Heavyweights square up over a fistful of retailing dollars

Published on Wednesday 8 January 2003 00:00

SCOTS entrepreneur Tom Hunter, property group Minerva-with-added-Terry-Green, and department store chains Allders and House of Fraser resemble a Clint Eastwood-style western movie stand-off.

Four ambiguous-looking dudes are in the takeover corral, each eyeing the others to see who will act first and in what way.

At least we now know that while Hunter had previously indicated he wanted a "seat at the table" in the discussions on Allders’ future, his statement yesterday shows he may well leap on to the table with a rival takeover bid to Minerva’s if he feels unwanted.

Minerva has so far refused to meet him, which seems ill-considered. Most people believe Minerva’s main interest in Allders is to win control of its prime site in Croydon, south London.

It is not difficult to see a deal whereby Hunter, who has tabled a rejected offer for House of Fraser, could get Allders’ retailing business and flog the property in question to the property men.

Then, seeing the 20 million-plus of synergies he could get from merging the chain with HoF, Hunter could sweeten his current 85p per share offer for the latter.

Sure, it is convoluted, but few dispute the underlying commercial logic. All perhaps, but Terry Green.

It is pretty obvious he has not come on board with Minerva to start a new career in property development.

The former highly successful chief executive of Debenhams and Bhs looks as if he does not want to be a very well-paid hired hand in department stores any more.

The likelihood is that some form of proprietorship in the retailing scene, or eventual moneyspinning release of that value, is the glittering attraction. It was because he could not get this at Bhs that he parted company with the owner of that group, Philip Green (no relation).

Unfortunately for Green (Terry), it looks as if Hunter is playing hardball.

Tourist trap

THE latest improved results but cautious statement from Jurys Hotel Group are a microcosm of where the wider hotels industry finds itself.

Jurys, with a dual Dublin/London listing, has managed a 2.5 per cent rise in underlying interim profits, having managed to put much of the tourist fallout from 11 September 2001 behind it.

It is hardly news that there has been a modest profits recovery at the group as in 2001 the terrorist attacks on America allied to the outbreak of foot-and-mouth disease saw earnings slide 8 per cent.

But Jurys told investors yesterday that the trading environment remains tough. There is pressure on room rates and worries about the possibility of unpleasant ramifications for the group - heavily dependent on tourists - from war in Iraq.

Jurys’ position is mirrored among most of the publicly-quoted four-star hotel sector. From Six Continents (Crowne Plaza) and Whitbread (Marriott) to the eponymous brands of the Hilton and Thistle hotels groups, the story has been identical.

Their shares plummeted in the wake of 11 September as tourist and business travel ran into the sand on both sides of the Atlantic.

By the middle of last year, hotel stocks had clawed back their losses, sometimes even rising beyond those earlier levels, as investors saw hotel shares as a quintessentially cyclical play in the vanguard of a stock market recovery.

However, as economies and business and leisure travel have continued to stutter and political storm clouds have gathered in the second half of 2002, shares in the sector have begun to drift down again.

War in Iraq, particularly if allied to fresh terrorist attacks in the western hemisphere, hangs sullenly over the hotels industry like chlorine fumes over a swimming pool.

Even without the threats, the major players - along with holiday companies - say recent trading improvements do not mean they will get to pre-11 September trading levels for quite a while yet.

If the balloon does go up in Baghdad, the industry may well feel it is back where it all started to go wrong 15 months ago.

Three-pipe conundrum

PROFITS being made by UK companies fell to their lowest level for nine years in the third quarter of 2002; new UK car sales jumped 14 per cent to a record of more than 114,000 in December, up more than 4 per cent on the year. Discuss.

One cursory deduction would be that corporate Britain is struggling, but we as consumers are not depressed about it. Profits may be lower, but so are unemployment, inflation and interest rates.

In future years, the groves of academe will have a three-pipe problem on which to ponder around the quadrangle. Why, with persistent economic gunfire in the hills for well over two years, has the British consumer blithely held the line on carefree spending?

Perhaps we are seeing a unique, if possibly transitory, decoupling of business conditions and how we feel in our private lives.