Kingfisher chief warns of store closure over online firms’ tax advantage

Business rates are one of the biggest charges the Kingfisher faces, with as much as £120m going on the charge each year

The government stands to lose out on one of its biggest sources of revenue by failing to reform the tax system to take account of online selling, the chief of one of the UK’s biggest retailers has warned.

Ian Cheshire, chief executive of Kingfisher, said he would close a quarter of his company’s stores were it not for long-term leases and other arrangements that would make the closures expensive. Business rates are one of the biggest charges the retailer faces, with as much as £120m going on the tax each year.

“We do pay our taxes [for the] public good,” said Cheshire. “But online retailers are not facing the same tax take. For the Treasury, there is a danger that their tax base is going to disappear.”

If the company were to reduce the number of its stores, the government’s tax take would fall accordingly. “So 25% fewer stores would be 25% less tax,” warned Cheshire, who said the company’s sales and profits would be unaffected by any such move.

Online retailers take advantage of their lower costs to undercut offline competitors, who face not only business rates but rent, higher energy and staffing costs.

“The challenge for the government is that they have to raise tax from somewhere,” said Cheshire. He advises differential tax rates to stimulate business. “The tax base is based on historic models. We need a different model.”

Cheshire is also chairman of the British Retail Consortium, which is campaigning for lower rates for businesses. The BRC notes that business rates are set to rise by 2.6% in April, after a 5% raise last year. Instead, the trade body would like a single year freeze in rates from April, which it says would help halt the slide in the sector. Retailers – with the demise of long-established names such as HMV, Jessops and Comet – have been among the worst hit businesses in the grip of double dip recession.

Cheshire met Danny Alexander, chief secretary to the Treasury last week to press his views. The hits to the high street come as some large online companies are under scrutiny for their tax affairs. Amazon was revealed to be using its Luxembourg subsidiary to avoid paying corporation tax in the UK and Google’s £2.5bn in UK sales resulted in tax bill of only £3.4m in 2011, as it channels profits via Ireland and Bermuda.

But Cheshire said that the revelations of alleged tax avoidance by large companies could backfire on them, with people preferring brands that pay fair tax.

Kingfisher is Europe’s largest home improvement retailer with more than 1,000 stores in eight countries, under brands including B&Q, BricoDepot and Castorama. The company employs about 80,000 people and sales in 2011-12 reached £10.8bn, of which more than half came from outside the UK, chalking up pre-tax profits of £807m.

While Kingfisher also runs Screwfix, which has a major online presence in trade tools and hardware, and sells thousands of lines through its web sites, some of the company’s other popular product lines – such as new kitchens, paints and other decorations, and gardening products – are still more likely to attract customers to physical stores.

Nevertheless, “if I were starting today, I’d start Screwfix not B&Q,” said Cheshire.

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HMV administrators axe another 464 staff and 37 stores

Latest closures – including all four Heathrow airport sites and the final Glasgow store – take total number of job losses to 1,500

Full list of 103 HMV stores set to close

HMV is to axe a further 464 staff and 37 stores, bringing the jobs toll since the retailer lapsed into administration to nearly half the workforce.

The latest closures at the failed music and DVD chain will bring the total number of unemployed staff close to 1,500, with a total of 103 stores earmarked for closure including the sites added in the latest cull.

Among the stores set to close in the wake of Wednesday’s announcement are all four Heathrow airport sites, along with a fourth Glasgow store, in addition to the three other stores already closing in the Scottish city. However, the flagship store in London’s Oxford Street will remain open for the time being.

Nick Edwards, a joint administrator at Deloitte, said: “As part of our ongoing review of HMV’s financial position, we have undertaken a further review of the store portfolio and have identified an additional 37 stores for closure. This step has been taken in order to enhance the prospects of the restructured business continuing as a going concern.

“Together with the previously identified 66 closures, this restructuring will result in a residual portfolio of some 116 stores.

“We are extremely grateful to the staff for their continued strong support and commitment during an understandably difficult period. All other key stakeholders including suppliers and landlords remain supportive and we appreciate their ongoing assistance.”

The company, which has debts of £170m, called in administrators last month after poor Christmas sales.

There was some hope for the company’s future after a temporary deal was struck with film studios and music labels to ensure new releases, such as the James Bond film Skyfall and Madagascar 3, continued to flow to its stores.

Negotiations with specialist investor Hilco continue after it acquired the secured debts from Royal Bank of Scotland and Lloyds Banking Group. The company had already bought HMV Canada in 2011 and has built relationships with several distributors.

Earlier this month, administrators said they would shut 66 shops across the country, with the loss of 1,000 jobs. About 1,500 jobs remain.

When the chain collapsed, its gift cards, worth about £7m, were suspended, but these were later reinstated after a customer backlash.

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Eight jobs at Costa branch attract more than 1,700 applicants

Coffee chain reveals job competition with claim it received 1,701 applications for posts at a new branch in Mapperley, Nottingham

More than 1,700 people have applied for eight jobs at a new coffee shop in an indication of how tough the jobs market remains. The Costa chain said it had received 1,701 applications for the posts at a new branch in Mapperley, Nottingham, after advertising in early December.

The news comes before new unemployment figures due to be published by the Office for National Statistics weds.

A spokeswoman for Costa said the company was shocked at the response for the three full-time and five part-time posts at the shop, which is due to open on Friday. She said applicants for the posts, with wages between £6.10 and £10 an hour, ranged from new graduates to former managers who were clearly overqualified for the positions.

The applicants included employees of the music chain HMV and Clinton Cards, which are among a number of high-street chains forced to call in the administrators in recent months.

More than 1,000 jobs are to be lost at HMV as it closes 66 of 220 UK stores over the next two months. Hundreds of jobs were also lost when Clinton went into administration last year, though many were saved when it was bought by a US company.

The spokeswoman for Costa added: “We’ve been really encouraged to see so many people wanting to work at their local Costa store.”

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HMV administrators to make 930 staff redundant as they shut first 66 stores

Administrators for failed music store chain to close loss-making shops across country over next two months

HMV stores set for closure – the full list

Almost 1,000 HMV staff are facing redundancy as administrators for the failed music store chain revealed they will close 66 shops across the country.

The loss-making stores, including all five Edinburgh sites, three in Glasgow and four in London, will close over the next two months and comes as administrators from Deloittes plan to sell the company’s flagship Oxford Street store.

Joint administrator Nick Edwards said: “As part of our ongoing review of HMV’s financial position, we have now completed a review of the store portfolio and have identified 66 loss-making stores for closure. This step has been taken in order to enhance the prospects of securing the business’ future as a going concern.

“We continue to receive strong support from staff and are extremely grateful to them for their commitment during an understandably difficult period. All other key stakeholders remain very supportive and I continue to be hopeful of securing a future for the restructured business.”

HMV called in administrators in early January after poor Christmas sales. A further 3,000 jobs are at risk.

At first gift cards, worth around £7m, were suspended, but these were later reinstated after a customer backlash.

Restructuring group Hilco took over the retailer’s debts of around £176m from its lenders, including Lloyds and Royal Bank of Scotland, giving it effective control of the business but not ownership.

Hilco is thought to have the support of music labels including Universal Music, Warner Music and Sony for any takeover, having already bought HMV Canada in 2011.

It is thought that RBS and Lloyds were owed around £30m each as HMV’s biggest secured creditors. It is not known how much Hilco paid to take control, but it is expected to be well below the £60m the banks were owed.

The 930 job losses – the first shopfloor redundancies at the firm – add to the 190 losses at HMV’s head office and distribution arm and led to the company’s official Twitter account being hijacked by soon-to-be sacked staff who live-tweeted a meeting with HR at which they learned their fate.

This included “There are over 60 of us being fired at once! Mass execution, of loyal employees who love the brand. #hmvXFactorFiring”

Followed by: “Just overheard our Marketing Director (he’s staying, folks!) ask “How do I shut down Twitter?”

Later on, the employee, identified as Poppy Rose, said: “I hoped that today’s actions would finally show them the true power and importance of Social Media, and I hope they’re finally listening.”

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Rebellious HMV tweets are in a fine tradition | Richard Seymour

The retailer’s Twitter account went rogue. It’s always good to see workers take some control back over their fate

As the triple-dip recession hits, major stores have embarked on a jobs massacre. Jessops, Blockbuster and HMV have collapsed, placing thousands of jobs at risk. Having nothing to lose but their high street chains, HMV workers in Limerick responded by occupying a number of stores.

Today, as more HMV workers faced the sack, the company’s Twitter account was taken over by an angry employee. “There are over 60 of us being fired at once!”, one of the tweets said, although a total of 190 redundancies have been confirmed. “Mass execution of loyal workers who love the brand.” One hopes the workers have learned this much at least: loyal workers are always the first to get it.

“Under usual circumstances,” another tweet explained, “we’d never dare do such a thing as this.” But these are not normal circumstances, so “what have we to lose?”

Shortly before the tweets got deleted, the account was updated one last time: “Just overheard our Marketing Director (he’s staying, folks) ask ‘How do I shut down Twitter?'” Another lesson here: the cluelessness of management can always be used against them.

These scattered rebellions by HMV workers stand in a venerable tradition. When workers were threatened with redundancy at Republic Windows and Doors in Chicago, workers occupied and won a series of demands. When Ford Visteon workers were unceremoniously sacked, they occupied production plants and called for solidarity.

What these examples have in common is that they involve groups of workers taking some control over their fate. We treat “the market” as if it was some impersonal god, rather than simply the effect of human behaviour. It feels as if we have no way out. Taking control means defying the logic of “the market”. And this, in germinal form, constitutes the reappearance of an older tradition of workers’ militancy, from factory councils in Turin in 1919 to the Recuperados in Argentina in 2001.

In recent years, Occupy raised similar questions about how we can take control of our fate, forming “liberated” spaces for democratic discussion and planning activism. But what Occupy couldn’t successfully do was take control of the means by which real power is exerted. This is something that workers occupying factories, stores and even Twitter accounts have done first-hand. They are right to do so, and shouldn’t stop at protest and rebellion. In the best tradition of the labour movement, they should say “we don’t want just a bigger slice of the cake; we want the whole fucking bakery”.

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Gift voucher law must be changed | Nils Pratley

Protecting consumers ought to be the priority and it is hard to believe HMV’s fate would have been different had it been obliged to tell Christmas shoppers it couldn’t sell them vouchers

Administrator Deloitte has studied HMV’s business and, thankfully, decided that gift vouchers can be honoured after all. The saga, though, feels unsatisfactory. It is clearly deeply unfair that consumers, who cannot be expected to monitor the financial health of high street names, are put in the position of unsecured creditors when administration happens.

It is also a nonsense that HMV, which warned before Christmas of “material uncertainties facing the business” and a probable breach of banking covenants, could be free to continue selling vouchers.

The law should be changed to stop the latter abuse in future. The only serious objection is that vulnerable retailers might hasten their demise by advertising their frailties and, potentially, losing custom.

Yes, that’s a risk but protecting the consumer ought to be the priority. In HMV’s case, the outstanding vouchers are worth £6m-£7m. It is hard to believe the fate of the company would have been any different if it had been obliged to tell Christmas shoppers: sorry, it couldn’t sell them a voucher at that time.

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HMV will accept gift vouchers after administrators’ U-turn

High street chain will also pay proceeds from charity singles in full, after accountant Deloitte finishes review of business

The stricken entertainment chain HMV is accepting gift vouchers to pay for products after administrators reversed their original decision .

Accountant Deloitte, which took control of HMV last week, also moved to reassure charities owed money from the sale of charity releases – including the Hillsborough Justice Collective single – that they would be paid “in full as soon as possible”.

Nick Edwards, joint administrator for HMV and its Fopp offshoot, said he was pleased to announce that, after the conclusion of an assessment of the business, stores would honour gift cards.

“I can also confirm that all money raised by HMV for various charities will be paid in full. We recognise that both of these matters have caused concern for individuals and organisations affected and are pleased to have reached a positive outcome.”

HMV gift cards and vouchers worth millions were declared worthless when the retailer collapsed into administration on 15 January. The move angered consumers because HMV had continued selling the tokens after warning investors in December that the group expected to face a solvency crisis by the end of January.

A Deloitte spokesperson initially insisted the administrators had no intention of reviewing the decision to stop accepting vouchers. Edwards then said the administrators were assessing the state of the business and added: “The ability of administrators to honour gift vouchers will depend on the specific circumstances of each case.”

The administrator has not said how long the gift vouchers will be accepted for, but shoppers are being urged to use them as quickly as possible.

The move will be considered a victory for customers, who mounted a high-profile campaign to convince the administrators to reinstate gift voucher purchases. Deloitte performed a similar U-turn following bad publicity when electrical retailer Comet went into administration before Christmas.

Labour’s shadow minister for consumer affairs, Ian Murray MP, wrote to Deloitte asking for the vouchers to be reinstated. He said: “I’m delighted that HMV and their administrators have reconsidered. I’m sure consumers will be delighted that they will be able to use those Christmas gifts after the initial disappointment last week when the administrators said they would not be accepted.”

Andrew Johnson, director general of the UK Gift Card and Voucher Association, said: “As an industry, the HMV situation has not been great for us, so we are very pleased that the administrators have reversed their decision.

“We would like to see a change in the rules so that vouchers must continue to be accepted by retailers all the time a company is still trading, because that is what really upset consumers.”

It is thought the administrator performed its U-turn because it did not want to inflict any long-term damage on the HMV brand – Deloitte has said that at least 50 groups or individuals have expressed an interest in buying part or all of the business, with turnaround company Hilco – which owns HMV Canada – thought to be the frontrunner. Hilco is already helping the administrators run the HMV chain.

A coalition of music labels and film studios are also reported to be preparing a package for HMV that includes cut-price CDs and DVDs as well as generous credit terms, in a bid to help the 92-year-old retailer maintain a visible high street presence and ongoing rivalry with online sellers.

Consumers greeted the news warmly on Twitter, though there was speculation as to whether many shoppers would already have thrown their vouchers away. @HelenCLondon wrote: “Yay HMV are accepting vouchers! *phew* £10 back in my pocket.”

However, consumers in Ireland were still indignant that there has been no reversal from Deloitte on the 16 stores that went into receivership. All the stores operated by HMV Ireland, a separate company from the UK business, have been closed.

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HMV agrees to accept gift vouchers

Troubled retailer’s administrators say they will begin honouring customers’ cards and vouchers from Tuesday

Stricken retailer HMV has done a U-turn on its refusal to accept its own gift vouchers and will start accepting them again from 22 January, its administrator has announced. Accountancy firm Deloitte, which took control of retailer last week, also said that cash raised by HMV from the sale of charity releases, including the Hillsborough Justice Collective single, will be paid “in full as soon as possible”.

Nick Edwards, joint administrator for HMV Group, HMV Music and Fopp, said: “I am pleased to confirm that, having concluded [an] assessment [of the business], we are able to honour gift cards.

“I can also confirm that all money raised by HMV for various charities will be paid in full. We recognise that both of these matters have caused concern for individuals and organisations affected and are pleased to have reached a positive outcome.”

HMV gift cards and vouchers worth millions were declared worthless when the retailer collapsed into administration on 15 January 2013. The move angered consumers because HMV had continued selling the tokens after warning investors in December that the group expected to face a solvency crisis by the end of January.

A Deloitte spokesperson initially insisted the administrators had no intention of reviewing the decision to stop accepting vouchers. Edwards said the administrators were assessing the state of the business and added: “The ability of administrators to honour gift vouchers will depend on the specific circumstances of each case.”

The move will be considered a victory for customers who mounted a high-profile campaign to convince the administrators to reinstate gift voucher purchases. Twitter hashtags were also set up by members of the public as a way for customers to share their memories of browsing and buying music from HMV stores.

Consumers greeted the news warmly on Twitter, though there was speculation as to whether many shoppers would already have thrown their vouchers away.

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What if your company goes into administration?

With the fall of HMV and Blockbuster, employment lawyer Philip Landau looks at what lies ahead for employees

What happens if the company you work for falls into administration? It’s a situation many retail workers have found themselves in in recent weeks following the troubles of Comet, HMV and Blockbuster. And it is reflected nationwide in all industry sectors.

Frustrated workers are having to grapple with their rights and entitlements – often with insolvency practitioners or public sector bodies who have replaced the familiar face of their employers.

There is a difference between an employer being in liquidation and administration. If your employer is in liquidation, there is no continuing business and you will be out of a job. Where your employer is in administration, an administrator will be appointed to see if the business can be kept alive pending a transfer in whole or part to a new buyer.

In an administration, you will not be able to make any immediate legal claim against your employer as the law imposes a “moratorium” on any such claims without the consent of either the courts or the administrator.

The administrators have a period of 14 days after their appointment to decide if they want to offload the costs of any employees by dismissing them. If they do so within the 14-day period, those former employees become “ordinary creditors” within the administration, so will line up along suppliers and other creditors.

If the administrator elects to retain you as an employee beyond the 14-day period, you become a “preferential creditor” – where you stand a better chance of recovering outstanding salary and redundancy payments if and when the time comes.

If insolvency is the only option for the business, the Insolvency Act 1986 only entitles preferential creditors to their outstanding salary (which also includes commission) for the four-month period immediately preceding the insolvency, and up to a ceiling of £800. You are also entitled to be treated as a preferred creditor for accrued holiday pay (up to six weeks) and certain occupational pension payments. Any additional amount you are owed (or relating to periods longer than four months) ranks as ordinary debt along with the bulk of other creditors.

If there are insufficient funds to pay you from the insolvent business, all is not lost. You can apply to the National Insurance Fund (NIF) for outstanding payments including salary, notice, holiday and redundancy pay. The NIF is operated by the Redundancy Payments Office and is the most useful first port of call in claiming outstanding payments, although the process can be complex and time consuming.

To qualify for NIF payments your employer must be insolvent and your employment needs to have terminated. You must also have done everything you can to get your payment, including applying in writing to your ex-employer for the payment within six months of the date your employment ended.

A claim to the NIF is also subject to ceilings. This includes a cap of £430 a week for unpaid salary up to a maximum of eight weeks; up to six weeks’ holiday pay to a maximum of £800; and outstanding statutory notice, up to a maximum of £430 a week. Your statutory minimum notice is one week for every year worked, up to 12 weeks.

Of course it is always possible that a buyer for the business can be found. If the business is sold and you are transferred, your employment rights are generally protected and transferred to the new owner under the Transfer of Undertaking (Protection from Employment) Regulations. This includes your continuity of employment and any payments owed to you.

It is possible, however, that your contract may be varied to some extent by an administrator as necessary for the survival of the business. This is deemed a permitted variation. You may, therefore, find yourself being forced to accept some changes to your terms of employment – unlike in a standard business transfer situation.

If you are made redundant, the question of transfer of terms does not arise and you lose continuity of employment even if you are rehired by the new owner. You will not qualify for redundancy pay unless you have two years’ qualifying service.

An insolvent employer doesn’t mean you will lose all outstanding pay, but realistically there is likely to be a shortfall.

Philip Landau is an employment lawyer at Landau Zeffertt Weir Solicitors.

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HMV accused of theft over gift vouchers

Conservative MP, Sir Tony Baldry says HMV bosses must have known retailer was at risk while they continued selling vouchers

A senior Tory backbench MP has accused HMV bosses of committing theft by continuing to sell vouchers when they must have been aware “there was little prospect of those vouchers or gift cards ever being redeemed”.

Sir Tony Baldry, a practising barrister specialising in commercial law, said “directors and management must have known that the company was at very real risk of failure” whilst they continued selling vouchers “all through Christmas and up until the day they went into administration”.

His comments came as voucher experts said consumers have probably lost at least £100m in now worthless HMV vouchers. Andrew Johnson, the director general of the UK Gift Card and Voucher Association, said many retailers sell up to 60% of the £4bn of vouchers sold in the UK every year in the run-up to Christmas.

Baldry, MP for Banbury, said there was a “legitimate question” of whether HMV’s directors were “obtaining property by deception, ie offences against the Theft Act, in allowing their stores to continue to sell vouchers and gift cards when they must have known that there was little prospect of those vouchers or gift cards ever being redeemed”.

Just days before Christmas, HMV’s bosses warned investors that there was “significant doubt on the group’s ability to continue as a going concern in the future”. Yet it continued to sell vouchers to the public, many of whom were unaware of HMV’s parlous financial position, until just hours before the company entered into administration.

A spokesman for HMV’s directors said: “Until as late as early afternoon on Monday, the directors believed that they had a reasonable prospect of avoiding insolvency and were satisfied that they were complying with all of their legal obligations including in respect of gift cards. When it became clear to the board late on Monday afternoon that they had no option than to file for administration, they issued immediate instructions to all stores to stop selling gift cards.”

HMV and Deloitte, its administrator, refuse to say how much money consumers have lost on vouchers they are refusing to honour. Other administrators said Deloitte must know how much money is held in unsold vouchers.

Baldry said in a letter to the Department for Business (BIS) it was “more than unfair” that consumers should be left out of pocket when retailers refuse gift vouchers. He called on BIS to change the law to protect the public. “A gift voucher should be as good as a bankers draft, ie a consumer should know that they will either be able to redeem the gift voucher, or get their money back, and there is absolutely no reason why companies shouldn’t keep monies raised from gift cards or vouchers in a separate account,” he said.

Ian Murray, Labour’s shadow minister for consumer affairs, said he had written to HMV and Deloitte to ask them to immediately disclose how much money the public has lost in HMV vouchers. “It will strike consumers as unfair that whilst the company is still trading, they are unable to use gift cards and vouchers,” he said. “I hope that HMV and its administrators will be able to reconsider their decision.”

Johnson said the board of the GCVA would discuss whether to allow a resurrected HMV to remain a member of the association if it continues to refuse to honour the vouchers. He added that public pressure could force the administrators to reverse their decision and honour the vouchers. The same team of Deloitte administrators started accepting Comet vouchers following publicity about a four-year-old cerebral palsy sufferer unable to buy an iPad with vouchers from the electricals retailer that collapsed before Christmas.

Richard Lloyd, executive director of Which?, said it was “outrageous” that consumers have been left out of pocket. “We want the rules on gift vouchers and insolvency to be reviewed to ensure consumers are adequately protected in cases like this,” he added.

Dean Dunham, founder of consumer rights website youandyourrights.co.uk, said it was “morally appalling” that HMV’s bosses continued to sell vouchers “when they would’ve known they were in trouble and going into administration, and they knew the first thing administrator would do would be to take them.”

HMV Ireland collapsed into receivership yesterday and 16 shops in the Republic closed their doors. Receivership is more serious than the administration process in the UK, which increases fears for HMV’s 300 Irish jobs.

A grandfather who bought his grandson a €40 HMV gift voucher for Christmas walked out of a Dublin HMV with three computer games on Tuesday after staff refused to accept the voucher.

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