace, driven by the resilience and dynamism of our 4,000 SME customers.
“The strong trading performance has once again been underpinned by rental growth with stable occupancy, delivering an 8.5 per cent growth in the total dividend to shareholders of 28p per share.
He added: “Our valuation was down in the year by 9.5 per cent, although the reduction was significantly lower in the second half.”
“I would expect this valuation to be the low point of the current cycle given the forecast of interest rate reductions combined with our ability to continue to deliver pricing growth and value-add asset management activity.”
Clemett, who has served nearly 16 years at the firm, is set to retire as chief executive.
Last month, the firm revealed former Capital & Regional chief Lawrence Hutchings would be next to take the throne.
Clemett said: “I am immensely proud of the distinctive culture we’ve cultivated at Workspace; it has made my time in the business hugely enjoyable, despite the challenges we have had to deal with over the last two decades. I have no doubt that Lawrence Hutchings, who succeeds me as chief executive officer, will be a great fit for the business and that Workspace will continue to thrive under his leadership.
“I wish everyone at Workspace and all our stakeholders all the best for the future. I will of course remain an invested shareholder and I look forward to watching from the sidelines as Workspace goes from strength to strength.”
Pawnbroker Ramsdens boosts dividend as cash-strapped Brits fuel profit surge
Cash-strapped Brits flogging their valuables for a quick quid helped profit at pawnbroker Ramsdens grow by eight per cent this year.
Over the six months to March, revenue at the Middlesbrough-based business also grew by 12 per cent to £43.4m.
A national cash crunch also drove up demand for small sum short term credit, leading its pawnbroking loan book to jump by 12 per cent to £10.8m.
Peter Kenyon, chief executive at Ramsdens, said: “We are very pleased with the Group’s good further progress during the first half of FY24 which once again demonstrates the strength of Ramsdens’ diversified business model.”
As a result, and reflecting our confidence in the outlook, we are pleased to announce a nine per cent increase in the interim dividend.”
“We are continuing to invest in our long-term growth including opening carefully selected new stores, investing in our exceptional team, and further developing our customer proposition. This includes our new service-specific websites that will launch in the second half as well as the recently launched pre-paid travel card.”
He added: “These investments are ensuring that we continue to provide the best possible service to our growing customer base irrespective of which Ramsdens service they choose and through which channel they come to us.”
“Underpinned by our proven diversified business model, trusted brand and market leading team, the Board remains highly confident that Ramsdens is well positioned to further grow our profitability in FY24 and beyond, continue to deliver on our progressive dividend policy, and, ultimately, create value for all stakeholders.”
The pawn industry is a sector that tends to perform well in times of economic downturn as people grow desperate to shore up extra cash.
Ramsden said it is also opening three new stores this year, taking its total number of sites to 170.
The Board has approved a nine per cent increase in the interim dividend to 3.6 pence per share.
Discount retailer B&M beats ‘lockdown peak’ but shares slip as analysts left with ‘more questions than answers’
Bargain retailer B&M beat its “lockdown” peak and traded at the higher end of expectations, but a failure to update on current trading sent shares sliding by five per cent.
Analysts at Investec agreed the full year update left them with “more questions than answers,” as they rated the stock a ‘Buy’.
They said: “There is no comment on current trading, but management allude to pivoting the business towards having a higher proportion of growth coming from ‘total volume growth’ driven by new stores.
“That said, it also reiterates like-for-like is expected to continue to contribute towards ‘total volume growth’.
They added: “We were disappointed that Q4 LfL sales growth last year had not accelerated by more – given relatively soft ‘post-pandemic’ comparatives.”
On Wednesday, the value-led store told markets that group revenue grew to £5.5bn over the year to March, up 10.1 per cent compared to last year.
The London-listed retailer also noted a nine per cent leap in adjusted earnings before interest taxes, depreciation, and amortisation to £639m.
A squeeze on living costs has driven customers to seek out affordable goods, leading to a rise in popularity in stores such as B&M.
B&M also acquired 51 Wilko stores for £13m after the fellow discounter collapsed into administration.
Alex Russo, chief executive at B&M, said the company is plotting the opening of at least 45 B&M stores this year, in line with plans to target to not ess than 1,200 B&M UK store
He said: “During Q4, we accelerated our opening programme, and the step up in openings is continuing. In FY25, we will open not less than 45 gross new B&M stores in the UK, plus a meaningful number in France and for Heron.
“We have also raised our long-term store target to not less than 1,200 B&M UK stores, which provides a clear runway of profitable growth ahead for us, from our current base of 741 B&M UK stores.
He added: “We have demonstrated strong volume-led momentum in our business throughout our trading history and that has continued, driving our profits ahead of both pandemic and pre-pandemic benchmarks.”
“Despite the more challenging comparatives, with continued new store openings, and a laser focus on low prices and best in class retail standards, we remain confident in our outlook for cash generation and profit growth.
The company said there were few lockdown winners” and who have sustained their competitive progress post-pandemic, but B&M was one.
They said: “The retail industry remains challenged by regulatory and macro pressures. In the last 12 months a number of retailers have failed and a significant number of others have issued one or more profit warnings. In this context, we delivered increased profits and cash generation, and have this year exceeded our “lockdown” peak of £626m adjusted EBITDA”.
Separately, the firm announced current non-executive director Tiffany Hall as chair.
She will succeed Peter Bamford who will retire from the Board at the conclusion of the AGM after six years in the role.
New law set to push the price of a pint above £7 across London
Hard-pressed punters could be set for another blow in October as a new law looks set to push up the price of a pint across London.
Sticky inflation and supply pressures facing pub owners have seen the cost of a beer or larger surge over the past year, with the average boozer now charging £6.75.
But this could rise to a steep £7.15 across London later in the year.
The average price of a pint could jump after legislation impacting hospitality staff tips is enacted this autumn, according to a new study by hospitality technology brand Three Rocks®,
Under the new rules, known as the Employment Allocation of Tips Act, employers cannot hold back service charges from their staff. This is to ensure staff in hospitality and other roles receive all of the tips they have earned.
These new measures will apply to England, Scotland and Wales once parliamentary approval has been secured.
However, a new research report, based on the feedback from 2,500 hospitality businesses, has suggested the industry could respond to the new law by putting a service charge on drinks.
Overall 74 per cent of the businesses surveyed said they would have to raise prices to cover the change.
Some 22 per cent of these said they already charge a tip, while 52 per cent said they plan to add a charge of up to 10 per cent for the service.
If enacted, the changes would push the current average price of a pint across the UK from £4.75 today to over £5 for the first time.
Due to the new legislation, nearly a fifth of hospitality businesses, equivalent to 25,740 operators across the UK, could see costs increase by between £60,000 and £360,000 a year.
Just 28 per cent of hospitality companies across the UK are currently compliant with the new act, equating to more than 90,000 businesses which will now need to change the way in which they operate.
Government officials said the move would put £200m more into workers’ pockets – but restaurants and the wider hospitality sector fear it could add to costs amid a period of high inflation.
“No hospitality business will be able to benefit from tips’
The shake-up in rules comes amid a challenging period for hospitality, which has suffered due to high inflation and wage stagnation, leaving customers with less cash to burn at the bar.
Scott Muncaster, founder and managing director of Three Rocks, said the industry has been “under immense pressure in the last few years”.
“Beginning with the pandemic, then one of the biggest labour and skills shortages in decades, and now the cost-of-living crisis, operators need all the help they can get.”
He added: “Tipping has long been a sticking point for customers, staff and businesses, with many not knowing what to expect, what to give, or how to spread tips out among employees.
“It’s encouraging that customers are supporting the industry, however once the Employment (Allocation of Tips) Act 2023 comes into force, no hospitality business will be able to benefit from tips.”
He said: “[Spending is up] on last year but overall still below pre covid, the whole industry has changed. People’s habits and budgets have changed a lot in just a few years and with young people drinking less and less it’s really a perfect storm for stagnation in the industry.”
Price of a pint already high
While the average price of a pint around London could rise to above £7, some boozers are already charging well above that rate.
According to a report in Time Out, a pint of Guinness at the Trafalgar Tavern in Greenwich is £7.95, and if you want a Brixton Coldharbour Lager at the same pub it will set customers back £8.80.
However, for punters on the hunt for a bargain City A.M. recommends Turner’s Old Star in Wapping or The Asparagus in Battersea for a pint costing below £6.
Blackstone in ‘exclusive’ talks to buy Village Hotels
US private equity giant Blackstone is reportedly in exclusive talks to buy mid-market chain Village Hotels for circa £850m.
According to a report in Sky News, Blackstone has entered a “period of exclusivity” to buy the chain.
Last week, it was also reported by the outlet that Sixth Street, another US-based investment firm, was also in the race to purchase the business.
The majority backer of Pinewood Studios, Aermont, was also said to be among the suitors to buy the company from KSL Capital Partners.
Village Hotels, which has 30 sites across the UK, was put up for auction in February.
The news of the sale followed reports in February that the owner of Center Parcs had abandoned plans to sell the holiday resort group for more than £4bn.
The current owner of Center Parcs, the Canadian investment giant Brookfield, purchased the holiday park operator from Blackstone’s private equity and real estate businesses in 2015.
Village Hotels was first founded in 1995 and offers restaurants and leisure facilities on-site.
Blackstone has also owned Butlins, although it only owned the company for around a year before it sold it back to a newly formed company backed by its founding Harris family.
At the time, Lionel Assant, European head of private equity, Blackstone, said: “Staying true to our high-conviction investment approach, we believe we are well positioned to drive the continued success of both the Haven and Warner businesses.
“Proceeds from the Butlin’s sale will enable us to continue delivering our ambitious investment programmes across both brands, supporting upgrades to the existing estates and adding new sites to the portfolio, to the benefit of millions of customers.”
City A.M. has contacted Blackstone for comment.
US private equity giant Blackstone snaps up 1,700 homes from Vistry as it drives to become major UK landlord
Blackstone and Regis Group have inked a deal to buy 1,700 homes from developer Vistry.
The private equity firm and its joint venture partner Regis will shell out £580m for the portfolio of new build homes across the South East of England.
Vistry is in the process of selling off old properties from its house building arm, following a decision by the business to focus on becoming a solely affordable property developer.
The first completions under the agreement are expected by the end of June 2024, with the majority of homes expected to complete within the next two years and would be managed by Leaf Living.
James Seppala, head of European real estate at Blackstone, said: “Institutional private capital can play an important role in providing high quality housing stock across the UK, particularly in the private rented sector which is significantly under supplied today.
“Partnerships such as these can meaningfully accelerate the delivery of new homes and help alleviate structural undersupply across the sector.”
Back in November, Vistry offloaded 2,800 to Leaf Living and Sage Homes. Two companies which Blackstone has a stake in.
Greg Fitzgerald, chief executive at Vistry Group said:“By working in partnership with organisations like Leaf Living we can maximise the number of high-quality homes we deliver every year.
“This agreement supports our differentiated business model, with the certainty provided by the pre-selling of homes enabling us to accelerate our build programmes, guarantee work for our supply chain, reduce sales and build costs and create vibrant new communities.”
“This year we are on track to deliver more than a 10 per cent increase in new home completions, playing a key part in helping to address the UK’s acute housing shortage.”
Last October, the FTSE 250 firm said it would focus solely on building affordable homes via its Partnerships business. This partners with local authorities and other social housing providers after a volatile housing market eroded demand for building in the private sector.
The company said it predicts half year and full year profit to be ahead of last year and “remains confident” in achieving £800m operating profit in the medium term.
Gooch and Housego optimistic despite headwinds
Photonics engineering and manufacturing firm Gooch and Housego (G&H) has held its guidance for the year and remains optimistic despite revenue falling slightly.
The Lonodon-listed firm said the figure declined by 1.4 per cent to £63.6m over the six months to March due to customer destocking in industrial and medical laser markets.
Statutory profit before tax also came in at £0.3m down from £3m recorded in the same period the year before.
Gooch and Hosuego said its order book remained strong at £115.8m, up slightly from £115.3m recorded the year before, and “continues to grow, substantially de-risking second half revenue”.
Charlie Peppiatt, chief executive officer of Gooch and Housegeo, said: “Despite the reduced demand in our industrial and medical laser markets persisting longer than expected, the medium term outlook remains positive underpinned by a strong order book and healthy pipeline with the group well positioned to benefit from increased demand levels as a result of operational and supply chain improvements.
“The market dynamics for G&H’s technologies and capabilities remains strong in all our target sectors supported by the focused progress the group has made to establish the foundations to accelerate the delivery of our strategy.”
Shares in the company fell by nine per cent in early trade.
It follows a report in February that the company would have to revise its earnings for the year due to prolonged inventory adjustments among its customers.
Speaking at the time, the board of Gooch and Housego, said: “The group’s trading for 2024 is expected to be more weighted to the second half and profit growth for the full year to be lower. Adjusted profit before tax is anticipated to be circa £3m below management’s previous expectations.
“Given the strong medium term customer demand demonstrated by a growing order book, recent operational improvements and the group’s strategic focus, we believe we remain extremely well placed to respond quickly and benefit as several key end markets recover.”
More retail misery as Brits’ spending shrinks to lowest level in three years
May proved to be another miserable month for retail, as cash-strapped Brits said no to treating themselves in the face of rising bills and unfavourable weather.
Spending on debit and credit cards grew by just 1.0 per cent in May, according to new figures by Barclays, making it the smallest rise since February 2021 and below inflation which sits at three per cent.
The nation’s already stretched budget tightened in April as water and broadband bills rose.
Fast food, which has remained a resilient market amid the cost of living crisis, saw its first monthly decline since the pandemic, dropping by 0.2 per cent.
Restaurants were also dealt another blow, as spending on dining out fell by a staggering 15.7 per cent in May, against a 13.3 per cent drop the previous month.
Jack Meaning, chief UK economist at Barclays, said: ”The economic strength we saw in the first three months of the year was always expected to ease as we moved into the second quarter, with GDP having seen the extra bounce needed to recover the ground lost in last year’s recession.
“The underlying direction of travel remains though, with falling inflation, real income growth and low unemployment all pointing to a gradual acceleration in consumer spending over the next 12 months, especially as we begin to see the Bank of England reduce interest rates in H2.”
This comes as some 41 per cent of shoppers told Barclays they plan to re-wear more of their old summer clothes this year and 29 per cent are cutting back on shopping for their summer wardrobe due to cost-of-living concerns.
Overall retail spending fell -0.4 per cent – the biggest drop since September 2022 – with in-store spending (excluding groceries) and clothing sales dropping by -2.6 per cent and -1.0 per cent respectively.
Not all bad news, though
Some categories, though still in decline, showed signs of recovery last month.
Furniture stores saw their smallest decrease since last August, while home improvement and DIY stores had their best performance since last September, declining by 5.4 per cent
Barclays said this was likely due to “homeowners capitalising on the two May bank holiday weekends to spruce up their living spaces”.
A separate report by the British Retail Consortium (BRC) showed non-food sales decreased 2.4 per cent year on year over the three-months to May, against a growth of 0.7 per cent in the same period last year.
Helen Dickinson OBE, chief executive of the BRC said: “Despite a strong bank holiday weekend for retailers, minimal improvement to weather across most of May meant only a modest rebound in retail sales last month. Although non-food sales fell over the course of the month, the long weekend did see increased purchases of DIY and gardening equipment, as well as strong clothing sales.
“Growth in computing sales reached their highest levels since the pandemic, with many consumers continuing to upgrade tech bought during that period. Retailers remain optimistic that major events such as the Euros and the Olympics will bolster consumer confidence this summer.”
Unseasonable weather has been an ongoing problem for some of the UK’s best known retailers, hindering a number of companies’ earnings in the past year.
It comes amid fears that the UK could be hit with 50 days of rain over the summer months, making it the wettest on record since 1912.
Marks and Spencer chief’s pay soars to decade high as turnaround pays off
Marks and Spencer’s CEO has received the highest pay package in over a decade, as the high street darling’s turnaround strategy has paid off.
Boss Stuart Machin, who took the reins two years ago, was handed £4.7m this year, up significantly from the £2.7m he was paid last year.
Machin’s packet also remains higher than his predecessors Steve Rowe and Marc Bowland who were paid up to £2.6m a year over the past 10 years, the retailer’s annual report has said.
Co-chief executive Katie Bickerstaffe, who reported to Machin and will step down in July, was paid £4.4m, including a salary of £767,000 for the year to the end of March, and also qualified for “good leaver” status.
Bickerstaffe, the retailer’s first female boss, helped run the show alongside chairman Archie Norman and frontman Stuart Machin, who was appointed at the same time as her.
She will depart Marks and Spencer to become a non-executive director at B&Q owner Kingfisher.
“She has had an important role in overseeing a marked improvement in the performance of the business and moves on with our best wishes,” chair Archie Norman said on Monday.
Reports of the hefty handouts follow a bumper year for Marks, which reported a 58 per cent jump in profit before tax for the full year.
The Percy-Pig maker also said it would restore dividend payments after it delivered its best results in almost three decades.
Its continued success in a tricky retail environment highlights the success of chief Stuart Machin and chair Archie Norman’s turnaround plan – which included overhauling its store estate and selling more trendy clothing.
Marks and Spencer also plans to invest over £30m in new stores across London, amid a period of heightened popularity for the 140-year-old brand.