Rumbelows set to disappear
Saturday 04 February 1995
It is understood that all the managers of the 350 Rumbelows stores are being summoned to a meeting tomorrow, where they will be told that the shutters will come down on more than 100 shops.
The remaining 200 will, the sources add, be reflagged under Radio Rentals or Fona, the Scandinavian-style chain that sells televisions, stereo and video systems from 40 sites.
Thorn EMI, which is chaired by Sir Colin Southgate, refused to comment yesterday, citing the close season rule on information because it is set to announce third-quarter results on Tuesday.
Electrical retailing has become a cut-throat business, and many operators make profits out of the £6bn a year spent on goods only by selling extended warranties.
Thorn has apparently resorted to the break-up plan for Rumbelows after failing to tempt regional electricity companies into buying the stores. Some of the privatised utilities are already addressing their own retailing problems, either by looking to withdraw from the business or cutting the number of stores they operate.
The electricity companies have also come under attack from other operators, who have accused them of subsidising their retail operations. Stanley Kalms, chairman of Dixons, last month described their promotional activities as "profligate and uncommercial".
He added: "The expansion of their retail activities could not be sustained without the cash flow generated from their electricity distribution."
The high street retailers have also come under attack from the Office of Fair Trading. In a report published before Christmas, the OFT said customers were not well-served by the anti-competitive practice of selling extended warranties, which sport profitmargins as high as 80 per cent.
Despite the problems in the high street, analysts expect Thorn to announce an increase in third-quarter profits from £164m to about £200m, which will lift the nine-month total to December from £274.1m to about £340m. They said, however, that none of the improvement had come from Rumbelows, which they predicted was on course to lose more than £10m for the whole year.
The Rumbelows business performance contrasts starkly with Thorn's rental operations, which analysts reckon will make £140m in 1994/95.
One analyst said he would be encouraged if Thorn did break up Rumbelows; in particular, he said the expansion of Fona, a downmarket operation, would be very good news.
Thorn's shares, which have had a strong run over recent weeks, held steady at £10.50 yesterday amid a revival of the speculation that it might also sell or float off its EMI music operation. That business generates almost two-thirds of Thorn's profits, and nearly 70 per cent of results from the HMV record shops are lumped into the division's figures.
Rough calculations by analysts suggest that a flotation of the music business would equate to 800p, or 76 per cent of Thorn's current share price.
City opinion is divided over the merits of enhancing shareholder value by pulling out of EMI, which is widely recognised as having the best back music catalogue in the world. A partial flotation would, some analysts say, prove unpopular with investors and deprive Thorn of a good vein of cash.
- 1 Finland schools: Subjects scrapped and replaced with 'topics' as country reforms its education system
- 2 The West has it totally wrong on Lee Kuan Yew
- 3 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 4 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
- 5 Zayn Malik quits One Direction: Hundreds of workers request compassionate leave following band member's exit
Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
Amanda Knox murder conviction: Italian court overturns verdict for US student and Raffaele Sollecito in the killing of Meredith Kercher
Saudi Arabia says it won't rule out building nuclear weapons
The battle for the Middle East's future begins in Yemen as Saudi Arabia jumps into the abyss
#FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Germanwings plane crash live: Co-pilot Andreas Lubitz wanted to 'do something people would remember him for'
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...