Friday 05/07/19

  1. In HIGH STREET NEWS, William Hill announces shop closures and Primark eyes US expansion
  2. In CAR-RELATED NEWS, UK plug-in car sales disappoint and India’s Ola gets a London licence
  3. In TECH-RELATED NEWS, Samsung forecasts a big fall in operating profit and Niantic could do better
  4. In OTHER NEWS, I bring you the “invisible challenge”…



So William Hill wields the axe and Primark looks to the US…

William Hill to shut 700 shops (Daily Telegraph, Michael O’Dwyer) heralds the inevitable move by the bookmaker following the government’s crackdown on fixed-odds betting terminals (FOBTs) which cut the maximum bet from £100 to £2 in April to limit gambler losses. Betting shops earned huge amounts of money on these things – often referred to as the “crack cocaine” of gambling – and so their sudden demise has hit hard. GVC, which owns Ladbrokes and Coral, also plans to close up to 900 of its shops for the same reason. In all, this will put nigh on 10,000 jobs under threat. * SO WHAT? * The betting shops have seen this coming for ages, so this should come as no surprise. From a business standpoint, though, things could be worse as the US sports betting market opened up this year due to a change in the law and so British bookmakers have been scrambling over themselves to get a piece of that growing (American) pie. In the meantime, though, store closures will hit costs and put yet more holes in our high street.

Primark still hot despite wet start to summer (The Times, Ashley Armstrong) highlights strong sales at the Associated British Foods-owned clothing retailer despite experiencing a wet May. Fun fact: ABF owns brands like Ovaltine, Ryvita, Jordans and Twinings but makes over half of its sales and profits from Primark (hey – I’ve got your back on interesting conversation topics 👍). Actually, while I’m at it, did you know that Primark is Britain’s #1 retailer by volume and #3 in terms of value after M&S and Next?? Anyway, trading was strong despite the weather and tough comparisons with the same time the previous year which saw a royal wedding, the World Cup and a heatwave. ABF left its full-year outlook unchanged. * SO WHAT? * I think that this is an impressive performance on the domestic front given current difficult trading conditions. Outside the UK, Primark targets Chicago for next stage of US expansion (Financial Times, Jonathan Eley) looks at the company’s US ambitions which follow a difficult period where it had to cut space at a number of its stores to improve sales density. The US market has been the graveyard of many a UK retailer – the most recent casualty of which has been Philip Green’s Arcadia which is closing Topshop there – so clearly it has its work cut out.



UK plug-in sales suffer and Ola gets a London licence…

Subsidy cuts blamed for fall in UK sales of electrified vehicles (The Guardian, Jasper Jolly) shows that – surprise, surprise – when punters are faced with higher prices for electric vehicles, they don’t buy them. And yes, bears do indeed sh!t in the woods. Anyway, the latest figures from the Society of Motor Manufacturers and Traders show that sales of alternative-fueled vehicles (which includes hybrids as well as fully-electric) fell by 11.8% in June versus the same month last year. The geniuses at SMMT put this down to the government reducing the subsidy for electric vehicles from £4,500 to £3,500 and eliminating the hybid subsidy altogether in October. Funnily enough, sales of diesels continued to fall – this time by 20% year-on-year – given that this is now seen as the fuel of Satan. * SO WHAT? * The SMMT consistently belly-aches over falling car sales, but the fact of the matter is that people just aren’t spending money (from their higher wages) on big ticket items like cars because of economic uncertainty. Also, the quicker manufacturers shift production away from diesel the better. God knows what’s going to happen to all the old secondhand diesels out there that everyone bought because we were all told the wrong information! FWIW, I

think that a major force in boosting sales of electric vehicles would be for company car fleets to increasingly go electric. This would also increase the impetus for building a viable charging network which is, let’s face it, probably the biggest issue when people are faced with the choice between electric, hybrid or “traditional”. I would personally go down the hybrid route if you wanted to go green, but to be honest if I had the money to go and buy a car tomorrow I would buy petrol because I don’t do massive mileage and I just think charging capability in this country isn’t capable – and won’t be for years to come.

Ola wins licence to take on Uber (Daily Telegraph, Natasha Bernal) signals the arrival of Indian ride-hailing company Ola in London where it will compete with that little-known taxi thingamajig Uber. The Softbank-backed company got its licence from Transport for London yesterday and is expected to start offering its services in September and joins the likes of Bolt, Kapten and ViaVan as new challengers to Uber. Ola says it will differentiate itself by focusing on passenger safety and letting black cabs use the service. Ola launched in Bristol last year and now has 10,000 drivers in Liverpool, Birmingham, Cardiff, Reading, Bath, Bristol and Exeter. * SO WHAT? * Nice one – but it is a rather crowded market! Still, Ola has some major backers in the form of Japan’s Softbank, car makers Hyundai and Kia, China’s Didi Chuxing and Sequoia Capital India. That doesn’t guarantee success (because many of these investors also invest in other ride hailers) but it does mean that it should be taken seriously by the competition.



Samsung has a downbeat profit outlook and Niantic falters…

Samsung Electronics expects quarterly operating profit to fall more than 50% (Wall Street Journal, Eun-Young Jeong) highlights a rather disappointing announcement from the consumer electronics giant. It said that its second quarter operating profit would take a 56.3% hit from the previous year due to poor demand for memory chips, with profits and revenues also taking a dive. Having said that, market expectations for its operating profits turned out to be too pessimistic as Samsung’s current situation was improved by a weaker-than-expected domestic currency and a “one-time gain related to the display business” (thought to be from compensation fees from Apple, which uses Samsung’s OLEDs in some of its iPhones). * SO WHAT? * Falling chip sales hit Samsung badly because it’s where it earns most of its operating profit – 75%  in 2018, to be exact – so you can see why the current slowdown is

painful. The company has also suffered fallout from the US-China spat because, although it’s a competitor to Huawei in smartphones, Huawei also buys Samsung’s memory chips.

I must say I thought that Niantic, the maker of the wildly popular Pokemon Go who recently released a new Harry Potter augmented reality game, would have been taking the plaudits by now but Mobile gaming: spell check (Financial Times, Lex) shows that the reception of Harry Potter: Wizards Unite, has been largely disappointing (according to market research company Sensor Tower, the Harry Potter game is expected to make $10m in its first month versus Pokemon Go, which made over $200m). What is interesting, though, is that Niantic is creating a platform for other augmented reality products – something that Epic Games, creator of Fortnite, is also doing. I think that AR is like VR in the sense that although many look at the respective technologies in terms of gaming, it actually has other much broader and better uses in training and other areas – IMHO, gaming is the cherry on the cake.



And finally, in other news…

I thought I’d leave you this week with The “invisible challenge” is the internet’s latest dog craze (BestLife, Diana Bruk). When I find a cat equivalent, I’ll let you know (but tbh, I think cats would work this out quite quickly). Have a great weekend!

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Some of today’s market, commodity & currency moves (as at hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones ***S&P 500 ***Nasdaq***DAX *CAC-40 *Nikkei **Shanghai **
7,604 (-0.08%)26,966 (hols)2,996 (hols)8,169 (hols)12,630 (+0.11%)5,621 (+0.03%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close, *** are at July 3rd close because of 4th July US holiday)