Debenhams CFO Quits After Profits Warning

The chief financial officer at Debenhams has quit the retailer, just 48 hours after it issued a post-Christmas profits warning.

Simon Herrick had already been under pressure, according to media reports, after he asked suppliers for a discount on goods just eight days before Christmas in what was seen as a 'Santa tax'.

The department store chain denied at the time of his letter to suppliers that it was an attempt to boost fragile festive trading.

In the letter he wrote: "As we will mutually benefit from the growth of Debenhams we are now seeking a contribution from our suppliers to support our commitment to on-going investment."

He said this would include: "A single-sum contribution on all outstanding payments on your account at close December 17.

"An additional discount of 2.5% applied to all open orders on our system at close on December 17.

"This is a contribution and not a permanent amendment to your trading terms with Debenhams," the letter said.

The company, which lowered its profit outlook on Tuesday after the hoped-for surge in last-minute Christmas shopping failed to materialise, said a search to find a replacement for Mr Herrick was under way.

Neil Kennedy, director of finance, has assumed the role of acting chief financial officer on an interim basis, Debenhams said.

The chain blamed its poor Christmas performance on the continuing decline of the high street, the impact of the recession on household incomes and bad weather.

The retailer said it was planning to slash prices in January and February.

Michael Sharp, chief executive of Debenhams, said on Tuesday: "As has been widely commented on in the media, the market was highly promotional in the run-up to Christmas and we responded to these conditions to ensure our offer was competitive.

"However, this extremely difficult environment has inevitably had an impact on both our sales and profitability."

The announcement, which had been due on January 17, saw the retailer reveal an £85m profit for the 17 weeks to December 28 – some way off the £114.7m in the same period last year, a 26% drop.

The company's statement showed that online sales had increased by 27% during that time and accounted for 15.6% of total sales, compared to 12.4% for the same period last year.

Its share price has tumbled by 20% over the past month.

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Xmas Storms: Ofgem May Fine Power Networks

The energy regulator has threatened to impose fines on power line operators after the Christmas storms which left hundreds of thousands without electricity.

Ian Marlee, senior partner at Ofgem, told Sky News that while praise was due to power networks which reacted swiftly in horrendous weather conditions, it remained to be seen whether reconnection delays of up to five days were justified.

More than 150,000 homes were cut off after strong winds, torrential rain and flooding caused damage and company bosses are due to be called before a committee of MPs to explain their response.

The Government called on the distributors to cancel Christmas holidays at the height of the crisis amid suggestions they were unable to cope with the scale of the damage to supplies because of the festive season.

On a visit to Yalding in Kent to see villagers affected by flooding and thank rescuers, the Prime Minister was confronted by one resident who claimed they were abandoned.

Basil Scarsella, chief executive of UK Power Networks which owns electricity lines and cables in London, the South East and east of England, has already admitted it was not prepared for the storm and too many staff were on holiday.

The company has pledged to increase payments for 48 to 60-hour outages from £27 to £75 for those affected on Christmas Day as "a gesture of goodwill".

Additional payments will be made to customers who have been without electricity for longer than that time - up to a maximum of £432.

Mr Marlee said today of the distributors: "They had learned the lessons of the past, for example in offering Christmas meals out to people through mobile catering, and working together with other companies.

"But there are still some questions remaining: Were they sufficiently well prepared, did they actually reconnect people fast enough and indeed was the information they provided sufficient?

"We will get reports back from the companies and clearly we will look at that and if there is regulatory action that needs to be taken then we will do so."

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UK House Prices 'Jumped 1.4% In December'

House prices in the UK rose by the biggest amount in more than four years in December, according to mortgage lender Nationwide.

It measured a 1.4% increase in the month - its best performance since August 2009 - leaving annual growth in the year to December at 8.4%.

The surge, Nationwide calculated, raised the average house price to £174,444 but London continues to outperform the rest of the country.

Prices in the capital are now 14% above their 2007 peak with the price of a typical London home at £345,186.

The North of England remains the weakest performing region though each region achieved growth in the three months to the end of December.

The latest data will further fuel concerns that the second phase of the Government's Help-To-Buy scheme is only likely to raise prices, rather than give a much-needed boost to construction. 

Prime Minister David Cameron has said that the scheme led to 6,000 extra mortgage applications between October and December.

More follows...

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AgustaWestland Deal Cancelled By India

India says it has pulled the plug on a £466m order to buy 12 British-made helicopters following allegations that bribes were paid to secure the deal.

The contract, agreed in 2010, has been cancelled with Yeovil-based AgustaWestland "with immediate effect... on grounds of breach of the pre-contract integrity pact", according to a statement from the Indian Defence Ministry.

India had already put the deal for the AW101 helicopters on ice, amid accusations that middlemen were paid to swing the sale.

The corruption claims threatened to overshadow David Cameron's trade visit to the country last February, when the Indian Prime Minister Manmohan Singh raised his "very serious concerns" about the case.

Giuseppe Orsi, the former chief executive of Finmeccanica, is on trial

India's Defence Minister AK Anthony said at the time he did not believe AgustaWestland's denial of paying bribes.

And India's Central Bureau of Investigation said it had evidence which allegedly showed alterations were made in the helicopter specifications to favour the company.

The helicopter manufacturer denies any wrongdoing.

Giuseppe Orsi, the former boss of AgustaWestland's parent company, Finmeccanica, is on trial in Italy on fraud and corruption charges over his alleged role in securing the contract.

Bruno Spagnolini, the former chief executive of AgustaWestland, is also on trial.

The former Indian air force chief SP Tyagi, and three of his relatives are among those facing charges in India.

India has named a judge to arbitrate over the cancelled deal, which AgustaWestland is understood to be challenging.

Finmeccanica has said it will defend its position.

A spokesman for UK Trade & Investment said: "We are awaiting formal confirmation from the Indian Government."

Indian Prime Minister Manmohan Singh raised his concerns with David Cameron

United Technologies Corp's Sikorsky Aircraft, EADS' Eurocopter and Lockheed Martin may now be in line to provide helicopters for India's defence forces.

The country has become the world's biggest arms and defence equipment buyer in recent years, and is expected to spend £48bn over the next decade to upgrade its military.

However, arms deals in India have often become mired in controversy, with allegations that companies have paid millions of dollars in kickbacks to Indian officials.

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Rail Fares Rise With Some Paying £5,000 A Year

Rail Fare Rises Revealed By Route

Updated: 2:21am UK, Thursday 02 January 2014

The rise in rail fares depends on the route passengers are taking. Here are some examples.

ROUTE                                   JAN 2013   JAN 2014     PERCENTAGE

RISE

Leeds-Wakefield                    £964           £992             2.9%

Basingstoke-London              £3,952        £4,076          3.13%

Ramsgate-London                  £4,864        £5,012          3.04%

Folkestone Central -London   £4,836         £4,984          3.06%

Bedford-London                     £4,172         £4,300          3.07%

Sevenoaks-London                £3,112         £3,208          3.08%

Cheltenham Spa-London        £9,184        £9,468          3.09%

Deal-London                            £4,864          £5,012         3.04%

Woking-London                       £2,896         £2,980         2.9%

West Malling-London             £3,876         £3,996         3.1%

Guildford-London                    £3,224         £3,320         2.98%

Dover Priory-London             £4,864          £5,012          3.04%

Ludlow-Hereford                    £1,992         £2,032          2%

Morpeth-Newcastle               £1,008         £1,040           3.17%

Milton Keynes-London           £4,620          £4,772           3.29%

Tunbridge Wells- London      £4,132          £4,260           3.1%

Aylesbury-London                  £3,632          £3,732           2.75%

Hastings-London                   £4,304          £4,432           2.97%

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Debenhams CFO Quits After Profits Warning

The chief financial officer at Debenhams has quit the retailer, just 48 hours after it issued a post-Christmas profits warning.

Simon Herrick had already been under pressure, according to media reports, after he asked suppliers for a discount on goods just eight days before Christmas in what was seen as a 'Santa Tax'.

The department store chain denied at the time of his letter to suppliers that it was an attempt to boost fragile festive trading.

In the letter he wrote: "As we will mutually benefit from the growth of Debenhams we are now seeking a contribution from our suppliers to support our commitment to on-going investment."

He said this would include: "A single sum contribution on all outstanding payments on your account at close December 17. An additional discount of 2.5% applied to all open orders on our system at close on December 17.

"This is a contribution and not a permanent amendment to your trading terms with Debenhams," the letter said.

The company, which lowered its profit outlook on Tuesday after the hoped-for surge in last-minute Christmas shopping failed to materialise, said a search to find a replacement for Mr Herrick was underway.

Neil Kennedy, director of finance, had assumed the role of acting chief financial officer on an interim basis, Debenhams said.

The chain had blamed its poor Christmas performance on the continuing decline of the high street, the impact of the recession on household incomes and bad weather.

The retailer said it was planning to slash prices in January and February.

Michael Sharp, chief executive of Debenhams, said on Tuesday: "As has been widely commented on in the media, the market was highly promotional in the run up to Christmas and we responded to these conditions to ensure our offer was competitive.

"However, this extremely difficult environment has inevitably had an impact on both our sales and profitability.

The announcement, which had been due on January 17, saw the retailer reveal an £85m profit for the 17 weeks to December 28 – some way off the £114.7m in the same period last year, a 26% drop.

The company's statement showed that online sales had increased by 27% during that time and accounted for 15.6% of total sales, compared to 12.4% for the same period last year.

More follows...

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Young People Sell Future Earnings To Investors

By Hannah Thomas-Peter, New York Correspondent

A new industry is offering people the chance to "sell" a portion of themselves to investors in return for a cut of their future earnings.

Start-up companies such as Pave match carefully vetted, mainly young individuals, known as "prospects" with those willing to offer a one-time cash infusion.

On average prospects seek to raise around $20,000 (£12,100), although so far amounts have ranged between $3,000 (£1,800) and $50,000 (£30,300).

They choose to repay up to 10% of their future earnings on an annual basis for either five or 10 years.

Pave determines what the percentage repayment will be based on the qualifications of the candidate.

The company's co-founder and COO Oren Bass told Sky News: "There's a huge debt issue in the States, particularly for young people.

"They don't have a funding option that really enables them to make choices to think long-term. So there are two big issues that Pave addresses.

"One is that under the Pave agreement the payments are always linked to income so they are by definition always affordable, and that allows the prospect to actually take risks that they may not have taken if their funding was debt for example, which is a specified payment regardless of what happens to you during their lifetime.

Pave matches 'prospects' to people willing to make an investment

"The second value proposition is that because real people are actually funding you, you can benefit from their guidance and their mentorship and advice."

Many of the prospects are social entrepreneurs who are saddled with student loans, but there are also journalists and musicians on the site.

Ify Walker has founded her own education recruitment company and is a typical prospect: bright, driven and keen to monetise her potential.

She told Sky News: "My husband and I went to law school and we both have several degrees and we walked out with over $200,000 dollars in loans.

"Pave is one of the very few organisations that is saying look, we have a solution to this: we want to accelerate the potential of young people and we want to do that immediately, we don't want to wait ten years for people to give their best selves to society, so let's actually do that now, let's take backers who have resources, let's connect them to people who have a vision and a goal and let's make that partnership work for the better of our community and our world."

There are protections in place for those who choose this alternative method of funding.

If prospects don't earn above a certain amount, they don't have to pay, which sets the arrangement apart from a traditional fixed debt scenario, and if an individual becomes very successful they can choose to buy themselves out of the contract for five times the amount raised.

Almost half of the prospects at Pave use their investment to pay off punitive debt.

They also often have multiple backers, allowing them access to more expertise and networks than might be afforded by a single investor.

A company called Fantex tries to sell stock in American football players

Upstart is another company with a similar set up.

It caps payments at up to 7% of earnings.

Like Pave, it takes a 3% fee from its "upstarts" and a smaller service fee from investors.

Hedge fund partner Benjamin Borton has invested in five upstarts.

He said: "There's an economic return and a social return.

"If you invest in a company, particularly a start-up company, the numbers would suggest that 50% of those will go out of business, whereas if you invest in a person, the chance of getting zero pay back is very low if you are good at choosing someone.

"So even if they take a job and that job doesn't work out, they can go on to the next one.

"If we can accelerate the speed with which these kids get to that place of optimal productivity, then we've done great and I think if you do that, then you are going to achieve a good rate of return as well."

So far 282 backers have invested more than $2m (£1.2m) through Upstart. Almost 200 individuals have achieved their funding goals.

The state of Orgeon has recently given preliminary approval for public universities to pilot the model for students.

One company called Fantex is trying to sell stock in American football players, although it has had limited success so far.

Sceptics warn that this is an as-yet unregulated industry, and there is nothing to stop someone setting up a more exploitative business as long as it operates within the law.

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Debenhams Profits Warning After Poor Xmas Sales

Debenhams has announced it will be slashing prices after issuing a profits warning following poor Christmas sales.

Shares in Britain's second-largest department store plunged by as much as 13% on Tuesday after it disclosed profits nearly £30m lower than last year.

In a statement released by Debenhams management, they say that they now "expect the need for additional markdown to clear stock in January and February".

The store said that while online sales had increased they had not done so significantly enough and that the "final surge" in sales they had expected around Christmas had failed to materialise.

It blamed the poor performance on the continuing decline of the high street, the impact of the recession on household incomes and the bad weather.

The retailer is planning to slash prices in January and February

Michael Sharp, chief executive of Debenhams, said: "As has been widely commented on in the media, the market was highly promotional in the run up to Christmas and we responded to these conditions to ensure our offer was competitive.

"However, this extremely difficult environment has inevitably had an impact on both our sales and profitability.

"Looking forward, I expect conditions to remain highly competitive as we enter 2014. Everyone in the organisation is focused on improving performance and growing the business, building on the four pillars of our strategy which I remain confident will lead to success over the longer term."

The announcement, which had been due on January 17 but was brought forward because of the results, saw the retailer reveal an £85m profit for the 17 weeks to December 28 – some way off the £114.7m in the same period last year, a 26% drop.

The company's statement showed that online sales had increased by 27% during that time and accounted for 15.6% of total sales, compared to 12.4% for the same period last year.

However, the income from online delivery was, it said, still lower than had been anticipated.

It comes after the high street spending spree dubbed 'Manic Monday' that had been predicted for December 23, failed to materialise because of the strong winds and heavy rains.

Analysts had expected 15 million people to take to stores, spending £2.6m a minute on gifts, food, drink and decorations.

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UK Stock Market 'May Hit Record Levels'

By Poppy Trowbridge, Consumer Affairs Correspondent

City forecasters have predicted the UK stock market may reach record levels in the new year.

After a steady - if not stellar - 2013, the FTSE 100 is set to outperform other indices over the next few years, according to a report by Capital Economics.

The FTSE, a measure of the UK's top 100 shares, closed at 6,749 points on Tuesday.

The index gained 0.3%, bringing its annual advance to 14%, the biggest annual rally since 2009.

Yet measures of British consumer confidence suggest the financial markets do not reflect reality for many.

Pay is only rising at 0.9%, according to the Office for National Statistics.

And corporate profit warnings dampen the mood further.

Debenhams was one of the first to report on Christmas sales figures, and after a slow sale season, profits are already down £30m on last year.

It blamed the poor performance on the continuing decline of the high street, the impact of the recession on household incomes and the bad weather.

Retail analyst at ESCP Europe Jeremy Baker said: "More and more shops are chasing the same pound.

"There is a finite amount of shopping one person can do."

Still, in his Autumn Statement announcement, Chancellor George Osborne said the UK economy will grow more rapidly in coming years.

The rate of inflation has started to slow, falling to 2.1% in the latest reading.

Unemployment fell to 7.4% this month, the lowest rate in nearly five years.

Top city economists say the stock market may soon be even better than back during the tech boom years, when it reached a high of 6,930 points in December 1999.

Stock analysts at Citigroup are especially optimistic, setting a target for the FTSE of 8,000 points by the end of 2014.

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Volkswagen Camper Van Reaches End Of The Road

By Greg Milam, US Correspondent

One of the most iconic vehicles in motoring history has finally reached the end of the road.

The last ever Volkswagen "Type 2" - more commonly known as the VW Camper, kombi or bus - rolls off the production line on December 31.

It is being retired after 64 years in continuous production because it cannot be adapted to meet modern safety regulations.

The last kombi will be made in Brazil, the country which has produced them for 56 years and where they are a vital thread in the fabric of everyday life.

A vehicle that came to symbolise the counter-culture in much of the world - as the van of choice for hippies and surfers alike - remains very much a mundane staple in Brazil.

It seems that everyone you talk to learned to drive in one and everywhere you turn they are being used to sell, deliver or provide shelter.

Labourers work on a Volkswagen assembly line in Brazil this month

Angelisa Stein is making a movie to mark the passing of the kombi. She told Sky News: "It is a car that is in touch with a lot of generations here. It will not be the same to have just another car."

The kombi is being phased out because modern requirements such as anti-lock brakes and airbags cannot be fitted into a frame that has changed little in 50 years.

A run of 600 last edition kombis - priced at £25,000 each - has sparked a rush among collectors and nostalgic fans.

Driving one of the last ones - with no air conditioning and "stirring custard" gear box - is remarkably reminiscent of driving one from the 1970s. Even down to the feeling of being behind the wheel of something special.

Of course, with a production run of around 10 million kombis, there are plenty that will be around for many years to come.

At a classic car rally in Rio, owners proudly showed off customised vans and talked of their sadness at the end of the kombi era.

Mechanic Adriano Godinho told Sky News: "It is a car which has represented a lot for us in this country.

"It has been used to transport goods, it is a workman's car, it is a family car, so it is something that's in us. It is part of the family."

The van was originally named the "Type 2" as it was only the second vehicle the company made after the Beetle.

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