The big earning news in the City today is the third quarter interim management statement from Tesco, which has shown weaker sales growth than some analysts were expecting.

Britain’s biggest supermarket chain reported that UK like-for-like sales rose by 2.8% (excluding petrol and adjusted for lower VAT) in the 13 weeks to 28 November. Analysts were forecasting around 3%.

Today’s result is also lower than the 3.1% like-for-like sales growth that Tesco achieved in the second quarter of the year. Back in the first quarter of the year, when food inflation was still rising, Tesco’s UK sales grew by 4.3%.

Overall, group sales were up by 8.8% (excluding petrol) compared with the previous quarter thanks to a stronger performance overseas, and chief executive Sir Terry Leahy insisted that Tesco was coping well with the economic downturn:

We are seeing improving customer confidence and encouraging trends in both the UK and our international businesses, although recessionary conditions still exist in a number of markets. As ever, with Christmas approaching, we’re doing even more for customers with low prices, great promotions, including on our Finest range, and of course double Clubcard points.

But traders are predicting that Tesco’s shares could some under pressure today – they fell just over 2% when the stock market opened.

Finance director Laurie McIlwee has also told Reuters that while Tesco can cope with the end of the temporary VAT reduction, it would not be happy if VAT rose to 20%.

We also have results from Game Group this morning, which continues to find 2009 much tougher than 2008. Like-for-like sales in the UK and Ireland are now down 16.6% this year.

Game had been pinning its hopes on a corking selection of new computer games in the run-up to Christmas, but chairman Peter Lewis indicated that Game may be a bit disappointed:

Since the half year, there have been a number of major software releases including Call of Duty: Modern Warfare 2 and FIFA 10, which both broke records in their first week of launch. However, the exceptionally strong performance of these titles was in part offset by softer than expected sales of some other releases.

 Source : The Guardian

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Thousands of Northern Rock shareholders are being told today that they are not entitled to compensation following the nationalisation of the Newcastle-based lender nearly two years ago.

After receiving “several thousand” responses, the independent valuer Andrew Caldwell has published a consultation document today in which he concludes that shareholders should receive “no compensation”.

Caldwell admits that his investigation has taken longer than he originally hoped because of the difficulties he encountered in obtaining the information he needed – and had been promised – when he was appointed by the Treasury 14 months ago. He did not receive some of the information until last month, further delaying the publication of today’s consultation document.

Caldwell based his calculation on how much money Northern Rock would have had left for shareholders if it had repaid the £25bn loan from the Bank of England, granted in September 2007 when it experienced funding difficulties during the credit crunch.

He concluded that it was “unlikely” Northern Rock could have been sold in its entirety and therefore searched for any assets the lender could have sold to raise the necessary funds. Following a complex analysis, he concluded that the lender would actually have been unable to repay the loan and would have been “in a deficit” of £5.7bn.

Caldwell reached this conclusion even though Northern Rock had £106bn of assets on its balance sheet. They would have fallen short of the amount needed because Northern Rock would have required a quick sale which would have forced down their price, he said. Caldwell assumed that £50bn was immediately available for sale to repay the loan – largely mortgages, government bonds and cash – but applied discounts to their values that left a deficit of £2.4bn. This rose to £5.7bn once he assumed an administrator was then appointed and forced to sell further assets at distressed prices. He insists he made “optimistic assumptions”.

In a letter sent to shareholders today, Caldwell stresses that he is still in a consultation phase and asks for responses by 29 January.

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Source : The Guardian

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It started with Debbie Flett, the model, applying red lipstick to Sir Richard Branson. Twelve years on, the last remnants of the Virgin Cosmetics retail business will close next month.

The Times has obtained a copy of the administration proposals for Effective Cosmetics, the company that began life as Virgin Cosmetics in a blaze of Branson publicity in 1997. The administrator’s plans include closing the last ten stores, which were rebranded as Effective Cosmetics last year, after January 10. It will mark the demise of another high-profile 1990s’ Virgin launch.

Sir Richard had enormous confidence in Virgin Cosmetics when it began, claiming that he would open two stores a month and have more than 100 high street outlets within five years. Virgin also launched an internet and home sales division for its cosmetics, which were sold under the Virgin Vie or Vie at Home brands. Yet Virgin Cosmetics struggled to find a footing in a competitive market and Sir Richard sold the business last year.

Ros Simmons and Ratan Daryani, who put together the original Virgin Cosmetics concept in 1996, took control of the assets after the Virgin Group wrote off accumulated loans of £21 million. A further £8.8 million was given to the new owners as a brand-protection payment. That payment was to reclaim the Virgin brand so that if the new owners failed, the Virgin name would not be tarnished.

Something similar happened when the Virgin Megastore music shops were sold and renamed Zavvi two years ago. Zavvi’s owners are believed to have received a £50 million brand protection payment when they bought the chain. Zavvi was put into administration last year.

The new owners of Virgin Cosmetics decided this year that they could not keep the retail stores operating and have closed about half so far. The remainder will close from next month, once they run out of stock or available staff. About 80 staff will lose their jobs. The stores, which include outlets at the Trafford Shopping Centre in Manchester, Lakeside in Essex and Meadowhall in Sheffield, lost £1 million in the five months to the end of August on turnover of £1.7 million.

However, the remaining home sales and internet operations will continue as the Vie Cosmetics Group (VCG) and will carry the Vie brand.

The new owners have a strategy to cut costs and are planning an international expansion to boost revenues after the business lost £5.7 million last year.

The company sells its products through self-employed consultants who arrange parties for potential buyers and take a commission on everything sold, similar to the Avon or Tupperware party model.

Vie has about 9,000 consultants but is rumoured to have lost staff in recent months amid uncertainty about the company’s future and also as a result of Jamie Oliver, the celebrity chef and restaurateur, launching a home sales operation.

Wedding belle

Virgin Cosmetics was one of a number of high-profile businesses, including Virgin Brides, Virgin Cola and Virgin Vodka, that were launched with great fanfare during the 1990s, but success was elusive.

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Source : The Times

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We often spend time thinking up new ice-breakers to settle the nerves and create rapport at the beginning of important meetings with senior decision-makers. Yet, far too often these can sound clichéd or insincere.

There is even a school of thought that recommends avoiding too much banter or small talk at the beginning of a meeting and concentrating on the job in hand; after all, that’s what the busy executive has allocated precious time to do.

Positive memories

It makes more sense to leave the buyer with positive memories of your visit once you have the formal part of the meeting out of the way. So, by all means pick up on that desk photo of the decision-maker shaking hands with a sporting legend when you’re packing up to go.

Try something along the lines of: ‘Have you really met Tiger Woods? What’s he actually like?’

You may find that the decision-maker engages there and then and you will have secured a way of making yourself stick in the buyer’s memory.

Then try: ‘I‘m a big fan of Tiger Woods. I’d love to hear more about him next time we meet.’ This plants an important emotional seed that there will actually be a follow-up meeting. Either way, it will help create a lasting impression.

Source : CIM

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