Blow to the high street as Thomas Cook announces 200 store closures

Just a day after the Portas report into our high streets and Thomas Cook's results this morning show just how dire the situation is.

The firm which delayed its results announcements earlier,having to get emergency funding to tide it over the Xmas period has reported losses of £398m for the year and it will close 200 of its under performing shops in Britain with a loss of over 1,000 jobs.

In an interview on Radio 4 about an hour ago,chief executive Sam Weihagen told the programme that the business had been hit by people booking holidays on the Internet as well as problems caused by the Arab spring and floods out in Thailand.

But in contrast, the world's biggest tour operator TUI Travel reported a better-than-expected full-year profit last week, boosted by strong online sales and demand for exclusive resorts.

Weihagen pledged that the closing of stores is part of a turnaround plan which will enable it to deliver annual profit improvements of £110 million.

Earlier this week,the group sold Spanish hotel chain Hotels Y Clubs De Vacaciones in order to reduce its debt

More high street woes

More problems on the High Street today as Icelandic investor Baugur asks for protection from its creditors.

Baugur has stakes in a number of high street chains including House of Fraser, Hamleys, and frozen food chain Iceland as well as stakes in fashion chain Whistles and jeweller Goldsmiths.

It is thought to employ 50,000 people in business' connected.

The group has entered a "moratorium" process in Reykjavik a similar roceedure to American Chapter 11 which offers protection from creditors.

It will now have three weeks to find a way forward.What is worrying for the UK is that one of those way forwards could well be a fire sale of its UK assets.

The group owes its creditors around £1b

Shopping can damage your health

I like this post from John Redwood who warns about the dangers of shopping

The government would like you to go shopping. They would prefer it if you flashed the plastic, as they want you to go borrowing as well.
I have a more modest suggestion. If you think at some point in the next year or two you cannot resist the temptation of an import of two, go and buy it today. If you cannot cure yourself of the craving for continental wine, have one last fling. If the curves of European furniture are keeping you awake at nights, go and treat yourself this weekend. If you still do not have enough amazing electrical and electronic gismos and TVs from Japan, this might be your last chance to afford one.

And he believes that shops should carry the following health warning

SHOPPING CAN DAMAGE YOUR WEALTH. YOU SHOULD NEVER BUY SOMETHING WITHOUT TAKING PROPER ADVICE FROM SOMEONE WHO UNDERSTANDS YOUR NEEDS AND YOUR FINANCIAL POSITION. BUYING THINGS ON BORROWED MONEY CAN CAUSE YOU DIFFICULTIES IN MEETING FUTURE REPAYMENTS. DEALING WITH NATIONALISED BANKS CAN BE A VEXATIOUS EXPERIENCE. REMEMBER TAXES MAY GO UP AS WELL AS UP AND YOU WILL HAVE TO PAY THEM.

Is Stuart Rose the bringing of more bad tidings?

If you believe Robert Peston and most people do at the moment,Marks and Spencer's sales figures this morning are quite worrying.

The group which was forced to announce that it was cutting jobs yesterday ahead of this morning's statement reported like to like sales down 7.1 per cent in the thirteen weeks to 27th Dec.

For Peston though

it's probably the trend to unadjusted, overall sales that's more disturbing. For the group as a whole, these were 1.2% lower, thanks to a particularly strong performance outside the UK and on the internet.
But here's the ghastly bit: overall UK sales were down 3.4%, including the benefit of Marks' well-publicised and unprecedented promotional days.
Clothing was the worst performer, with sales 6.5% lower. Food was just 1.1% down - which represents a modest recovery.

and adds that

Also, the profit margin of Britain's largest clothing retailer was significantly lower, because Marks has been forced to slash prices.

The comments of its chief executive Stuart Rose are also worth listening to because he forecasts that the recession will last well into 2010.

Something that the chancellor hinted out in his interview with the FT.

It would be foolish to ignore the remarks of Rose,someone that has his fingers on the pulse but what will this do to the government's finances?

On the demise of Woolies and MFI

There is a lot of coverage in the papers this morning about the demise of Woolies and MFI and much of it is linked to the recession.

Before wishing to sound too much like Andrew Lansley and saying that the recession may be good for us,it will result in some of the dead wood of the business world being removed.

Both of these firms have been teetering on the brink for some time and the credit crunch has simply brought to a head that nobody wanted to fund a loss making enterprise.

Woolworths was well past its sell by date,its position on many high streets the result of past glories rather than current trading success.MFI's market strategy has been successfully copied and vastly improved by its many competitors whilst it has become a byword for poor quality and service.

Yes of cause I have nothing but sympathy for the 30,000 employees of Woolies who face a bleak Xmas and new year and the 1500 jobs at risk at MFI.

But sometimes the market must take the lead