Friday 23/04/21

1. In CONSUMER & RETAIL NEWS, UK consumer confidence rises, social spending shoots up and luxury sales are set to strengthen
2. In CAR-RELATED NEWS, Hyundai profits rocket, JLR and Renault complain of prolonged chip shortages, Intel isn’t too positive about a quick solution and Bosch blasts fixation on EVs
3. In CORONAVIRUS WINNERS & LOSERS, winners include Mattel, Nespresso and Segro while Informa loses out
4. In INDIVIDUAL COMPANY NEWS, Apple boosts ad business, HBO Max beats Netflix and US airlines see a recovery
5. AND FINALLY, I thought I’d leave you with the most niche boy-band I’ve ever heard of…

So UK consumer confidence continues to rise, social spending jumps up and luxury sales look set for good times…

UK consumer confidence rises to highest level since first lockdown (Financial Times, Valentine Romei) cites the latest research from GfK which shows that rising UK consumer confidence is boosting consumer spending to higher-than-pre-pandemic levels, with the implication that the economy had a strong start to the second quarter. Confidence in personal finances and the general economic outlook were also positive. Social spending reaches pandemic era-high (Daily Telegraph, Tim Wallace) cites the latest figures from the Office for National Statistics which show that people spend more money socialising last week than at any point since the start of the pandemic (you’ll be

glad to know I played my part in this statistic!). * SO WHAT? * It really does seem that every survey you care to look at at the moment is positive – whether it’s on consumer spending, manufacturing, business confidence or hiring – which is great for the economy! As we see more hard figures that back this up, I suspect that the positive momentum will continue to build strongly in the coming months.

Sales at biggest luxury groups set to recover as early as this year (Financial Times, Leila Abboud) shows how the luxury sector’s recovery is gathering pace as Hermès’ revenues beat analyst expectations with the highest growth in the industry so far, following recent positive noises from Anna Wintour and Kering as well as LVMH. Analysts now reckon that annual revenues at LVMH, Kering and Hermès with at least be as good as they were in 2019. It seems that previous concerns last year have been misplaced and we are now set for a major boom in the sector!

Hyundai rocks, JLR and Renault have chip problems, Intel doesn’t sound too upbeat on this and Bosch has an EV moan…

Hyundai profits surge three-fold on pandemic rebound (Financial Times, Song Jung-a) shows that the South Korean car company announced a near tripling of net profits in Q1 due to strong demand for SUVs and its premium cars. Global vehicle demand started to gain traction in H2 last year and Hyundai also managed to swerve production stoppages in the January to March period that rivals suffered due to chip shortages (it had loads of chips). Analysts think this is unlikely to last, though, and it could be the case that the company has a tougher Q2. Jaguar Land Rover to suspend work at UK plants amid computer chip shortage (The Guardian, Jasper Jolly) highlights JLR as just the latest car manufacturer to succumb to the chip shortage and Renault warns over car industry’s worsening global chip shortage (Financial Times, Peter Campbell) shows that the French carmaker reckons that there are going to be months of disruption. Both Ford and Daimler announced and/or extended shutdowns for the same reason. * SO WHAT? * This is a real nightmare for the car makers because they really want to be able to meet market demand and take full advantage of the current feelgood factor as lockdown restrictions lift. All I can say is that as this problem gets worse, I would have thought that the secondhand car market is going to get stronger as would-be new car buyers plump for used instead, so perhaps companies like Auto Trader and various car supermarkets will benefit as a result.

Chipmakers themselves aren’t painting a great picture either as per Intel sees prolonged chip-supply constraints (Wall Street Journal, Paul Ziobro) cites Intel’s new chief exec as saying that he believes that the shortage could go on for another two years! He did say that he would make some extra capacity available in the short term, but the $20bn spending commitment on new facilities he announced recently would take some time to kick in.

Meanwhile, Bosch blasts EU over electric car ‘fixation’ (Financial Times, Joe Miller) shows that Europe’s #1 car parts maker criticised EU’s fixation on EVs whilst simultaneously neglecting other low-emission alternatives like hydrogen and synthetic fuels. Bosch has so far invested €5bn into EV tech but has also put money into building hydrogen capabilities. * SO WHAT? * I have to say that I’m inclined to agree with them because it seems to me that there are all sorts of potential problems with putting all our eggs in one basket regarding current lithium ion technology. This is an old technology with problems such as overheating and dwindling supplies of key ingredients (e.g. lithium and cobalt) so surely it makes sense to put money into other tech as well, don’t you think? The problem is that I think governments and companies want relatively quick wins and so they put more effort and resource into one thing – but if that area hits big issues the whole EV boom could come to a juddering halt.

Mattel, Nespresso and Segro win and Informa looks like it’ll take a while to recover…

And in the “winners” corner, Mattel’s quarterly revenue hits 6-year high as toy boom continues (Financial Times, Matthew Rocco) shows that the pandemic-fuelled boom in toys is continuing as the toymaker announced an upward revision in its financial forecasts after having had its best Q1 revenues for six years! Demand for Barbie dolls and Jurassic World action figures were particularly strong as kids played spent some of their downtime away from screens. The company also managed to gain market share in latest quarter after posting double-digit gains in the previous three quarters. Nespresso sales are up as home coffee demand soars (Daily Telegraph) highlights continued strong sales of the coffee pod system as people went to coffee shops less and had their caffeine fix at

home instead. Sales shot up by 17% in the first quarter, giving owner Nestlé a boost – although the parent’s performance was also boosted by strong showings in dairy, baking products and pet food. Watch this space, booming Segro advises its investors (The Times, Robert Lea) highlights what must be one of the biggest winners of all during the pandemic as the rise in demand for warehouse space due to a sudden ramping up of online and storage demand has played right into the hands of the warehouse specialist. Segro is now Europe’s biggest industrial property company and it has been able to increase rents and fill new warehouse space. I do not see this slowing down any time soon!

On the other hand, things haven’t been so good for event specialist Informa as per Showstopper of a year left events host £880m in red (The Times, Patrick Hosking) which highlighted the cost of shutting down all those events and exhibitions last year – a statutory loss of £880m for 2020. The company believes that 2021 will be a year of transition, with trade shows and other B2B events returning to more normal levels in 2022.

Apple looks at ads, HBO Max outpaces Netflix and US airlines hope for a recovery…

Apple to boost ads business as iPhone changes hurt Facebook (Financial Times, Hannah Murphy and Patrick McGee) shows that Apple intends expand its ad business whilst simultaneously bringing in new privacy rules for iPhones that are going to severely dent ads offered by its rivals, such as Facebook. Currently, Apple sells search ads for its App Store that let developers pay for the top result – but it is now thought to be planning to add a second advertising slot in the “suggested” apps bit in its App Store search page by the end of the month. * SO WHAT? * Basically, the iOS 14.5 update will force apps and advertisers to get consent from iPhone users to collect data – and this is causing uproar and accusations that Apple isn’t just doing this to improve privacy for users, but that it’s just trying to further its own ambitions in mobile advertising. Apple continues in its efforts to wean itself off relying too much on hardware sales and diversify its revenue streams.

Elsewhere, HBO Max’s US subscriber growth beats Netflix in first quarter (Financial Times, Anna Nicolaou) shows that HBO managed to sign up 2.8m US subscribers to its streaming service in Q1 – which is rather more than the 450,000 news subscribers that Netflix managed in the US and Canada over the same period. * SO WHAT? * OK, so HBO only has 9.7m subscribers versus Netflix’s 74m in the

US and Canada (and 208m globally), but I really do think that this shows how important content really is to the ongoing success of a streaming service. Disney+ has attracted people because of the quality of its content and WarnerMedia’s HBO is trying to do the same. When all’s said and done, though, I think that we’ll have another year or so of growth for the streamers and then I would really expect some consolidation between them because people just won’t want to subscribe to 10 different streaming services. The irony of this is that we may eventually end up with something similar to what we first started with in terms of loads of content on a few (consolidated) channels!

There’s hope in Southwest, American say leisure travel rebounding as summer season approaches (Wall Street Journal, Alison Sider) as a number of major US airlines this week emphasised confidence that leisure travellers will come back during the summer vacation season as lockdown restrictions lift and vaccine rollout continues. Various airlines are recalling pilots and flight attendants in anticipation of a busy summer. * SO WHAT? * This sounds great and, I think, eminently possible given the amount of domestic flying that Americans do. I find it more difficult, however, to say with the same confidence that Europe will see the same bounce back given vastly differing states of vaccination across all the European nations. Time will be of the essence here because European operators will want to try to get traffic up and running for a summer season before it all potentially quietens down again.

…in other news…

As many of you will be aware by now I love Japan (my mum’s Japanese, I went to university in Tokyo for a few years and I also worked there as a stockbroker for a number of years also). The food is out-of-this-world, the culture is incredibly interesting and the people are great! However, there are aspects that are completely bonkers – and this is a great example: Meet Aloma: the Japanese male idol group cheering on moms through the trials of child-rearing (SoraNews24, Ingrid Tsai). Dance routines with baby-carriers, anyone 😂?!?