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Department store John Lewis set to cut prices in online push

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department store john lewis set to cut prices in online push

John Lewis will cut prices and could close more stores in a £1billion plan to revive its fortunes. 

The department store will launch a homeware range and introduce ‘more affordable’ budget ranges to counter the perception that it is expensive. 

It said the move would ‘broaden our appeal to more customers’ when shoppers are ‘especially cost-conscious’. The partnership, which now has 42 department stores and 335 Waitrose supermarkets, will also cut costs by £200m by 2022, on top of £100m of savings announced last year. Bosses refused to rule out shutting more stores after the closure of eight John Lewis sites during lockdown, with 1,300 jobs lost. 

New direction: Dame Sharon White, who took over as chairman in February, will invest £1billion over five years to return the company to profit

New direction: Dame Sharon White, who took over as chairman in February, will invest £1billion over five years to return the company to profit

The firm reported a mammoth £634.6m loss in the six months to July 25, leading it to cancel the coveted partnership bonus for the first time since 1948. The value of its department stores took a £471m hit as the pandemic forced shoppers online. 

Dame Sharon White, who took over as chairman in February, will invest £1billion over five years to return the company to profit – and laid down a target of £400m by 2025. 

It will spend £400m on new areas such as financial services and ‘affordable’ rental accommodation, with more cash going into its online business. 

Bosses want online sales to make up between 60 per cent and 70 per cent of department store revenues, up from 40 per cent before the pandemic, and up to a fifth of its food business. 

Food delivery capacity at Waitrose is being increased to 250,000 orders per week, and John Lewis is expanding the number of places customers can pick up online orders to 1,000 locations. It has applied for planning permission as part of efforts to enter the ‘affordable’ rental accommodation and it is testing furniture rental. 

Some £100m has been put aside to grow financial services and it is considering a move into horticulture and garden design. 

White hopes new services will contribute 40 per cent of overall profits by 2030 and reduce its reliance on retail. 

Its department stores will place more emphasis on homeware, items for children’s nurseries and home technology. 

The company also pledged to go carbon neutral by 2035, halve its food waste by 2030 and recruit people coming out of the care system.

This post first appeared on dailymail.co.uk

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Royal Mail offers 4,000 new jobs for Christmas

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Shopping boom: The temporary sites will create 4,000 jobs

Shopping boom: The temporary sites will create 4,000 jobs

Shopping boom: The temporary sites will create 4,000 jobs

Royal Mail is opening two extra parcel sorting centres to help deal with huge demand this Christmas, as the coronavirus pandemic fuels an internet shopping boom. 

The temporary sites in Milton Keynes and Northampton will create 4,000 jobs. 

They will be in addition to six other temporary centres Royal Mail normally sets up to deal with the busy Christmas period. 

The firm revealed a 34 per cent increase in parcels during the first five months of 2020. 

Ricky McAulay, field operations director, said: ‘With the possibility of Covid-related restrictions being in place this Christmas, Royal Mail’s role in delivering presents and cards will become even more important. 

‘Given the rise in online shopping, we have put even more effort into ensuring that we have the right resources in place. 

‘We also hope our recruitment drive will bring some welcome employment opportunities to regions across the UK ahead of the festive season.’ 

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ALEX BRUMMER: Chancellor passes first IMF exam

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The inspectors have been in and Rishi Sunak has passed his first examination from the International Monetary Fund. 

A dismal UK growth forecast for 2020 has been downgraded after just a fortnight with a projection of a jolting 10.4 per cent loss of output. 

But with the virus rampaging through cities and towns, from Manchester to Slough, that is not surprising. There is sound advice from the IMF’s managing director and chief examiner Kristalina Georgieva. The impulse of a fiscally robust Treasury is to keep a close eye on the bottom line. 

Test: The inspectors have been in and Rishi Sunak has passed his first examination from the International Monetary Fund

Test: The inspectors have been in and Rishi Sunak has passed his first examination from the International Monetary Fund

Test: The inspectors have been in and Rishi Sunak has passed his first examination from the International Monetary Fund

The repairs made to the public finances by George Osborne, after the financial crisis of a decade or so ago, have given the UK the space to throw huge sums at saving jobs and keeping vulnerable enterprises alive. 

Georgieva’s advice is crystal clear. Borrowing may hit £400billion this year and debt is set to soar further above £2trillion, but it is not the time to withdraw support yet. 

As the voice of a kinder and gentler IMF, Georgieva singled out praise for the enhanced Universal Credit – making it harder to remove the Governnment’s £20-aweek bung anytime soon. 

She also argued that when the time comes to pull up the drawbridge, there should be focus on taxes and public spending measures which prioritise equality. 

Britain will not reclaim all the lost output or jobs in 2021. In the IMF’s view, the UK’s hard-earned fiscal and monetary credibility, a willingness to invest in infrastructure, a flexible labour market and healthy banking sector should help restore prosperity. 

An important building block will be a UK-EU trade accord. That’s something No10 may not have wanted to hear.

Divi reborn 

After a run of dispiriting third-quarter earnings reports, finally a sprinkling of optimism. Antonio Horta-Osorio has deployed Lloyds’ huge presence in the mortgage market to exploit the stamp duty holiday which is driving a mini housing boom. 

Shell managed to deploy its big retail presence and restored its progressive dividend from a lower base. And advertising behemoth WPP is demonstrating that there is life after Martin Sorrell, capturing monster clients in HSBC and Uber. 

As for serial under-performer BT, it is starting to look as if entrepreneurial chief executive Philip Jansen is making a difference. 

Openreach is building out more fibre, but not nearly fast enough. Future earnings guidance has been upgraded, enough to hint at a dividend return. Jansen is still pushing a boulder uphill, however, when it comes to the fundamental restructuring required if Britain is to have the reliable broadband and 5G networks critical to its global ambition. 

What has to be recognised is that the three months to September were a shard of light on both sides of the Atlantic after the Covid gloom. In the advanced economies infections and deaths were down, output climbed and consumer and business confidence slowly restored. 

The message for investors is that the dividend famine which arrived with lockdown is easing. Banks are at the start of a dialogue with the Financial Conduct Authority and Bank of England about dividend restoration. The ban on payouts (loudly protested by HSBC) has had the perverse effect of flattening share prices and weakening equity to capital ratios. Indications from the latest results suggest that at Barclays, Lloyds and HSBC bad debt provisioning was overdone in the first half. The liability for dodgy bounce-back loans will fall back on the Treasury. Finance is holding up well. But banks could be knocked back again if, as the IMF advises, the Bank of England eventually opts for negative rates.

Home security 

Forget all the guff in the 60-page G4S defence document about its 2025 goal to be the world’s leading security company and to act with integrity and respect. 

Everything we know about G4S’s past, and how difficult it is to control a sprawling and undisciplined workforce, militates against that. What is certain is that private equity ownership by Garda World, or a second private suitor, Allied Universal, will do nothing for the culture. Garda’s bid is insultingly low, especially as G4S has raised its game with an improved revenue forecast of 4 to 6 per cent and stronger margins of 7 per cent. 

The battle here is against overseas bottom feeders, loss of the governance, which comes with a public quote, and the broader public interest. That’s why big battalion investors should pull down the shutters. 

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Greensill Capital snubbed by Big Four auditors

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Controversial lender Greensill Capital is scrambling to find a new auditor as it gears up to float on the stock market. 

The specialist finance company, which was founded by Australian Lex Greensill and counts former prime minister David Cameron as an adviser, had previously enrolled the little-known Saffery Champness to vet its finances. 

But after growing too large and complex for Saffery’s services, Greensill is searching for a larger auditor to do the job. 

High flyer: Lex Greensill (main) has close links with former Prime Minister David Cameron (top right) and steel tycoon Sanjeev Gupta (right)

High flyer: Lex Greensill (main) has close links with former Prime Minister David Cameron (top right) and steel tycoon Sanjeev Gupta (right)

High flyer: Lex Greensill (main) has close links with former Prime Minister David Cameron (top right) and steel tycoon Sanjeev Gupta (right)

It has not been met with quite the enthusiasm it might have hoped for. Big Four accountants KPMG and Deloitte have turned down Greensill’s invitations, the Financial Times reported, citing a conflict of interest. And BDO, which sits a rung down from the Big Four, has also rebuffed Greensill’s approaches as it tries to clean up its image following its involvement in a series of audit scandals. 

Greensill’s difficulty securing an auditor is a setback as it prepares for stock market float, which has been rumoured for several months. When Japanese investment giant Softbank invested last year, Greensill was valued at £2.7billion. 

KPMG, Deloitte and BDO declined to comment on why they are reluctant to take the job. But, with auditors under fire following a string of corporate debacles – including the collapse of Thomas Cook and BHS, they have become more picky about which clients they take on. 

Greensill has certainly had its fair share of controversies in the nine years since it was founded. 

The company specialises in lending to businesses which might otherwise struggle to get a loan from a usual bank. 

But its close links to British-Indian steel tycoon Sanjeev Gupta, and his group of companies the GFG Alliance, have caused a series of headaches.

Founder Greensill, 43, grew up on his parents’s farm in Australia and was inspired to set up his business as he saw his mother and father struggling to make ends meet while they waited for their crops to grow. 

From those modest beginnings, he has become something of a high flyer. 

The financier is now known for his penchant for corporate jets, and owns planes including the luxurious Dassault Falcon 7X and Gulfstream G650. 

He has also struck up a close relationship with Gupta. 

The steel tycoon is featured on Greensill’s website, singing the lender’s praises, and Gupta formerly owned a stake in Greensill before selling it due to concerns that there could be a conflict of interest. 

But the pair last year found themselves at the centre of a scandal which rocked Swiss asset manager GAM. 

Tim Haywood, one of GAM’s star fund managers, was suspended in 2018 for ‘gross misconduct’, before being fired in a debacle that brought the investment titan to its knees. 

It turned out that Greensill had brokered a number of deals between Gupta and Haywood, who was ploughing hundreds of millions of pounds of clients’ money into Gupta’s endless stream of projects.

A whistleblower at GAM grew concerned about the deals, and Haywood’s closeness to Gupta and Greensill. After an internal investigation at GAM, the firm concluded that Haywood had failed to do enough due diligence on many of the deals. 

Gupta was eventually prompted to buy £600m of bonds linked to his own companies back from GAM, so the asset manager could return money to its worried investors. 

Greensill also became tangled in a lawsuit with news agency Reuters, over bonds it issued for Gupta. The bonds were secured against a hydro power plant in Kinlochleven – a village located in Lochaber, in the Scottish Highlands – owned by Gupta’s GFG Alliance. 

In a statement to the market, Greensill said the Scottish government had approved a guarantee of support for the power plant. In fact, the government had given no such guarantee – leading Reuters to accuse Greensill of misleading the market. 

Greensill tried to sue Reuters, arguing it had not intentionally misled anyone, before dropping the case earlier this year. One of Greensill’s German subsidiaries, Greensill Bank, is also being probed by the country’s financial regulator Bafin, Bloomberg reported, over worries it is also too heavily exposed to Gupta-linked companies. 

And back in the UK, Greensill has raised eyebrows over its participation in the Government’s emergency coronavirus loan scheme. Hundreds of thousands of businesses are still waiting for a Government-backed loan to see them through the pandemic, after applying to their preferred lender. 

But Greensill has quietly handed out tens of millions of pounds in Coronavirus Large Business Interruption Loan Scheme (CLBILS) to two companies connected to Gupta – despite the companies employing just 11 people. 

Greensill did not respond to a request for comment, and did not reveal how much it has lent out in total under government coronavirus schemes.

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