Friday 10/07/20

  1. In CONSUMER/HIGH STREET NEWS, UK consumer spending falls, Boots, John Lewis and Burger King announce cuts and Boohoo bounces back
  2. In REAL ESTATE NEWS, City landlords worry about empty trains and first-time buyers get competition
  3. In NEWS ON “WINNERS” & LOSERS, PC sales rise, Harley-Davidson cuts jobs, Rolls-Royce sees revenue drop and recruiters’ profits fall
  4. AND FINALLY, I bring you the real use of crackers and a KFC competition…



So UK consumer spending falls, the jobs carnage continues on the high street and Boohoo bounces back…

UK consumer spending down despite reopening of hospitality sector (Financial Times, Valentina Romei) shows that although pubs and restaurants have now opened up, unofficial data shows that spending remains weak. Official estimates for July won’t be available until September, but the unofficial data indicated that business only returned to about 50% of pre-virus levels. Credit and debit card data from Barclaycard and Lloyds Bank more or less backed that conclusion as the value of transactions on the “Super Saturday” weekend were 45% lower than they were over the same weekend last year. Hopefully, Sunak’s VAT cut from 20% to 5% for the sector will help the situation.

Boots and John Lewis to cut 5,300 jobs and shut stores (Financial Times, Jonathan Eley, George Parker and Chris Giles) highlights the announcement of more job losses as Boots said it would be closing 48 of its opticians stores and restructuring its head office while John Lewis said that it would be shutting down eight of its 50 department stores – including flagship outlets in Birmingham and Watford. Cuts are on the menu at Burger King (The Times, Dominic

Walsh) shows that closures of up to 10% of its 530 British outlets are on the cards, putting as many as 1,600 jobs at risk. * SO WHAT? * The latest round of job cuts is all in addition to the 40,000 jobs already lost on the high street in the first half of the year, according to data from the Centre for Retail Research. It’s by no means certain that this will be the last round, unfortunately, but I’m sure that many retailers will be wanting to see how the consumer behaves before making deeper cuts. 

OK, so it’s not “high street”, but Boohoo shares bounce back after pledge to improve factory conditions (The Guardian, Sarah Butler) shows that the embattled online fashion retailer’s share price bounced back by 27% in trading yesterday as analysts and investors believed that they were doing all they could to sort out their supply chain. * SO WHAT? * I think that there were three main reasons why the company’s share price rebounded yesterday. Firstly, Boohoo’s broker (the institution that represents Boohoo in the market) held a conference call on Wednesday night with major investors in the UK and US after the market had closed, which seemed to calm nerves. Secondly, news that the company’s biggest investor, Jupiter Asset Management’s Merian Global Investors, had increased its stake to over 10% also showed confidence of a major player. Thirdly, the fact that numerous inspections had already taken place of its facilities and found nothing also reassured. It looks, for the moment at least, like Boohoo may be out of the woods.



City landlords fret while first-time buyers may face more competition…

City landlords fear for future of offices with trains still empty (The Times, Katherine Griffiths) highlights office landlord concerns in the City that government advice about public transport (try not to use it) and returning to work are at odds with each other. This is particularly relevant for those who work in the City as most people commute using public transport. * SO WHAT? * The combination of a fear of using public transport and City companies telling the majority of their staff to work from home is killing TfL at the moment. The company got a £1.6bn bailout that will take it through to the end of September but Ron Kalifa, an NED at TfL and director on the court of the Bank of England said that “it is clear TfL will need support from the government for the long term”.

Then in First-time buyers feel pain of universal stamp duty cut (Daily Telegraph, Tim Wallace) we see that a consequence of Rishi Sunak’s recent decision to cut stamp duty for properties valued up to £500,000 will be that first-time buyers, who had up till now paid lower rates than everyone else, will now get more competition for properties as lower rates will now be available to everyone. * SO WHAT? * The Institute of Fiscal Studies think-tank said that this increased competition is likely to push house prices up and benefit sellers the most. Stamp duty used to start at £125,000 but first-time buyers only had to start paying it at £300,000 – so the new threshold of £500,000 for EVERYONE is a considerable step. I guess at least mortgages are cheap at the moment – the only snag being that building societies have recently increased the minimum level of deposit required to get a mortgage. I would have thought that this will certainly pep things up a bit WHILE IT LASTS. Whether activity will drop sharply again once lower stamp duty ends is another question.



PCs sell well but Harley-Davidson, Rolls-Royce and UK recruiters have a hard time…

In the “winners” corner today, PC sales surge, boosted by homebound workers and students (Wall Street Journal, Maria Armental) cites the latest stats from International Data Corp which show that global PC shipments rose by 11% in the June quarter as more workers and students were forced to work from home during lockdown. The US was particularly notable as it saw its highest quarterly shipment volume in over ten years. Shipments had slowed in the March quarter due to logistical problems but it

seems that they have since been resolved. * SO WHAT? * Computer manufacturers/sellers have certainly been among the “winners” of coronavirus with HP, Lenovo, Dell, Apple and Acer all benefiting from major changes in our working habits.

The doom, however, continues in Harley-Davidson to cut 13% of global workforce (Wall Street Journal, Austen Hufford) which shows the company engaging in a major global overhaul, Rolls-Royce signals revenue drop over next 7 years (Financial Times, Peggy Hollinger) due to the ongoing nightmare being suffered by anything related to civil aviation and Recruiters’ profits plunge as pandemic collapses global hiring market (Daily Telegraph, Michael O’Dwyer) shows that recruiters Robert Walters and PageGroup are suffering from hiring freezes during the outbreak.



…in other news…

I thought I’d leave you with an intriguing TikTok “hack” in Man discovers use for crackers’ jagged edges – and it’s blowing people’s minds (The Mirror, Luke Matthews) which could save on washing up 😂. Then there’s a treat in store for fans of the Colonel in KFC is giving away a year’s supply of chicken – this is what you need to do (The Mirror, Paige Holland). A year’s supply??? What would that look like?!? In addition to this, winners of the competition get a free ceramic KFC bucket with your face on. Classy (and something you could place with pride in a glass cabinet next to your sports medals and trophies perhaps), but I still think the best fast-food related product I have ever seen is without doubt in Pizza Hut unveils bizarre ‘Pie Tops’ shoes that let you order takeaway at the tap of a foot (The Mirror, Chris Baynes) from a few years ago.

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Some of today’s market, commodity & currency moves (as at 0754hrs 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 **
6,050 (-1.73%)25,398 (-1.20%)3,125 (-0.86%)10,54812,498 (-0.04%)4,921 (-1.21%)22,515 (+0.24%)3,383 (-1.95%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)