Monday 17/12/18

  1. In REAL ESTATE-RELATED NEWS, Overseas landlords abandon the UK and average asking prices fall by £10,000
  2. In RETAIL NEWS, US retailers face a big sell-off, UK shops face disappointment, Laura Ashley is to close outlets BUT some restaurant/bar chains are lifted by office parties
  3. In MODES-OF-TRANSPORT NEWS, JLR announces that it’ll axe more jobs and Uber moves to e-bikes
  4. In OTHER NEWS, I bring you Brussels sprout ice cream and some amazing paper craft. For more details, read on…



So overseas landlords ship out and average asking prices fall…

Overseas landlords retreat from UK property market (Financial Times, James Pickford) shows the current trend of overseas landlords abandoning Britain’s property market on a combination of lower expectations of house price growth, a tougher tax regime and the impact of expected Brexit-fuelled sterling weakness on rental returns. According to the latest data from Hamptons International, the share of new lettings for overseas landlords has more than halved since 2010 from 14.4% then to 5.8% up to now. It’s an even steeper fall in London, where such landlords had a 26% share versus 10.5% now. * SO WHAT? * This is hardly surprising given the economic backdrop, but at least it gives domestic buyers a bit more leeway in that there is slightly less competition for them – great for buyers, less good for sellers.

Housing market: average UK asking price dips £10,000 (The Guardian, Angela Monaghan) cites figures from property website Rightmove which show that the average asking price of a UK home fell by 3.2% between October and December to £297,527 which means that asking prices rose by their weakest rate since 2010, with London and the south-east being the weakest areas this year. Price falls are common at this time of year as everyone is thinking about Christmas, but this has been the biggest November-December fall for six years. * SO WHAT? * I keep banging on about the property market because it is a major driver of consumer spending, from DIY to furniture, carpets and electrical goods. However, when you have what we have at the moment – people sitting on their hands – it is unsurprising that the slowdown in the housing market has had repercussions elsewhere in the economy. Although housing market activity slows down in the run-up to Christmas, it usually reignites again in the new year – Rightmove says that it tends to see activity tripling between Christmas Day and New Year. FWIW, I would have thought that 2019 will surely see a weaker beginning to the year because of Brexit, so talks of a new year bounce could be premature.



US retailers are facing a big sell-off, UK retailers are facing tough conditions and Laura Ashley will be closing stores – but party spirit is lifting some areas of the UK high street…

US retail stocks on track for biggest sell-off since 2008 (Financial Times, Alistair Gray) highlights the fact that the S&P’s index of 95 listed leading retailers has fallen by a hefty 17% this quarter, putting them on track to becoming the most sold off since the financial crisis. * SO WHAT? * Some observers say that this is due to pessimism surrounding their expected performance next year as increased stockpiling by retailers keen to stay ahead of “trade war tariffs” could mean that they will have to shift a large amount of stock at discounted prices, thus affecting profits. The share prices of retailers as diverse as Tiffany and Target have suffered as a result – down 36% and 23% for the quarter respectively – and even those who have survived the onslaught of Amazon have been caught up in the sell-off, with Best Buy’s share price falling by 30% being a good example. This pessimism has wiped out all gains from earlier this year which were powered by a strong US economy and big tax cuts. Separately, figures published on Friday show that retail sales in China grew at their slowest pace for 15  years in November adding to concerns of the possibility of a global downturn.

Shops counting on last minute splurge ‘will be disappointed’ (The Guardian, Angela Monaghan) piles on the misery for the UK high street as the latest forecasts by retail analysis firm Springboard say that footfall is expected to drop by 3% this week as Diane Wehrle, insights director at the firm, pointed out that “Consumers are feeling nervous about what might happen in the new year, particularly around Brexit. So people are not prepared to splash out this Christmas and are reining back on spending”. She argues that this isn’t an online vs offline thing – people are just spending less overall especially given that rail fares and utility bills are set to rise next year.

Laura Ashley prepares to close stores (The Times, Miles Costello) heralds some bad news for employees at the venerable and once-wildly-popular retailer as the new chairman, Andrew Khoo, announced plans to shut 40 of its 160 stores but tried to soften the blow by saying that some existing stores could get larger and take on some staff affected by the cuts. Khoo also said that he planned to expand in Asia once the company gained a foothold online. * SO WHAT? * Bad news for yet another retailer. I would have thought that a concerted push in Asia may be a good idea – my impression is that Laura Ashley was the precursor to Cath Kidston – which proved to be very popular in the region – so maybe if it positions itself as “the original” it could get some traction and trade off its British vibe.

I thought I’d include Party spirit can be found on high street (The Times, Dominic Walsh) given the altogether gloomy stories about retailers knocking around at the moment. According to the Coffer Peach Business Tracker, like-for-like sales across the pub and restaurant sector in November grew by 1.5% versus the same month last year. The data included companies such as Zizzi, Mitchells & Butlers and Pizza Hut. * SO WHAT? * As I have said before, although people seem to be reining in their spending, they still seem to be willing to spend on “experiences”. Retailers need to take note and make their outlets a destination as much for experience as for just buying stuff IMHO.



Jaguar Land Rover announces more cuts and Uber looks at e-bikes while e-scooter companies go south…

Up to 5,000 JLR jobs to go in carmaker’s cutback plan (Daily Telegraph, Oliver Gill) sounds troubled times for the carmaker as it’s suffering from weakened demand from China (sales fell by 44% in the three months to September), tougher regulation on diesel cars (not to mention customers shunning them in increasing numbers) and concerns over Brexit (which is making customers less keen to buy big-ticket items). The company announced plans to cut costs by £1bn over the next 18 months, shrink capital investment by the same amount and target £500m of inventory and working capital savings. Job losses could affect 1 in 8 of its UK employees. * SO WHAT? * Tough times, but I guess the writing was on the wall when it announced 1,000 agency job losses and working hour reductions earlier this year. It’s hard enough for big car companies to cope with all these economic factors, let alone a “tiddler” like JLR. 

In Uber bringing e-bikes to Britain (Daily Telegraph, Olivia Rudgard) we see that Uber is planning on bringing electric bikes to these shores in a bid to broaden its current offering of ride-hailing and food-delivery services. Its Jump business, which it bought in April, lets users rent e-bikes and e-scooters via an app is hiring a general manager for the UK. It has expanded to 12 US cities and Berlin since the company bought it. * SO WHAT? * My gut feel is that e-bikes could be quite popular (as long as they can solve the problem of vandalism and getting nicked) – and are certainly a better prospect than e-scooters which, for my money, could be a bit of a fad. The other thing with e-scooters in this country, as it stands, is that they aren’t road legal.



And finally, in other news…

I thought I’d leave you today with something seasonal in Ice cream parlour serving Brussels sprout flavour for the Christmas period (The Mirror, Luke Kenton and Sarah Ward and something absolutely gobsmacking in Expert paper crafter fashions more wondrous creations from popular Japanese snack packaging (SoraNews24, Koh Ruide This is astounding.