Friday 28/06/19

  1. In INDIVIDUAL COMPANY & BITCOIN NEWS, Apple loses Jony Ive, Nike announces strong sales and Bitcoin drops
  2. In RETAIL NEWS, we see H&M cutting back on new stores, our changing high streets and weakening online fashion
  3. In CAR NEWS, Ford announces big cuts and Vauxhall clarifies action on no-Brexit
  4. In OTHER NEWS, I bring you camouflaged animals…



So Apple loses Jony, Nike’s sales climb and but Bitcoin falls…

Apple fans around the world will be wetting their pants, or at least wearing black armbands because Jony Ive, iPhone designer, announces Apple departure (Financial Times, Tim Bradshaw) is the news that’s all over the press today. After 30 years at the company, he’s decided to leave and form his own company called LoveFrom (which he describes in typically enigmatic Jony Ive fashion as “a culmination of what I’ve learned and intend to continue learning from the last 30 years. It will be a collection of creatives…from around the world that come from quite diverse areas of expertise”. ?!? It just sounds like a design agency to me…). Apple will continue to be one of his clients, but I think more people are interested in What will Apple do without Jony Ive? (Financial Times, Tim Bradshaw) given his massive influence as Apple’s chief design officer in a golden age that made Apple what it is today. This is a great article with an excellent chart of how Apple has grown over the years into one of the world’s biggest companies – you should take a look if you can. * SO WHAT? * In answer to the question posed by the title of this article, though, Apple will just have to carry on with the team the Ive left behind him. Interestingly enough, his Industrial Design department has been pretty rock solid for the last three decades, but some of the “old guard” have been leaving in recent years and Ive’s surprise departure perhaps bookends Apple’s most successful era. Given the maturing of the iPhone in particular, the slower progress of other devices and big

shift towards services, it seems that this might be a time where new ideas from a new team can provide the creative boost needed to switch Apple up a gear. Time will be the judge, but in the meantime many will mourn the departure of an icon.

Nike posts strong sales, plays down trade risks (Wall Street Journal, Khadeeja Safdar and Patrick Thomas) highlights strong performance by the sportswear giant in the latest quarter with US-China trade shenanigans apparently not affecting sales either side of the divide. Nike manufactures around 25% of its global apparel and footwear in China but execs say they’ve got the flexibility to switch production to factories in other countries to roll with the trade war punches as appropriate. Total sales for the fourth quarter rose by 4%, North American sales were up by 7% and China sales were up by 16%! Its profits would have been higher but for increased spend on new tech and a higher tax rate than last year. Digital sales showed an impressive 35% hike as its apps continued to help reduce dependence on traditional store sales. The company also painted a positive outlook for the coming year. * SO WHAT? * A decent performance and it just goes to show how some companies can survive even the direst of trade wars if they get their structure and offering right.

Bitcoin rally ends with sharp decline (The Times, Callum Jones) heralds a disappointing end to the week for Bitcoin as it fell by 10% yesterday to $11,621.30. Some have suggested that a lot of Bitcoin’s recent strength has been down to investors trying to shift money out of China, with the cherry on top being provided by Facebook’s unveiling of Libra last week. As always, no-one really knows, but I suspect there has been more than a little element of profit taking going on.



H&M cuts down new store growth, empty UK shops may never come back and online fashion sales lose their shine…

H&M cuts back on new stores (Daily Telegraph, Laura Onita) shows that the mighty H&M, one of the world’s largest retailers, has decided it will slow the pace of new store openings after its quarterly profits dropped in the latest quarter – the eighth consecutive quarter of weakness. H&M has been wrestling of late with cutting down its unsold product but investors saw signs that the company could be turning this around. Summer clothing sales have been very strong due to the current heatwave across Europe and inventories have been coming down. The company’s share price shot up by a fifth in Stockholm yesterday as chief exec Karl-Johan Persson observed that “The H&M group continues to increase full-price sales, reduce markdowns and increase market share, showing that customers appreciate our collections and the improvements we are making to the product assortment and the customer experience”. * SO WHAT? * H&M is certainly going in the right direction but it still has work to do on cutting its inventory. It also needs to continue to respond to customers quickly in a very cut-throat space – but for now, at least it appears to be making the right moves.

One third of shuttered shops on the high street ‘have gone forever’ (Daily Telegraph, Laura Onita) highlights the rather depressing findings of a report published by Colliers International which points to a massive change in the make-up of our high streets. The report says that around 11% of our high streets and local shops are empty, of which a third has been vacant for more than two years. It details a number of high profiles of high street casualties and recent relaxation to planning rules is helping business owners respond to changes on the high street. * SO WHAT? * This is yet more evidence of the evolution of the high street. I don’t think it will disappear – it will just evolve. In my opinion – and it’s easy to say but hard to do – high street outlets need to concentrate more on experience and offering because they won’t be able to compete on price with online. Also, retailers in particular need to concentrate on getting the right balance between offline and online presence to maximise the benefits of both.

Mind you, Online fashion loses the feelgood factor (The Times, Elizabeth Burden) cites figures from Kantar, the market analytics company, which show that online fashion sales have slowed to their slowest ever rate. Year-on-year growth fell to just 0.6% in the latest quarter versus 8% last year and 6.8% the year before that, although in absolute terms, offline sales continue to be greater at £5.5bn versus £2.1bn. * SO WHAT? * After years of growth, optimists will say that online fashion sales are just pausing for breath while naysayers will say that they are reaching a point of maturity. Either way, it just goes to show that fashion sales – online or offline – aren’t easy at the moment. 



Ford announces big cuts and Vauxhall threatens them…

Ford to cut 12,000 jobs in Europe as it seeks to reverse $400m loss (Daily Telegraph, Alan Tovey) is a headline that pretty much says it all but this equates to the elimination of about 20% of its European workforce. This is all part of a restructuring aimed at bringing the loss-making business of the Blue Oval back to profitability. The car company also said that it will slim down to three division – commercial vehicles, passenger cars and imports – and add three new models over the next five years.

Vauxhall plant ‘safe’ – but only if Brexit deal agreed (The Guardian, Jasper Jolly) cites the French carmaker PSA Group as saying that it will build its new Vauxhall Astra in the UK – but only if the UK avoids a no-deal Brexit. * SO WHAT? * These bits of bad news are just the latest to hit the automotive industry – and I suspect that there will be more to come. Ford’s European business has been a drag on its overall profits for quite some time now, but I guess that with the current climate of doom they can just blame overall difficult market conditions for ALL automotive makers. Although it’s probably a bit cynical, I think that the Vauxhall chat is just a case of the company managing expectations. If there is a no-deal Brexit, they can shut down factories and say “I told you so” and if the Brexit deal is only so-so, they can still shut down facilities and say “well it wasn’t as good as we had expected”. If, on the other hand, Brexit turns out to be joyful (it won’t be) they can stay and take advantage.



And finally, in other news…

I thought I’d leave you today with something animal-related in Can you spot the camouflaged animals in these photos? (Insider, Talia Lakritz Amazing!

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Some of today’s market, commodity & currency moves (as at 0911hrs 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 **
7,402 (-0.19%)26,527 (-0.04%)2,925 (+0.38%)7,96812,271 (+0.21%)5,494 (-0.13%)21,247 (-0.39%)2,979 (-0.61%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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