38 2GM Thursday May 26 2022 | the times
Business
Ocado Group, said that while the
online food market is still about
two-thirds bigger than pre-
pandemic levels, the return of
people to offices and nervousness
around the cost-of-living crisis
meant that shoppers are reducing
the amount they buy. More people
are seeking discounts, resulting in
basket sizes shrinking by 9 per cent.
As a result, Ocado Retail said it
believes that sales growth will be in
the “low single digits” rather than its
previous estimates of 10 per cent. In
addition, higher fuel and energy
bills will weigh on its profits,
resulting in a “low single digit”
earnings margin this year. Ocado,Ocado trims
forecasts as
sales decline
O
nline grocery sales have
fallen by a fifth
compared with last year,
prompting Ocado Retail
to cut its growth and
earnings forecasts for the year
(Ashley Armstrong writes).
The company, which is equally
owned by Marks & Spencer andA former anti-fraud minister is due to
give evidence against the government
as part of an attempt to force disclosure
of the identities of the beneficiaries of
tens of billions of pounds worth of
emergency pandemic loans.
Lord Agnew, who resigned in January
over what he called “colossal cock-ups”
in the government’s oversight of the
£47 billion bounce back loan scheme,
said that he would support an attempt
by a campaign group to bring transpar-
ency to Covid-19 schemes.
Speaking at a fraud conference yes-
terday, Agnew accused the govern-
ment of “ludicrous defensiveness” in its
attempts to maintain secrecy in the
schemes and alleged that “spurious rea-
sons” were being provided by officials
to block disclosure.
Agnew said the bounce back scheme,
which provided 1.6 million loans of up1
Thousands of passengers faced
disruption at UK airports after
British Airways and easyJet
cancelled hundreds of
international and domestic flights.
In yet more trouble for an industry
that has been beset by problems
over the past few months, British
Airways cancelled 118 short and
medium flights from its main base
at London Heathrow. Page 102
The Federal Reserve is set to
continue aggressively raising
interest rates until the autumn
as policymakers move to bring
runaway inflation in the United
States under control. Officials at
the central bank discussed moving
to a “restrictive” policy stance —
potentially lifting rates to levels
that would slow the world’s largest
economy — in an attempt to lower
price growth from its highest levels
in a generation. Page 373
JD Sports has ditched its long-
serving boss as its majority
shareholder finally ran out of
patience after a series of scandals.
Peter Cowgill has run JD Sports
since 2004 and oversaw a tenfold
rise in the sports retailer’s value
over the past seven years. Page 374
Volkswagen has agreed a
£193 million settlement with
more than 90,000 UK car
owners after the German company
installed “defeat devices” to cheat
anti-pollution tests. Page 375
Steve Rowe, chief executive of
Marks & Spencer, has bowed
out after returning the high
street giant to the black with a
warning that the cost-of-living
crisis would put a dent in profits.6
Monetary policy needs to be
tightened further in spite of
the risk that raising rates too
much could push the economy into
a recession, the Bank of England’s
chief economist has warned. Huw
Pill said “more needs to be done”
to control inflation, which is at a
40-year high. Page 407
The energy giant SSE, which
generated profits of £1.5 billion
last year, expects to make even
more this year as it benefits from
high prices. The FTSE 100 group
has upgraded its earnings outlook
for the next four years, citing
higher forecast inflation and
“higher and more volatile energy
commodity prices”. Page 428
Prudential has poached a
senior executive from a rival in
Asia to become its next boss,
in a move that cements the FTSE
100 insurer’s swing to the East.
Anil Wadhwani, who led the Asian
business of Canadian insurer
Manulife, will take charge next
February, the Pru said. Page 439
The growth of Britain’s early-
stage technology start-ups is
being hampered by dwindling
venture capital investment,
according to a report by Google.
The proportion of funding for the
earliest-stage tech companies fell
from 15 per cent of the overall
investment in the UK technology
sector in 2011 to 4.8 per cent last
year, the study found. Page 4310
Andreessen Horowitz, a
Silicon Valley venture
capital giant, has raised
$4.5 billion to invest in blockchain
technology via the largest crypto-
currency fund to date. Page 44Need to know
Rowe brings
M&S back
to black as
he bows out
The boss of Marks & Spencer bowed
out yesterday after returning the high
street giant to the black with a warning
that the cost-of-living crisis would put a
dent in profits.
Chief executive Steve Rowe said that
despite recent upbeat trading he ex-
pected financial pressures on shoppers
to “start to bite” in the autumn as people
returned from their first big holidays
since the pandemic to face higher
energy bills.
M&S also said that profits would be
hit by lower income from its Ocado
Retail venture as online sales softened.
It added that while recent trading had
been ahead of last year, “given the in-
creasing cost pressures and consumer
uncertainty we do not currently expect
to progress from this lower profit base
in 2022-23”.
Analysts reckoned this worked out to
about £440 million, compared with the
£522.9 million of adjusted pre-tax profit
it announced for the year to April 2.
The cautious outlook came as M&S
reported a pre-tax profit of £392 million
for the financial year compared with a
loss of £209 million the previous year
— when the business was hit by store
lockdowns — and profits of just
£67.2 million in 2020. Sales rose 10 per
cent from £9.16 billion last year to
£10.88 billion during the period.
Rowe said M&S had “fundamentally
changed” since he took over and he had
tackled “the underlying issues that had
eroded the strength of the business and
building the foundations for future
growth”.
Shares in the high street stalwart
closed up 6½p, or 4.8 per cent, at 138¾p,
valuing the FTSE 250 company at
£2.7 billion. However, despite the re-
cently improved performance, the
stock is still two thirds lower and profitsare still below the £488.8 million
recorded when Rowe took over in 2016.
Rowe is stepping down after almost
four decades with the company after
joining as a Saturday boy in Croydon,
south London. He claimed to have “fixed
the basics” such as halving the levels of
discounting in its clothing arm, making
Marks & Spencer food cheaper than
Waitrose for the first time, overhauling
its Sparks loyalty programme and
making its balance sheet more resilient.
On his watch the business also struck
a £750 million deal with Ocado, allow-
ing it to sell groceries online for the first
time, and started selling third-party
clothing brands over the internet as
well as making acquisitions of Jaeger
and a stake in Nobody’s Child.
However, the business still has work
to do on its store estate and confirmed
plans to shut a further 32 shops. The
business had previously said it would
close 110 stores, but has only closed 68.
The 138-year-old retailer has about
1,000 shops in the UK and 70,000
employees.
M&S said that many of its town-cen-
tre stores had “lost impetus as a result of
failed local authority or government
policy” and it was focused on reopen-
ings in retail parks.
Rowe is handing over to Stuart
Machin, Katie Bickerstaffe and Eoin
Tonge who all received promotions in
an unusual succession strategy. He said:
“Their objective is to increase the pace
of change and to reposition the
business for growth in the UK and
globally.”
The trio take over at a challenging
time for the business, with input costs
rising by 5 to 9 per cent already. Rowe
said that “a chunk of it” was already
passed on to customers but the new
team was focused on maintaining the
value perception that they had spent
years correcting.Ashley Armstrong Retail EditorMusk rejigs Twitter offer
Callum JonesElon Musk has pledged to provide an
extra $6.25 billion in equity financing to
fund his $44 billion takeover of Twitter.
Musk reiterated that he was in talks
with existing shareholders in the social
media group — including Jack Dorsey,
its co-founder and former chief execu-
tive — in a stock market disclosure last
night. He had previously suggested
they could roll over their stakes after his
proposed acquisition.
The filing demonstrated Musk’s
commitment to a deal he declared was
“on hold” less than a fortnight ago while
he sought more information on the
proportion of fake accounts on Twit-
ter’s platform. The move fuelled specu-
lation he would seek a cheaper price.
Shares in Twitter rallied $1.38, almost
4 per cent, to close at $37.16 last night.
There remains significant scepticism
on Wall Street that the deal, in whichMusk has agreed to pay $54.20 per
share, will be completed.
Twitter accepted Musk’s takeover of-
fer last month, weeks after he disclosed
a 9 per cent stake in the business. Musk,
50, has a personal fortune of $206 bil-
lion, largely derived from his stakes in
electric-car giant Tesla and SpaceX.
The billionaire has committed to
providing $33.5 billion in equity to fund
the transaction, up from $27.25 billion.
He no longer plans to rely on a margin
loan tied to his shares in Tesla, which he
has led since 2008.
Tesla’s stock rose $30.64, or 4.9 per
cent, to $658.80 yesterday after the
latest twist in its chief executive’s pur-
suit of Twitter.
At Twitter’s annual meeting yester-
day, investors voted to block the
re-election of Egon Durban, co-head of
the private equity firm Silver Lake —
deemed an ally of Musk — to the com-
pany’s board.Pressure to reveal all on
to £50,000, underwritten by the taxpay-
er, had been a “vital intervention at an
extraordinary time but [were] dreadful-
ly implemented”. He added that the
government was wrong to resist trans-
parency, “the best form of disinfectant”.
Fraud losses on the scheme are ex-
pected to be about £4 billion and Ag-
new has argued that the government is
doing far too little to mitigate the costs.
The case has been brought before the
information tribunal by Spotlight on
Corruption, a non-profit campaign
group, after the government’s British
Business Bank refused to disclose infor-
mation on which companies received
loans under the bounce back, business
interruption and Future Fund schemes.
The bank, which runs the pandemic
finances schemes, has stopped infor-
mation being released since July 2020.
“I have decided to offer testimony at
this tribunal,” Agnew told delegates at
the National Investigations Confer-James Hurley, George GreenwoodHeading
Source: Refinitiv2017 2018 2019Apr 2, 2016
Steve Rowe appointed
chief executiveJun 23, 2016
Shares fall on back
of Brexit voteNov 8, 2017
Rowe says priority
to "put of fires" Feb 27, 2019
M&S and Ocado
announce joint
ventureMay 23, 2018
Delivers "facing facts"
presentation on M&S
flaws