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Retailer Republic poisedto fall into administration
REPUBLIC, the youth fashion retail-er, is poised to become the latesthigh street name to collapse intoadministration, putting 1,000 jobsand 121 stores at risk.Ernst & Young has been lined up asadministrators and the appointmentis expected to be confirmed thismorning. The group’s demise marks the lat-est in a string of casualties since thestart of the year after Jessops,Blockbuster and HMV all enteredadministration, with more than10,000 staff made redundant. The chain, which is owned by USprivate equity giant TPG, has strug-gled to stem falling sales amid a weak consumer demand and a chal-lenging economic environment, par-ticularly in the North of England where most of its stores are based.Former Asda chief executive Andy Bond stepped down as chairman atthe end of January and last week itemerged that KPMG had been hiredto advise it on offloading the loss-making stores in its 121-strongestate. The retailer, which is led by former TK Maxx chief executive PaulSweetenham had been hoping tomove to monthly rents but it isunderstood that talks with landlordshave been unsuccessful. TPG bought the chain in 2010 for
THE DOW Jones industrial averageindex is close to hitting an all-timehigh, after edging up 0.34 per centto close at 14,018.70 last night.The key New York index isapproaching the 14,164.53 markthat it reached over half a decadeago –in October 2007. Yet equities across the pondcould swing either way today,depending on how investors reactto President Barack Obama’s Stateof the Union address, which wasmade overnight.The Standard & Poor’s 500 Indexclosed up.16 per cent, at 1,519.43.
Dow Jones nearto all time high
Republic, which is headquartered in Leeds, runs 121 stores and employs 1,000 staff
BY JULIAN HARRISBY KASMIRA JEFFORD
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NEMPLOYMENT remainsobscenely high in today’sstagnant Britain, and far toomany people – young and old –have been on the dole or on other outof work benefits for far too long. Anything that allows them to break out of their present predicamentshould be welcome. The government should be able toask those on benefits to work for theirmoney or to attend training; whenhandled sensibly, and with safeguardsto prevent this from turning into acorporate subsidy, such measures willhelp integrate people back into the workforce. They should be welcomed by all who want to help the poor. There is, however, a view amongsome activists that workfare pro-grammes are tantamount to slavery:they don’t see that benefits are equiv-alent to a wage. They also argue that
Work placements for the unemployed make a lot of sense
WEDNESDAY 13 FEBRUARY 2013
some workfare placements aredemeaning, or that claimants shouldhave the right to refuse placementsthey don’t like and continue toreceive benefits. Such arguments aremisguided; there is no slavery asclaimants can choose to take neither job nor benefit, just like potentialemployees can turn down a job andtherefore not get paid for it. Thesesorts of analogies are in truth horri- bly demeaning of genuine slavery.Fortunately, yesterday’s high courtruling, which struck down the cur-rent scheme on a technicality, madeit clear workfare wasn’t forced labourunder the Human Rights Act. The gov-ernment incompetently communicat-ed requirements, provided wronginformation about penalties andmade other procedural blunders.Once again, civil servants were slop-py and failed to produce legislation orimplement the policy in a robustmanner. The rules are now beingtweaked to ensure the programme’ssurvival, but the government could yet be forced to pay out millions. Themachinery of the British state is becoming more shambolic by the day.
HOUSING BUBBLES (CONT.)
Two more pieces of evidence to cheerthose seeking to buy a house – and worry those who fear the coalition’sfunding for lending programme and This won’t end well. The only sustain-able solution is to tear up our archaicplanning rules and allow hundreds of thousands more homes to be built.
DEALS ARE BACK
A healthier development is the returnof mergers and acquisitions, thoughthe trend remains far too American.Last night’s news that Comcast is pay-ing General Electric $16.7bn for the49 per cent stake in NBCUniversal itdidn’t already own is a major move; itfollows the increasingly contestedmulti-billion proposed buy-out of Delland the takeover of Virgin Media by Liberty Global. For the sake of theCity’s underworked bankers andlawyers, let’s hope more UK compa-nies soon start to splash out.credit subsidies are fuelling another bubble. The Council for MortgageLenders revealed that 216,200 first-time buyers became homeowners in2012, the first time the annual totalhas exceeded 200,000 since 2007 anda year-on-year rise of 12 per cent. Andas noted by Ray Boulger of Charcoal,the Marsden Building Society haslaunched a 3.99 per cent fixed rateloan to July 2015. While this only allows buyers to borrow £250,000,this is the first time for nearly 10 years that we see such a cheap fixedrate mortgage available on a loan to value of up to 90 per cent. Money isreturning to the housing market. Theproblem is that house prices remainaround 25 per cent overvalued com-pared to earnings, and even more soin much of London. The surge in new mortgages has also been accompa-nied by a reduction in home-building.£300m with the aim of doubling thesize of the business to over 200 stores.It hired Sweetenham a year ago tospearhead a major investment pro-gramme. Republic’s co-founder andchief executive Tim Whitworth thenstepped back from the day-to-day run-ning of the business. TPG also invested more than £7m inIT facilities to improve the chain’sonline presence and hired formerMango buying director MelissaMcDermott to revive its womenswearrange.But the latest accounts show salesdeclined by 2.3 per cent to £177m inthe year to January 2012. Pre-tax profitslumped from £27.3m to £3.2m. A source familiar with the company said Republic’s target market of 16 to25 year olds has been particularly hit by the recession while its loss-makingstores have also burdened the group.Republic was founded by Whitworthand Carl Brewins in 1986 in Leeds asBest Company, selling denim andmens’ jeans. It was eventually renamed Republic in 1998.Both Ernst & Young and TPGdeclined to comment.CARSTEN Kengeter, the former chief executive of UBS’s investment bank, isleaving the group sooner than expect-ed as part of a management shake-up.Kengeter was recently moved from being co-head of the investment bank with Andrea Orcel, its current chief executive, to head the winding downof the group’s fixed income business.But last night the bank announcedthat Kengeter was leaving the groupimmediately and would provide adviceon a consultancy basis.Sources said: “There’s a point whenit’s just right to move on.”UBS is reducing its headcount by 10,000 across the world.Sam Molinaro will become head of the non-core and legacy portfolio, withimmediate effect, reporting directly toSergio Ermotti, the bank’s chief execu-tive. Molinaro joined in March 2012 asCOO of the investment bank. The co-head of UBS’s financial institutionsgroup (FIG) in Europe, Edouard de Vitry, is also leaving as part of changesimplemented by new investment banking head Orcel. JavierOficialdegui, co-head of the FIG unit who was brought in by Orcel, will besole leader of the advisory team.Darryll Uden recently left as co-head of equity capital markets (EMEA).Separately, the bank was fined£9.45m by the FSA yesterday forexposing customers to unacceptablerisk when it sold an AIG investmentfund.
Kengeter exitsUBS soonerthan expected
BY DAVID HELLIER
LABOUR yesterday accused the government of failing to takedecisive action and build large-scaleprojects that could help kickstartthe economy.The party’s analysis of the government’s nationalinfrastructure plan suggested only seven out of the 576 major buildingprojects on the list have beencompleted, while just only 18 percent are under construction. A Treasury spokesman hit back:“Under Labour no nationalinfrastructure plan even existed.”
BY JAMES WATERSON
IT groups’ tax accounts face scrutiny
MPs are preparing to scrutinise the taxaffairs of IT companies that supply thepublic sector before a crackdown onaggressive avoidance by contractors thatreceive billions from taxpayers. The publicaccounts committee has confirmed that itis considering calling in some of the ITsector’s biggest companies, as a FinancialTimes investigation into nine governmentsuppliers shows they use a range ofmethods to keep taxes low, includingrecording UK sales in low-tax jurisdictions.
Rush to invest in Yorkshire potash
The latest discovery under the county’srich soil has sparked their biggestinvestment frenzy since the rhubarbboom of the interwar years. This time thecommodity is potash, a vital ingredientfor the fertiliser needed to feed theworld’s growing population.
CBI lowers growth forecast
A leading trade body for business has cutits forecast for UK growth but expectsBritain to avoid a triple-dip recession. TheCBI said it expects the UK economy togrow one per cent this year.
Bonus up for BP’s chief executive
Bob Dudley has been awarded a bonus of£2.6 million in cash and shares, despitepresiding over a 20 per cent slump inprofits at BP last year.
Iberia to jettison 3,800 jobs
Iberia today announced a plan to cut3,807 jobs as it attempts to stem losseswhich have reached €850 million (£731million) over the past four years.The job losses, which represent about 19per cent of the workforce, were reducedfrom an original figure of 4,500.
Rogue trader sues Societe Generale
French rogue trader Jerome Kerviel istrying to render meaningless the €4.9bnin damages he owes to Societe Generaleby seeking the same amount from thebank in a labour court.
Economic hopes rise on oil demand
The outlook for the global economyappeared to brighten as OPEC, the cartelof oil-producing nations, predicted theworld will consume more oil this year thanpreviously thought.It cited better thanexpected growth at the end of last year.
Intel to launch web TV service
Intel confirmed plans to offer a paidInternet video service and accompanyingset-top box, an unusual gamble for a chipmaker that has rarely marketed directly toconsumers.
Lehman in $800m property deal
Lehman Brothers Holdings has agreed tosell the Manhattan office tower at 237Park Ave. to a venture of RXR Realty andWalton Street Capital in what would beone of the largest sales in Manhattan inthe past year.
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