UPDATE: U.K. Riots Add More Gloom To Retail Woe
August 09 2011 - 9:13AM
Dow Jones News
LONDON (Dow Jones)--Retailers, already under pressure from the
consumer downturn, face mounting costs after a third night of
rioting and looting caused extensive damage across London and
several other major U.K. cities.
The riots, ignominious for the stark images of burning buildings
and looters queueing to try on stolen trainers, have escalated
since Saturday, affecting mobile phone shops, fashion stores such
as Hennes & Mauritz AB (HM-B.SK) and Debenhams PLC
(DEB.LN),electrical retailers Curry's and Comet, and a raft of
other stores.
"We are keeping stores closed in areas affected by the riots, to
ensure the safety of our staff and customers," H&M spokeswoman
Emilsson Falk said. "We continue to monitor developments closely
and follow all police directives," she said, adding that it is too
early to assess damages and costs at this point.
The British Retail Consortium Tuesday called for assurances that
the police and fire services have the means and the authority to
deal with the riots, and help shopkeepers by providing intelligence
on the disturbances and assistance in securing and clearing up
after attacks.
The retail lobby group also wants discussions with insurance
companies about premiums in the affected areas, and with banks
about lending to shopkeepers affected by the situation.
Director General Stephen Robertson said "Inevitably, some
businesses which have been attacked will never open their doors
again. Banks need to offer good credit arrangements to those
targeted so as many as possible have a chance to refit and
reopen."
The U.K. consumer has significantly reined in spending on
discretionary items, as inflation on essentials like food and fuel
sap monthly budgets, and government austerity tax rises and job
cuts conspire to further depress consumer confidence.
The retail trend for the last six months has largely been of
unrelenting gloom as sales have stalled and several big name
retailers have slipped into administration.
None of the affected companies have early indications of the
likely cost of the damage and loss of stock, but the Association of
British Insurers estimates the cost to insurers will run into tens
of millions of pounds.
Shares in some of the affected retailers fell in morning trade
with Debenhams and Curry's owner Dixons Retail PLC (DXNS.LN)
dropping over 8%, although most stocks later regained ground along
with the broader market. At 1232 GMT, Debenhams and Dixons were
flat and Carphone Warehouse Group PLC (CPW.LN) was down 0.1% at 356
pence, up from a morning low of 321 pence.
In Clapham Junction, south London, the Debenhams department
store remained closed Tuesday after being ransacked, while the
company worked with the police in their investigations.
Dixons Operations Director Sebastian James said in a post on
twitter Tuesday that 23 of its stores were affected on Monday while
rival electricals chain Comet, owned by Kesa Electricals PLC
(KESA.LN), said 10 of its stores were hit during the three nights
of rioting.
Tesco, the U.K.'s largest supermarket chain, said around two
dozen of its stores had suffered damage of varying degrees but it
managed to reopen all but one of them by Tuesday morning.
Large corporations with abundant resources will be able to
bounce back relatively quickly from the damage caused by rioters
and looters but small and independent shops may not be able to
display the same resilience.
Mobile phone stores have been particularly targeted for their
small, high-value items with 20 stores owned by Everything
Everywhere, the joint venture between France Telecom's (FTE) Orange
and Deutsche Telekom AG's (DTE.XE) T-Mobile, and eight Telefonica
(TEF.SA)-owned O2 stores hit.
Carphone Warehouse confirmed that a number of stores had been
damaged, but said all the phones sold in its stores can be blocked
or tracked "and we are working closely with the police with their
enquiries."
A spokesman for O2 said the company had closed some of its
stores Tuesday of its own volition rather than on the advice of the
police.
Vodafone was not immediately available for comment.
A Sony distribution center in Enfield, north London, continued
to smoulder Tuesday after a fire broke out on Monday night. A
spokeswoman said no-one can enter the facility, so Sony is "unable
to confirm the extent of the damage or the cause until the fire is
fully extinguished and a full investigation can be carried out by
authorities."
Prime Minister David Cameron, forced to return early from his
holiday in Italy to host a meeting of the government's emergency
committee, Cobra, said all police leave had been cancelled, and
there would be 16,000 officers on the streets of London Tuesday
night, compared to 6,000 the night before.
By Kathy Gordon, Dow Jones Newswires; 44-207-842-9293;
kathy.gordon@dowjones.com