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Tue 27th Jun 2017 - Update: Heineken/Punch deal, Debenhams food
Heineken offers to sell pubs to address competition concerns about Punch takeover: Heineken has offered to sell pubs in a bid to address competition concerns about its takeover of a tranche of Punch sites. The Competition and Markets Authority (CMA) is to consider whether the proposals offered by Heineken will address the concerns and remove the need for an in-depth investigation. Earlier this month, the CMA said Heineken’s proposed purchase of part of the Punch estate could reduce competition in 33 local areas across Great Britain. Before the merger was referred for a further in-depth investigation, the companies were given the opportunity to offer proposals to address these concerns. Heineken has now offered to sell pubs in each of the affected areas to preserve competition and ensure customers in these locations do not lose out. The CMA has decided there are reasonable grounds for believing these proposals, or a modified version of them, might be acceptable to remedy the competition concerns it has identified. As part of an initial investigation, the CMA looked in detail at areas where pubs operated by Heineken and Punch currently compete. It has identified 33 local areas where their pubs would not face sufficient competition after the merger, which could lead to price increases or a deterioration in the quality of the service on offer. The CMA has until 22 August to consider whether to accept the undertakings, although it may decide to extend this deadline to 17 October if it decides that there are special reasons for doing so. As part of its process, the CMA will undertake a public consultation. If the CMA does not accept the undertakings proposed, the merger will be referred for an in-depth investigation. The full text of the decisions, including details of the areas affected, will be published shortly on the investigation case page. In February, Punch shareholders overwhelmingly voted to back the deal that would see Heineken and Patron Capital, using newco Vine Acquisitions as a bidding vehicle, acquire Punch. Under the terms of the deal Heineken would acquire from Patron a portfolio of about 1,900 Punch pubs with Patron retaining an additional 1,329 it would run itself.

Debenhams – 13 new food offers have helped mitigate weaker clothing market: Debenhams has reported the opening of 13 new food offers has helped mitigate a weaker clothing market. In the 15 weeks to 17 June, like-for-like sales were down 2.4% and down 0.7% in the first 41 weeks of its financial year. The company stated: “We currently anticipate 2017 profit before tax will be within the range of market expectations. However, should current market volatility continue, the outcome could be towards the lower end of the current range. The UK trading environment has been more volatile in the second half of our trading year. However, our targeted destination categories of beauty, accessories and food and drink have helped to mitigate the impact of a weaker clothing market. With 13 new food offers in the period, food sales have risen 5%. We have delivered further improvement in full price sales, with growth of 1.7% in the period. Action to manage seasonal stock tightly in a continuing weak market for clothing is expected to deliver terminal stocks in line with historical low levels, and within our gross margin guidance. Digital growth continues to be driven by mobile demand, with further enhancements supporting rapid mobile growth, up 47% year-on-year and improved conversion rates up 12%. Across the international division our constant currency performance has improved, and the foreign exchange impact has remained positive in this period. Underlying markets remain mixed – positive growth in Denmark has been offset by weaker trading in the Middle East and the Republic of Ireland. A core Debenhams offer launched on Amazon Denmark this month, as planned. Having announced our new strategy, Debenhams Redesigned, in April 2017, we are making good progress putting in place our plans to drive growth through social shopping and our shorter term ‘Fix the Basics’ plan. This has included establishing a training programme to support up to 2,000 colleagues switching to customer-facing roles; implementing direct-to-floor deliveries, which will cut replenishment times from eight days to two; and completing the transition to a single warehouse management system.” Sergio Bucher, chief executive of Debenhams, said: “We are making progress in implementing our exciting and ambitious new strategy, Debenhams Redesigned, which will make us the destination for social shopping. We have already started to deliver changes that will improve service for our customers and simplify and focus our operations. As industry data has confirmed, May was a tough month for retailers and we continue to see volatility in trading week to week. As a result we are focused on delivering cost control and self-help through our ‘Fix the Basics’ plan. We continue to build good foundations for longer term growth at Debenhams by becoming a destination, digital and different.”

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