Latest news

Pinetum denial

Cabinet firm Pinetum has denied its has gone into administration for the second time in less than a year.

This afternoon the firm issued the following statement: ‘Amid rumours and speculation, Pinetum - the furniture manufacturing firm from Warminster, Wiltshire - would like to clarify that they are not in administration. However, Pinetum are in interim moratorium and are meeting with prospective buyers to take over the business as a going concern.’

According to the Insolvency Service, an interim moratorium comes into effect when either the company, directors or charge holders file a notice of intention to appoint an administrator, from which time a moratorium on insolvency proceedings and other legal processes being taken against the company is effective.

The company previously fell into administration on 1 October 2009, blaming rising costs and bed debts, before being bought in a management buyout lead by Dean and Richard Robbins on 16 October. ‘I am delighted that we have acquired the Pinetum business and with changes that have been made to the business model the business is now well placed to build upon its history and past successes,’ Dean said at the time, 20 year after he founded the company.

OFT proposes pricing overhaul

The Office of Fair Trading has proposed major changes to the guidelines governing how retailers advertise discounts and sales, including price establishing at 50% of stores, using RRPs that are ‘set at a price at which viable levels of sales have been made’ and having products on sale at the previous price for longer than the length of the sale.

The OFT is due to hold a series of meetings with retailers from 16 September to 1 October to finalise the guidelines.

‘The draft guidance is not intended to become “hard and fast” rules - only a court can give a definitive ruling on the meaning of the law,’ says the consultation document. The Consumer Protection from Unfair Trading Regulations (CPRs) are principles based legislation – our aim is to provide guidance for the benefit of businesses, consumers and our enforcement partners. On the following pages we set out some principles that we intend to apply when deciding whether or not to take enforcement action, which summarise our current views on how the CPRs apply to advertising and pricing.

‘The purpose of the proposals is to help those involved with the design of adverts and price promotions and not to change the underlying business model The intention is not to prevent the use of price framing per se. If price framing is used in conjunction with provision of the appropriate information and does not mislead consumers, it is unlikely to breach the CPRs.’

In relation to reference pricing, the OFT proposes:

Traders should always use the most valid reference. RRP only likely to be most valid where a ‘was’ or External Reference Price (ERP) is not available.

‘Was’ prices should be established relative to the length of the sale (ie no shorter than the sales period or ‘continuous’ price establishment).

‘Was’ prices should be established in at least 50% of outlets (by volume) that go on to use the offer price.

Traders using reference prices must state if they have sold the product at a lower price in the three months prior to the offer starting.

ERPs must state the date of the comparison and be kept current as far the medium allows.

‘After Sales Prices’ should be avoided and where they are used strictly adhered to. If the trader wishes to retain flexibility over the post-sale price then an ASP offer is unlikely to be appropriate.

RRPs should be set at a price at which viable levels of sales have been made.

Manufacturers should provide identical RRPs for all traders selling technically identical items.

The OFT says the following questions need to be answered at the autumn meetings:

Is the suggestion to use ‘was’ prices or ‘ERP’ prices in preference to RRPs workable? Does it allow for introductory offers?

Is the suggested flexible approach to price establishment helpful? Or is the ‘28 day rule’ preferred?

If a product has been price established in a different store to the store making the offer is it sufficient that at least 50% of stores making the offer have done so?

Some traders already state if a lower price has been available in the prior three months.  Should this become the standard?

What practical difficulties are presented in keeping ERPs current?

‘After Sales Prices’ would clearly need to follow the same price establishment period as a ‘was’ price offer in order to achieve consistency. How realistic is it that a trader can strictly adhere to this?

How far can retailers ‘police’ the RRPs they are given? What reassurance / evidence do manufacturers typically give that their RRPs represent true selling prices?

Which? recently accused furniture chains of misleading shoppers by having products at ‘sale prices’ for months on end after a seven month study tracking 12,793 prices.

The OFT says it plans to publish its final report in December. Anyone wishing to comment on the proposals can email gabrielle.firestone@oft.gsi.gov.uk and anyone wishing to attend the meetings can email james.macbeth@oft.gsi.gov.uk or telephone 020 7211 8958.

Dwell gets £5m KCP investment

Furniture and accessories retailer Dwell has secured a £5m investment to help fund its expansion after enjoying a 15% increase in sales in the six month to the end of January 2010.

Key Capital Partners’ investment will see the chain grow by 33 stores to 52 by 2014. Sales reached £25m last year as Dwell strengthened its management team with the recruitment of Neil McCausland, Kurt Geiger, TJ Hughes and Skin Clinics chairman as chairman; Simon Tutt as finance director and Robyn Clifford, former Harrods head of buying and merchandising for own brand products as buying and merchandising director.

Owen Trotter, KCP partner will joing the Dwell board. ‘The challenges facing UK retail over the last two years have been well documented, but Dwell has emerged from the turbulence in a far stronger position due to its first class management team and proven product offering. The business is performing strongly and we look forward to working with founder Aamir Ahmad to expand the business significantly over the coming years, in line with its ambitions,’ he says.

‘KCP will prove to be a key strategic partner as we look to boost brand awareness and expand the business, beginning with five new stores in the UK in 2011. The timing is perfect for expansion, both in terms of the life cycle of the business and conditions in the commercial property sector, where pricing is currently extremely competitive,’ says Ahmad.

Second At Home for John Lewis

John Lewis today opened its second John Lewis At Home store, in Croydon.

The format, winner of the Interiors Monthly 2010 Best Furniture Retailer (1-2 stores) award, focuses exclusively on furniture, furnishing accessories, homewares, electronics and home technology.
‘We are thrilled to be opening in Croydon today. The assortment is varied and extensive enough to furnish every room in the house and like our full line department stores, John Lewis At Home' offers a differentiated service, inspiring products and great value,’ says Tim Harrison, John Lewis head of format development.
‘John Lewis At Home in Poole has proved that a smaller format works and has been very well received by customers for its convenient access and shopping ease. Our Croydon shop was completed in less than six months and to do this in such a short period of time demonstrates that John Lewis has the ability to move at pace with our At Home format.

‘We’ll continue to trial the format in 2010, as we believe that with this new, accessible format there is a really strong opportunity to grow our business in the home sector. We are confident that these smaller format shops will serve our customers well by giving them convenient access to John Lewis products. We have also shown our ability to deliver a high level of customer service in a smaller format, which is the ultimate test.’

The chain believes there are at least 30 locations where it could open an At Home store, with the next two scheduled for Tunbridge Wells and Swindon this autumn.

The Croydon store is also the chain’s first to have a female only senior management team.

Debenhams sees home office sales leap

Debenhams has seen sales of home office furniture jump by 340% in the past year, with small triangular desks its bestseller.

The department store chain says the rise has been fuelled by people starting their own business after being made redundant, companies encouraging staff to work from home to cut office costs and people seeking a better life/work balance by cutting down on commuting.

‘Small triangular shaped work stations, designed specifically to fit unobtrusively into room corners or under the stairs are the top sellers followed by small, glass-top desks - just the right size for a laptop computer, a telephone with a printer alongside - are the next favourite buys,’ says the chain.

‘However, there is one area where home workers are refusing to compromise. Despite the recession, comparatively expensive, top-of-the-range, leather, swivel office chairs are still top of every home worker’s list. Often they will cost more than the desk.’

Compact bookshelves, filing cabinets and desk lamps are the next most popular items. 

Armstrong set to close factory

Vinyl flooring manufacturer Armstrong is set to close its Stockton, Teesside factory after beginning a 90 day consultation with its 163 staff.

The closure is part of the group’s withdraw from the European domestic flooring market. It says its Gateshead and Stafford factories are unaffected by the Stockton decision.

Executive vice-president Frank Ready says: ‘The decision to exit the residential flooring business in Europe and the proposal to close our plant at Teesside were not taken lightly. A review of potential options for the location and employees, including a sale, has been and continues to be conducted. Unfortunately, to date we have not found a workable alternative,’ says Frank Ready, Armstrong vice-president.

‘Armstrong takes its responsibility to its employees very seriously. We will be supporting our staff, customers and suppliers to ensure a smooth transition. The withdrawal from the European residential business is considered to be necessary for Armstrong to focus on the commercial flooring business and those markets where we have leading positions in order to build a sustainable and profitable business.’ Armstrong’s European vinyl division lost £4.65m in the quarter to 30 June.

Some of the Stockton employees have been at the plant since it opened in 1977 and Tim Bush, Unite regional officer says the news is devastating. ‘Unite will be entering into consultation with the company with a view to seeking alternatives to closure.’

Balta snaps up Domo to become £570m group

Balta snaps up Domo to become £570m group

Balta Group is to become a £570m company after agreeing to by Domo Group’s carpet, needle felt and carpet tile operations.
Balta will take over Domo’s Belgian production facilities at Oudenaarde, Zele and Ghent and retain the 725 staff. Domo is keeping its nylon carpet yarn and artificial grass operations as it concentrates on chemicals, property and private equity.
Balta Group had sales of £435m and Domo’s flooring division had sales of £135m last year. Balta can use the Domo name for flooring until the end of 2013.
‘This is a splendid opportunity for us,’ says Jules Noten, Balta Group ceo. ‘Until today Balta had no activities related to carpet tiles and needle felt. We can tap into the strengths and geographical overlap of each of these business units, without neglecting to harvest the potential synergies operationally.’
Noten says the group will adapt operations in order to focus in the most efficient manner of product-market combinations and the implementation of synergies. ‘This transaction will create an overlap only for broadloom carpet. After an evaluation period the product ranges will be optimally spread across the various manufacturing facilities and segments.’
The transaction is expected to be concluded by the end of next month following approval by the competition authorities.
‘Our intention is to put together two highly complementary businesses that will strengthen Balta’s leading franchise, giving it extended product and geographical reach, whilst simultaneously achieving significant operational synergies,’ says Julian Huxtable, a senior principal at Doughty Hanson, Balta Group’s private equity owner.

Prices fall again

Furniture prices fell by more in July than a year ago but flooring price reductions were significantly lower than in 2009.

Furniture prices dropped by 5.8% last month, compared with 5.6% in July 2009, according to National Statistics. ‘Prices overall fell this year by more than a year ago, with the main downward contributions coming from kitchen base units and mattresses. There are offsetting upward contributions coming from other items of bedroom furniture,’ it says. This resulted in the annual rate for furniture and furnishings dropping from 2.9% to 2.6%, with prices 5.9% higher than 2005.

Flooring prices dropped by 1.1% compared with 5% in July 2009. ‘Prices overall fell this year by less than a year ago, with the main upward contributions coming from carpets and rugs,’ says National Statistics. The annual rate jumped from 1.9% to 6.1%, with prices 5% higher than 2005.

These changes saw the annual Consumer Price Indices inflation rate drop from 3.2% to 3.1% (pictured above). The annual retail Price Index inflation rate dropped from 5% to 4.8%.

CF to kick off consumer campaign

The Carpet Foundation is investing £125,000 in a three month consumer advertising campaign which will see 34 advertisements, two thirds of them cover positions, in the October, November and December issues of 13 home interest magazines.

The magazines have a combined circulation of 1.3million.

To coincide with the Campaign for Wool, Carpet Foundation has reintroduced its Quality Mark as the Wool Rich Quality Mark. Almost all products produced by Carpet Foundation manufacturers are wool rich.

Back to the beginning

High rent charges will see Bolton furniture retailer Global Interiors move out of town to its original location.

The Egerton store has started a £1.25m closing down sales today before transferring to the Botany Bay retail mill outlet, near Chorley. This was where Donna Burrell, co-founder, launched the company in 1997. She has been planning the move for the past year, persuading Botany Bay to drop its admission charge.

Global Interiors occupies half of the mill’s second floor, and Burrell hopes to expand this to fill the entire floor as other tenants move out. The store’s dozen staff will relocate to the mill.

‘My rates, service charges and rent this year would have been about £65,000, so I decided to move to the mill where costs will be much lower.

‘There, I will only have to bother about my rent and my staff wages and I can spend my time on what I’m good at — buying furniture at the right price instead of dealing with everyday queries like utility bills.’

Last month Bolton furniture and flooring retailer Proffits fell into administration.

United sees sales drop

United Carpets has become the second large flooring retailer to see sales drop in recent weeks.

The 82 store chain saw like for like flooring sales drop by 2.6% in the 17 weeks to 28 July. Bed sales, which account for just under 10% of turnover, dropped by 25.5%. The chain says its average bed sale is approaching £300 compared with its average flooring sales of about £180.

‘This period includes the World Cup, the general election and subsequent budget which together have made for an exceptionally tough trading period. Given the uncertainty across the UK in terms of the impact of the tightened fiscal regime and wider global trends it is hard to predict the future. Certainly, the first 17 weeks of trading of the current year have continued to reflect the weaker trading patterns of the last quarter of 2009/10,’ says Peter Cowgill, United Carpets chairman.

Last week Carpetright warned like for like sales were down 3.4% in the 13 weeks to 31 July.

In the year to 31 March, United saw pre-tax profits almost double to £1.098m as sales grew by 7.4% to £69.9m.

Online delivery boost

Furniture and interiors delivery firm BJS Distribution is looking to more than treble its workforce on the back on online furniture sales.

The firm, which offers white glove delivery options, was formed a year ago in Telford but has recently moved to Walsall’s Phoenix Business Park to be nearer the M6.

It generated sales of £600,000 last year and is now looking to add 60 staff to its 25 strong wokforce. The majority of the company’s customers are online furniture retailers.

Sales dip at Carpetright

Carpetright has seen UK and Republic of Ireland sales dip in the past quarter, but margins have risen as it has cut back on promotions. Sales fell by 0.9% and by 3.4% on a like-for-like basis in the 13 weeks to 31 July.

The group had previously said that it had cut prices in the Republic of Ireland in an effort to lift sales volumes.

The falls compare with 6.6% and 1.4% increases in the same quarter a year ago.

‘As announced previously, we had expected consumer demand across Europe to remain subdued as we entered our new financial year, and this view is reflected in the update announced today,’ says Lord Harris, Carpetright executive chairman. 

‘We remain cautious about the outlook for consumer spending for the balance of the year and as a consequence continue to manage the business by exerting tight control over all costs, capital expenditure, stock and cashflow. Gross margins in the UK are up on previous year largely a result of managing promotional activity.

‘Our focus on strong value-led retail brands will enable the Group to capitalise on its market leading positions in its geographical markets when economic conditions improve.’

Total group sales fell by 2.5%, with the closure of its Polish stores accounting for almost a quarter of the drop.

Peter Knight to close

Peter Knight, the long established Beaconsfield, Buckinghamshire furniture, flooring, lighting and accessories retailer, is to close next month after nearly 50 years of trading.

 ‘Retailing is changing dramatically and business is falling away. Today you've got supermarkets becoming more like department stores. There's no question about it, we are obviously very sad,’ says Peter Knight, owner who is retiring.

Mr Knight founded the store in 1963 after running a furnishing shop in Surrey. It has a Royal Warrant and has supplied 'personal items' to the Royal Family for many years.

Alastair Pike, Buckinghamshire Chamber of Commerce interim president says parking is a major issue in the area and says the site could help boost the area. ‘The redevelopment of the Peter Knight site could rejuvenate the Old Town and neighbouring retailers will I’m sure be looking on with great interest in the months that lie ahead.’

Richard Keith, Beaconsfield deputy mayor, says: ‘This is a great shame and it will be a loss for the Old Town. It's a worry at the moment when a retail unit closes because it's a question of what replaces it - a dead shop frontage is a very sad thing to see. Peter Knight was a reason for people to come Old Beaconsfield.’

At Home stores get new head

Maggie Porteous, md of John Lewis’s Trafford Centre and Cheadle stores is to run the chain’s At Home stores.

The first John Lewis At Home store opened last October between Ppoole and Bournemouth and the second is due to open in Croydon on 16 August. This will be followed by Swindon and Tunbridge Wells in the autumn.

Porteous, who has spent 23 years at John Lewis, was in charge of the opening of the Cheadle store in 2002 and the Trafford Centre branch in 2005.

‘I like opening new shops and am really excited about the move.’

She will be succeeded by Margaret Jacques, current md of the Liverpool branch.

Home shines for John Lewis

Strong sales of fitted furniture helped John Lewis’s home sales jump by 10.6% in the week ended 10 July.

The department store chain also saw encouraging performances from other categories during the second week of its Clearance sale. ‘On Home it was a particularly good week for outdoor living, not surprising given the weather, but with an exceptionally strong sterling figure for this late in the season, with picnic-ware in support at plus 17%. However, the best result came from fitted furniture at plus 42%. Textiles, a big Clearance player, notched up plus 10% and it was good to see china at plus 15%,’ says Nat Wakely
 John Lewis director selling operations region A.

‘A good second week of Clearance at plus 9.1% on last year, with only Saturday recording a decrease thanks to the football and the exceptionally hot weather, particularly in the south. There were stronger figures from many of the northern branches, and London continued to hold its own.

‘Glasgow came top at plus 15.7% with a phenomenal result from home and in particular furniture. This was a pattern mirrored at Cheadle at plus 6.6%, where Home was plus 20% and furniture also very strong. In the south, Oxford Street scored the greatest increase at plus 12.3% with a full house of increases across all buying groups, just pipping Bluewater at plus 9% where womenswear provided the greatest strength. Peter Jones, Kingston and Edinburgh, all around the plus 5% mark, were next in line.

‘Johnlewis.com, at plus 44.7%, saw a bigger percentage uplift than the week before with fashion particularly strong, especially premium beauty, along with outdoor toys, furniture, china, lighting and televisions to name but a few!’

Sales for the 23 weeks to 10 July are 15.9% higher than last year an up 11% on 2008/2009.