Thursday 11/03/21

1. In MACROECONOMIC & VACCINE NEWS, Biden’s stimulus gets the go ahead, Spain is in turmoil, Brussels tussles with the UK and Russia plans to manufacture Sputnik V in Italy
2. In RETAIL & HIGH STREET-RELATED NEWS, Next takes a chunk of Reiss, M&S makes a splash in underwear and Adidas aims to go direct to customers while in food, TRG raises money while Just Eat Takeaway prospers
3. In M&A AND IPO NEWS, GE sells aircraft leasing to AerCap and Roblox has a stellar debut
4. In INDIVIDUAL COMPANY NEWS, Lego and Bumble put in strong performances and Foxtons hails a strong start
5. AND FINALLY, I bring you a pair of “Ewok” dogs…

So Biden gets the green light, Spain falls into turmoil, the Brussels/UK spat continues and Russia has designs on Italy…

📢 It’s Thursday – so it’s time for my 30-minute Instagram Live At Five where I will run through the week’s key stories AND the one hour weekly ZOOM call for paying subscribers where I will do the same but in more detail and with much more interaction 👍 The ZOOM call will start at 5.30pm and run until 6.30pm. See you there!

After a tense few weeks, Biden’s $1.9tn stimulus package wins final approval in Congress (Financial Times, Lauren Fedor and James Politi) shows that Joe Biden’s relief package got the House of Representatives backing that it needed in a vote yesterday (but only narrowly – by 220 to 211). All that remains now is for him to sign it into law tomorrow and the job’s a good’un. US chief executives’ confidence soars as vaccines and stimulus arrive (Financial Times, Andrew Edgecliffe-Johnson) cites a quarterly poll of chief execs by the Business Roundtable big-business lobby group which shows one of the sharpest business confidence rebounds ever and Biden’s stimulus will affect the whole world (Financial Times, the editorial board) spells out what other countries will benefit. Mexico and Canada should be set to benefit as should export-oriented economies of east Asia and Europe. The OECD thinks that the stimulus will work, but the key will be whether the US can keep the lid on inflation whilst still encouraging growth.

Elsewhere, Regional government collapses in Madrid (Financial Times, Daniel Dombey) shows that Spain was thrown into turmoil yesterday due to infighting between coalition partners. Isabel Díaz Ayuso, who is the leader of the Madrid government and a key figure in the centre-right People’s Party, announced the dissolving of the regional

assembly, calling for new elections on May 4th. * SO WHAT? * This is yet another headache for Socialist PM Pedro Sánchez at a very tricky time, what with the pandemic and the whole Catalonia nightmare. It also goes to show how incredibly problematic coalition governments can be as everyone is just pulling in different directions with their own agenda.

The Brussels-London spat continues in Brussels hits back in vaccine exports row with UK (Financial Times, Michael Peel, Sam Fleming, George Parker, Peter Foster and Laura Noonan) as Europe backtracked on previous EC President Charles Michel’s accusations that the UK imposed an “outright ban” on vaccine exports (what is the EC playing at?!?). This turned out to be a massively cack-handed attempt by Charlie boy to highlight that no vaccines so far have been sent from the UK to the EU. To be fair to the EU, it is a big exporter of vaccines and, ironically, the UK is the biggest recipient. Someone somewhere has royally messed up on the European side and it seems that they are now playing the blame game to deflect criticism.

Continuing on the vaccine front, Russia seeks to make Sputnik V in Italy as overseas demand surges (Financial Times, Henry Foy, Max Seddon and Silvia Sciorilli Borrelli) shows that Russia seems to be doing rather better overseas than it is in its own backyard as the Russia Direct Investment Fund, which oversees the vaccine’s distribution, said it had signed an agreement earlier this week to produce the jab in Italy via Swiss-based pharmaceutical company Adienne. It still has to get approval from local regulators but Russians remain sceptical. * SO WHAT? * So far Putin has not had the jab but only 2million of a population of 144m have, with only 30% willing to take it despite it being available to all age groups for free. 45 countries have so far approved the vaccine and it is being billed as an alternative to western vaccines. It is an attractive alternative given the 91.6% efficacy rate reported last month in The Lancet and the supply problems that Europe is having at the moment.

Next/Reiss reunited, M&S makes waves in undies, Adidas wants to cut out the middleman, people return to the high street while restaurants and takeaways show diverging fortunes…

Next’s £33m deal for Reiss gets the band back together (The Times, Ashley Armstrong) highlights a reunion of master and pupil as Lord Wolfson pays £33m for a 25% stake in Reiss, with an option to buy another 26% by July next year. The chief exec of Reiss, Christos Angelides, was Wolfson’s right hand man at Next for 28 years until he left to head up Reiss in 2014. Reiss had actually been doing OK until lockdown hit but, like many others known for smarter attire, it suffered. * SO WHAT? * This is probably an opportune purchase for Wolfson and follows the recent purchase of the UK licence for Victoria’s Secret. It seems to me that coronavirus has thrown up a number of interesting opportunities and Next has been able to act decisively due to its relatively successful navigation of the crisis. Wolfson is a very smart operator and it will be interesting to see where this venture – and others – goes.

Meanwhile, M&S to sell rival lingerie brands for the first time (The Guardian, Sarah Butler) highlights the retail stalwarts move to sell rival lingerie brands for the first time ever in order to boost online orders. It is going to introduce some items from Sloggi and Triumph while eight over new labels – including Hobbs, Joules, Phase Eight, Seasalt, White Stuff, YAS and Sosandar and menswear brand Jack & Jones – will be introduced to the website over the next few months. * SO WHAT? * Given that M&S accounts for just under a third of UK underwear sales, this is a punchy move. And when you also take into account that it has also been putting brands like Ben Sherman, Russell Athletic, Original Penguin, Elle Junior, Finery and Ghost onto its website (with the prospect of Jaeger waiting in the wings) you can see that M&S finally seems to mean business regarding a turnaround of its clothing business. Following on from what I said yesterday, Tearing down the Arch might yet mark a triumph for M&S (Financial Times, Bryce Elder) implies that a combination of a rejigging of its property portfolio and a turnaround in its clothing offering (as per the above) and food (courtesy of Ocado) could make it ripe for a takeover, possibly from a private equity house, if investors fail to get excited. 

Elsewhere, Adidas to bypass shops in drive to grow online sales (The Times, Ali Mitib) heralds the company’s announcement that it will invest €1bn in a digital transformation as part of a five-year plan to double its online sales by 2025. The company’s chief exec reckons that e-commerce will account for over 40% of the industry’s sales by 2025 and he wants to concentrate on Greater China, EMEA and North America (so most of the world, then 😂), which is where he thinks 90% of the sales growth will come from. Punchy!

Then in Britons bored by lockdown drifting back to high street (Daily Telegraph, Russell Lynch) we see that, somewhat unsurprisingly, people are starting to get those high street feels once more, according to data from Centre for Cities. The findings suggest that footfall in urban areas is already up to 24% of pre-pandemic levels and separate data from the Department for Transport showed journeys by car, London bus and Tube reached their highest levels for months. * SO WHAT? * I really do think that there is going to be a wall of money hitting the high street when lockdowns lift and non-essential shops can get back into the fray. Given these footfall numbers, it really does seem that people are just itching to get back out there – and I am one of them!!!

Meanwhile, in food, Feast and famine for the food industry giants (The Times, Dominic Walsh) we see the contrasting fortunes between The Restaurant Group (TRG) – which owns brands such as Wagamama and Frankie & Benny’s – and launched another equity fund that will try to raise £175m from existing shareholders – and Just Eat Takeaway sales soar 54% in 2020 as pandemic shifts eating habits (The Guardian, Sarah Butler), which highlights just how well takeouts have been doing under lockdown. * SO WHAT? * As I said above, I think that a wall of money will be hitting the high street soon and, as people venture out of their home-prisons, they will seek out more “direct” experiences. This means that I would expect the trend of eat-in vs take-out to reverse, especially in the casual dining segment (as it is an “affordable” luxury) but it will be interesting to see how long that lasts for. I’ll stick my neck out here and say that it will last going into the end of this year unless there’s a nightmare on the Covid front and we all get sent home again.

GE sells aircraft leasing and Roblox has a great debut…

GE to sell aircraft leasing business to AerCap in $30bn deal (Financial Times, Philip Georgiadis, Sylvia Pfeifer, Oliver Barnes and Andrew Edgecliffe-Johnson) highlights a very chunky deal which brings the two biggest companies in the market together in a cash-and-share deal. When this deal completes (it is expected that this will take about a year), GE will use the proceeds to make a dent in its massive debt pile. * SO WHAT? * This is a very big deal. It would be the equivalent of Airbus and Boeing announcing a merger – so you can understand how the industry may feel about this. Given that it could take a while to complete and

that a LOT can happen in a year, I don’t think that this is a certainty – especially if the aviation industry shows signs of recovery. Iata has already expressed concern that things are getting quite cosy in the industry given that there are two aircraft manufacturers, two or three major equipment manufacturers, a monopoly on air traffic control and airports – and now, potentially, a monopoly in leasing. One to follow – although within this time, it is eminently possibly that rivals could try their own mergers. 

Then in Roblox soars in debut as IPO market surge resumes (Wall Street Journal, Maureen Farrell) we see that shares in the videogame platform rocketed up by over 54% from the $45 issue price in its direct listing. The company now has an impressive $45bn market cap – up from the $29.5bn it was valued at in its most recent fundraising only two months ago! The IPO frenzy is most definitely alive and well!

Lego and Bumble put in strong performances and Foxtons is upbeat…

In a quick scoot around other headlines today, Lego sales soar on back of Covid lockdowns and Nintendo tie-up (The Guardian, Joanna Partridge) we see that Lego’s fortunes were boosted by families spending more time together under lockdown and it grew its global market share faster than all other toys overall! The company said that it was also thanks to investments that were made over the last two years and it intends to continue to merge the worlds of offline and online play. * SO WHAT? * Long may this continue! I love Lego! It will definitely have to merge the two worlds, though, as digital play is here to stay and ignoring it could lead to obsolescence. Other toy manufacturers will no doubt be taking note.

Bumble revenue jumped 31% in latest quarter (Wall Street Journal, Kimberly Chin) shows that the dating app did well in the latest quarter and revenues were up by 47% as the total number of paying users rose. Investors in last month’s IPO will be feeling pretty pleased with themselves given the shares are now trading at $62.91 versus the $43 launch price. Interestingly, the company is being cautious about the future as more direct interactions can take place, but it believes that there will still be a space for digital in the post-pandemic world.

Then in Foxtons reports busy start to year as Londoners look to move (Financial Times, George Hammond) we see that Foxtons the estate agent reported its business start to the year since 2016 due to people trying to beat the stamp duty holiday and to get more space. The company expects the strength to continue as the stamp duty holiday was extended and confidence rises due to vaccine rollout.

…in other news…

I thought I’d leave you today with some pictures of a couple of very cute dogs in Dogs that ‘talk’ and have human-like features leave onlookers gobsmacked (The Mirror, Paige Holland). 😍 Just what you need on a Thursday morning 👍

On a more serious note, my thoughts go out to my Japanese friends who, ten years ago today, suffered in the Great Tohoku Earthquake that shook Japan – and the entire nuclear power generation industry. What a terrible day that was.