July

IN THE NEWS

Qatari company Delta Two, the latest investor to show interest in Sainsbury’s, submitted a 600p-a-share proposal, valuing the grocer at£10.6 billion.

Sports Direct’s share price halved just five months after its IPO and management faced the wrath of furious investors.

Kwik Save finally went into administration. Many of its 1,100 staff had worked without pay in the previous six weeks in the hope it would be rescued.

New Look revealed plans for international expansion after the collapse of the£1.8 billion auction of the business.

Fopp went into administration, resulting in the loss of 700 jobs and closure of 81 stores. Retail Week revealed that rival HMV was likely to bid for the brand.

Borders reiterated its intention to quit the UK amid speculation that the potential sale of its UK division had attracted limited interest from possible buyers.

Ilva chief operating officer Colin Haggerty was rumoured to be leaving in August, amid speculation that a restructuring could lead to a refinancing of the business.

Asda unveiled its aim to shave 5 per cent off its fuel usage by 2010 with a vehicle tracking and transport management system for its fleet of delivery lorries.

Ethel Austin entered talks with lenders after its sales crashed from£4.8 million to£217,000 for the year to September 2006. The discount fashion chain entered discussions to find new backers to support its recovery plan.

New Focus chief executive Bill Grimsey leapt into action with his recovery plan for the embattled DIY chain, poaching former Wickes executives Gary West and Rod Gladwin to spearhead its revival.

WEEE, the Government’s electricals recycling directive, came into effect on July 1 after numerous administrative setbacks.

River Island secured its first store in Spain at Portaferrissa in Barcelona. The retailer took a 6,780 sq ft store to kick-start its expansion in the country.

STORE OF THE MONTH

Waitrose, Marylebone High Street
By its very nature, Waitrose is always a foodie destination, but the reopening of its branch on Marylebone High Street proved a high point for the premium food retailer.

New wood-dominated fixturing, bright graphics and a breakfast-cum-lunch counter all added to the manifest attractions of the top-notch food that was on offer at the shop.

The store also contained a series of old-fashioned provisions counters and the queuing system at the checkouts restored a feeling of equity to the process of paying for your groceries.

Waitrose has more recently made a splash with its joint venture with John Lewis at the department store chain’s Oxford Street flagship, but this is its best standalone effort to date.

ON THE MOVE

Boots chief executive Richard Baker and Boots the Chemist managing director Scott Wheway quit the company following the completion of its merger with Alliance UniChem. Wheway was replaced by healthcare director Alex Gourlay.

Mark Smith returned to accessories giant Claire’s to head its European business five years after he left the company.

House of Fraser marketing director Meg Gilmore left the retailer as it embarked on a review of its marketing strategy.

Asda appointed former Gamestation managing director Mike Logue to spearhead the gargantuan roll-out of its non-grocery Living format, to take it from 10 to 300 stores.

Sainsbury's saga hots up

It has been a year of turmoil for Sainsbury’s. After two years during which chief executive Justin King’s efforts to revive the venerable chain appeared to be bearing fruit, his efforts were overshadowed by the intense focus on the grocer from two separate bidders.

The key to the interest in Sainsbury’s was its property portfolio. Like rival grocers, but unlike most general retailers, it owns a large part of its estate. This proved attractive to leveraged buyers, who sought to spin off the property in an op-co/prop-co deal.

We didn’t know it at the time, but the first approach turned out to be the warm-up act for the main event. It came at the start of February when private equity powerhouses KKR, CVC and Blackstone confirmed that they had been working on a bid for the company. Over the following months, the consortium shuffled around, with KKR dropping out to focus on its Alliance Boots bid and rival Texas Pacific Group stepping in.

However, as has been the case so often down the years, the Sainsbury family proved an insurmountable obstacle and the bid collapsed in April.

But it was a mere three months until the next approach. This was a much more serious affair because Delta Two – the Qatari government’s investment fund – had been building a stake in Sainsbury’s that, crucially, had exceeded the size of the family’s. Combined with the stake of flamboyant property investor Robert Tchenguiz, it meant that two major investors more interested in real estate than retailing held all the cards.

By September, Sainsbury’s had opened its books and the board was recommending a deal. Then something extraordinary happened: the bidder – one of the richest ruling families in the world – fell victim to the credit crunch. The year’s upheaval came to nothing and the bonuses expected, from chief executive to store manager alike, failed to materialise.

In the long term, it may be for the best. Sainsbury’s rivals were relishing the prospect of the company losing operational flexibility from ceding control of its property. In the hugely competitive world of grocery retailing, this could have proved a debilitating blow.