Jessops holds talks with lenders as losses widen to £19m

 The 230-store retailer said it was not likely to meet its banking covenants and that it is in discussions with banks about putting in place a new covenant test and restructuring its net debt of £57.4m. Jessops is understood to be considering swapping a chunk of its debt for equity in the coming weeks with HSBC, which holds about 15 per cent of the retailer’s shares.

For the year to 30 September, Jessops delivered a loss before non-recurring items and tax of £19.1m, compared to £9.3m for the previous year. The retailer’s like-for-like sales fell by 6.5 per cent for the year to 30 September, compared to an 8.5 per cent decline for the previous year.

Jessops’ shares fell by 0.57p, or 20.7 per cent, to 2.18p yesterday.

The retail outlook continues to look gloomy. Another national retail group discount health and beauty outlets, Savers, were looking to be saved themselves as they begged their landlords to throw them a lifeline to some of their more than two hundred outlets in the form of a “payment holiday” on rents. ,

On the industrial front, Italian steel foundry operators Marcegaglia SpA announced their intentions to acquire a majority shareholding in the UK unit of Tata Steel Ltd. Their decision is in line with their goal of boosting their sales and production capacity over the next few year

Tata’s European division, under the heading of Corus had recently stated their intention of disposing of 75 percent of their holdings in the Teesside cast Products for around £350 million.

The sale further indicates the global trend towards reducing holdings and cost cutting as demand for the metal, employed for uses from construction to cars production continues to decrease.

Added evidence of the difficulties that car manufacturers are going through is that Honda UK’s enforced four-month lay-off that begins on Monday.

The Honda group began this planned lay-off against the backdrop of last quarter profits that had dropped by an astounding ninety per cent from the corresponding period of last year…

Honda, who is Japan’s second-biggest carmaker in Japan, employs more than four thousand workers at their plant in Swindon.

Employees will receive their full basic pay for the first two months and about sixty per cent for the rest of the four-month break from the production line.

Honda UK, who produced around one quarter of a million vehicles in the UK in 2008, expects to resume production on the first of June, although at a lower level in line with demand.

In his speech at the World Economic Conference held in Davos, Switzerland Jose Manuel Barroso, President of the European Commission again reiterated his view that sterling should enjoy the protection that being under the “Euro umbrella” could provide. Barroso stated that the pound should now join the eurozone because “even the biggest states can’t face these challenges alone.

The European Commission also wants to acquire “oversight” over national financial regulators, such as the UK’s Financial Services Authority. Mr. Barroso stated that “national supervision systems did not work – that is obvious”.

As if contradicting Mr. Barroso’s statement, Sterling had risen slightly against both the dollar and the Euro on close of business on Friday

Pound/US dollar 1.456
Pound/Euro 1.135
At the close of trading on Friday the FTSE 250 stood on 6250.75, a drop of 21.85 points, while the FTSE 100 was on 4149.64 a drop of 40.47 points.

On Wall Street the Dow Jones closed down 8000.85m down 148 points with the NASDAQ also dropping to 1476.42, a drop of 31.42 points

• Fun Facts about Chocolate "Chocolate" comes from the Aztec word, "xocolatl," which means "bitter...
• China Buying Gold On The Sly! I just read this interesting article in the Financial Times....
• Comparison Test: Honda Civic Versus Honda Civic Hybrid. Seeing as how many people say that hybrid cars are...

Tags: Economics, Economy, Finance, Financial News, Retail, UK Recession