Bernard Ginns: A landmark year for all the wrong reasons

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ONE’S SUBJECTS might be fighting a battle for survival, but the Queen’s grocer has shown no signs of the deep troubles engulfing Britain’s supermarket sector.

Fortnum & Mason yesterday reported a record-breaking set of results, including a 14 per cent uplift in annual sales to £74.4m and a 111 per cent rise in pre-tax profits to £3.8m.

The Piccadilly-based retailer, controlled by the same super-rich family that owns Primark, described the 12 months to July 2014 as the busiest period in its 307-year history.

Fortnum’s broke with more than three centuries of tradition to open new stores, first in St Pancras International Station last November, then in Dubai in March and last week at Heathrow Terminal 5.

Ewan Venters, chief executive, said he was “thrilled” with the figures.

“The last financial year was a landmark one for us and the new stores at St Pancras, and in Dubai, have both been big success stories,” he added.

For the big supermarket groups, the last financial year has also been a landmark one, but for all the wrong reasons.

A combination of falling sales, profits and market shares are causing distress in a sector dominated for decades by Tesco, Asda, Sainsbury’s and Morrisons.

These are among Britain’s largest private sector employers. They are also the biggest buyers from food producers, helping to support one of Yorkshire’s most important industries. A downturn in their fortunes will spell bad news for the UK economy.

The soarway success of Fortnum’s shows how complete the decoupling of the capital from the rest of the country has become.

Who needs to compete on prices when your customers are oligarchs, plutocrats and monarchs?

* It’s a hard life, being a banker. David Thorburn, chief executive of Yorkshire and Clydesdale banks, had a hefty pay cut last year.

The plc annual report, published quietly last week, reveals that Mr Thorburn’s total emoluments fell 38 per cent last year.

The CEO’s package was worth £955,000 in 2014, compared to £1.544m the year before.

Similarly, John Hooper, the outgoing chief operating officer, saw a big reduction in his pay.

He received £663,000 in 2014, down 59 per cent from £1.649m the previous year.

The pair successfully steered the lender through the downturn, but have seen the costs of past conduct issues mount to more than £1.23bn.

The provisions for the mis-selling of useless or toxic products to households and small businesses equate to the profits of the “many, many years”, Mr Thorburn admitted when I spoke to him last.

In fact, the bill for behaving badly was blamed for a 10 per cent fall in annual cash profits at parent National Australia Bank, which has made a UK exit “an absolute priority”.

Its UK operations posted a loss after tax of £178m for the year ending September 30, according to the plc annual report.

A statement from the lender said: “Bonuses for all employees are linked to business performance.

“While the significant improvements achieved in the past year have been recognised by the NAB group board’s remuneration committee, the performance bonus pool for employees is significantly lower again this year.”

Still, Yorkshire and Clydesdale did manage to deliver a big improvement in underlying pre-tax profits, to £218m from £87m the prior year, thanks to an improving economy and a major restructuring exercise.

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