- In BIG PICTURE NEWS, European infections cause travel chaos, junk food ads get canned and businesses consider their future
- In RETAIL NEWS, Debenhams is up for sale again, Ben Sherman’s owner plans store closures and Boohoo is to set up a “model factory”
- In ENTERTAINMENT NEWS, TikTok continues to face uncertainty and BritBox announces a bigger rollout
- In NEWS ON “CORONATRENDS”, Gousto does a roaring trade and e-scooters are about to hit our streets
- AND FINALLY, I bring you a potential side-hustle and some mask chat…
So there’s European travel chaos, a banning of junk food ads and choppy waters ahead for businesses…
*** JUST A QUICK ONE – I know that some of you like podcasts. I’ve been doing a weekly one that you can access via Apple Podcasts, Spotify and Google Podcasts (among others), but I’m about to bring in more content. I will soon be doing a daily podcast which goes into more depth on one or two of the Daily’s stories (it’ll be a 5-minute one, so not too long!) and will include interviews with interesting people every now and again. I recorded one interview last week, for instance, with a lawyer who started out at a Magic Circle firm and went on to have a really interesting and varied career – I’ll put this up shortly ***
In Infection surges force countries to curb European travel (Financial Times, Guy Chazan and Alice Hancock) we see that European tour operators have had to respond quickly to an uptick in coronavirus cases as the UK government announced that Britons coming back from Spain would have to self-isolate for two weeks on their return. The French government is also imposing mandatory testing at airports and ports for travellers arriving from a list of 16 countries and is now strongly advising against travel to Catalonia. Interestingly, Mediterranean resort fund raises €680m in show of faith in European travel (Financial Times, Alice Hancock) highlights a fund raising by a Spanish real estate company, called Azora, that will enable it to invest in “sun and beach” hotels around the Med. There are likely to be rich pickings here as 62% of hotels are independently owned, versus 30% in the US. * SO WHAT? * I think that this latest development in Spain is an absolute disaster for holiday travel globally. It is a stark reminder that the coronavirus has not left the building and that going abroad is, effectively, a lottery. I think that this will kill demand for foreign travel (not stone dead, as there will be some die-hards out there) for at least the rest of this year – and this will give Azora even BETTER opportunities to buy hotels for a steal. I think that this could be a MASSIVE boon for domestic travel-focused operators (people will still want to go on holiday) and potentially a boost for Airbnb. OK so Airbnb has lost business from people travelling into the UK, but I would have thought that it will do very well from Brits wanting a holiday that isn’t too far away (and that won’t have all the hassles that you might get at a hotel – no breakfast buffet?!? Nooooo! 😱). I bet that retailers selling camping goods will do well from this!
Elsewhere, Online junk food ads face total UK ban in drive to tackle obesity (Financial Times, Laura Hughes and Sarah Neville) shows that Boris Johnson is bringing in a number of restrictions on the sale of unhealthy foods in Britain that will make it one of the most restrictive markets in the world. There will be a 9pm watershed on TV and online adverts but the government is also looking at a total ban on online adverts and considering putting calorie labels on alcoholic drinks. Restaurants, cafés and takeaways with over 250 employees will have to put calorie labels on menus and there will be limits on price promotions like multi-buy deals and BOGOF. There will also be restrictions placed on putting naughty foods near supermarket checkouts, store entrances and the end of aisles. * SO WHAT? * Critics like the Food and Drink Federation says that the new restrictions will increase food prices, reduce choice and threaten jobs whereas others say that the measures don’t go far enough (or say that they are, at least, not very well co-ordinated). I would have thought this will hurt supermarket sales and the makers of confectionery and comfort food such as Mondelez (which owns Cadbury’s, among other brands) and Coca-Cola.
Then we see increasing pressures on businesses in Small businesses cut jobs as furlough scheme winds down (Financial Times, Daniel Thomas) which identifies a potential increase in job losses as the government furlough scheme starts to taper off from next week. The number of start-ups (businesses of three years or under) in distress has risen by 18% over the last quarter, according to Begbies Traynor’s Real Business Rescue service – and the Federation of Small Businesses (the FSB – not to be confused with the FSB that is the successor of Russia’s KGB 😂) says that around 20% of small companies expect business performance to be “much worse” for the next quarter. Mind you, there are pressures of another kind in Businesses eye exit over capital gains tax reforms (The Times, Tom Howard) where entrepreneurs and small business owners are potentially going to accelerate plans to sell up as Rishi Sunak mulls over an overhaul of capital gains tax. Business owners are charged 20% of the profits they make from selling their companies although entrepreneurs’ relief means that they “only” have to pay 10% on the first £1m over their lifetime (it used to be £10m until it was changed in March). Some think that Sunak will bring in changes in the autumn budget expected in October and are making moves to exit before any changes are made. * SO WHAT? * The government has got to make money from somewhere, but this is not going to go down well with those who are affected. I’m not sure what sort of effect that this will have on jobs, but if there are more businesses being sold I would have thought that this will be negative because, generally speaking, there are likely to be overlaps/repeat functions that will mean job losses.
The gloom continues with Debenhams and Ben Sherman while Boohoo tries to make amends…
Debenhams up for sale in last-ditch bid to save stores (The Guardian, Julia Kollewe) shows that the department store appointed investment bank Lazard this weekend to try to find a buyer before the end of September in a bid to avert the possibility of liquidation. They already called in the administrators in April for the second time in a year (it brought them in back in April 2019) and things ain’t looking pretty. The gloom continues in Ben Sherman owner plans store closures to avoid collapse (Financial Times, Patricia Nilsson) as Baird Group, which also owns Suit Direct and Jeff Banks, filed for a CVA on Thursday and is planning to close over a third of its stores and renegotiate rent with landlords. It was hit particularly badly by store closures at
Debenhams, where it had a lot of concessions, and presumably because fewer people are buying smarter clothes for the office and/or weddings.
Boohoo to set up ‘model garment factory’ in Leicester (The Guardian, Julia Kollewe) shows that online fashion retailer Boohoo is trying to respond quickly to criticisms that it buys its garments from sweat shops by announcing plans to set up its own “model factory” where everything is done proper, like. The company said that it would be employing 250 people at the new Leicester factory and aims to produce clothes for its PrettyLittleThing and Nasty girl ranges by September! * SO WHAT? * I think that this latest move will kill two birds with one stone. Firstly, it will be good PR and help the company get back on track by showing a physical example of “best practice”, but it will also help it to achieve quick turnaround for fast fashion – something that Zara-owner Inditex is well known – and admired – for. Producing domestically means that it will only take days to get garments on the shelves, something that would normally take a few weeks.
The TikTok intrigue continues and BritBox has bigger overseas ambitions…
TikTok’s time is running out over Chinese security fears (Daily Telegraph, James Titcomb) does a good job of highlighting the efforts that have been made so far to avert a ban on the wildly popular video app that has so far been downloaded over 2bn times worldwide. TikTok could be tougher target for Trump administration (Wall Street Journal, John D. McKinnon) looks at how America might ban the app whilst trying to reduce user backlash. The administration could unwind the cross-border merger that gave the app a strong presence in the US (ByteDance bought Shanghai-based Musical.ly, which built up a strong US user base, in 2017), invoke international emergency powers to ban social media apps with ties to foreign enemies, include TikTok in rules that are under
development by the Commerce Department to ban the use and installation of foreign technology that threatens national security and/or put it on the “entity list”, the trading blacklist. * SO WHAT? * The clock is ticking (it’s actually going “tick, tock” 😂) but some feel that a complete ban on the app would be a shame in that it is probably Facebook’s biggest challenge in social media at the moment. Zuck’s made a few attempts in the past to make similar versions of the app, but they have failed thus far. If it is bought by a consortium of American investors, this could create an American-owned challenger to Facebook but another option is to float the company. Whatever happens, though, TikTok is unlikely to survive in its current ownership structure.
Meanwhile, BritBox expands to launch in 25 more countries (Daily Telegraph, Ben Woods) shows that there a bigger plans for the BBC/ITV streaming service BritBox as it prepared to launch in up to 25 countries across EMEA and South America. No-one expects that it can realistically challenge Netflix’s global dominance, but I think that there is room for niche players such as this.
NEWS ON "CORONATRENDS"
Gousto gorges and e-scooters are around the corner…
In news on trends that have emerged during lockdown, Food box provider Gousto set to recruit 1,000 extra staff (Financial Times, Daniel Thomas) shows that the UK-based recipe box company is looking to hire 1,000 more staff to meet rising demand for its meal kits. There will be new roles in software and tech as well as its manufacturing and delivery operations. At the moment, the company provides meal kits for over 50 recipes and just became profitable this year, eight years after starting up. It is now aiming to triple capacity by 2022. * SO WHAT? * I just don’t get it, personally, but then again I love cooking
and maybe I’m not the target market. I’m also not a fan of what will happen to all the packaging that this sort of business entails. Anyway, it will be interesting to see whether its winning streak under lockdown will continue as customers get back to more “normal” habits.
There’s some electric fun just around the corner as E-scooter giants wheel out their fleets for UK invasion (The Times, Robert Lea) shows that we are getting nearer to seeing electronic scooters whizzing around our British town centres as we are one of the last adopters in the developed world! What is particularly interesting, though, about this article, is that it says that most of the big players in the market, such as Lime and Bird, rely on Chinese tech for their scooters. Xiaomi (better known for its mobile phones) and Ninebot (which acquired Segway a few years ago) will be among those benefiting from a new e-scooter boom!
…in other news…
I thought I’d leave you today with a potential job in You can now get paid £250 to drink wine – here’s how to apply (The Mirror, Paige Holland). Nice! Given the recent crackdown on mask usage in the UK, I thought One second test that will let you see whether your face covering is effective (The Mirror, Paige Holland) would be useful, but sometimes you just have to concede that there are people like the woman in Woman casually wears KFC box as makeshift face covering while out shopping (The Mirror, Courtney Pochin) who just want to strike out on their own and go against the herd. You go girl.
Some of today’s market, commodity & currency moves (as at 0757hrs 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 **|
|6,124 (-1.41%)||26,470 (-0.68%)||3,216 (-0.62%)||10,363 (-0.94%)||12,838 (-2.02%)||4,956 (-1.54%)|
|Oil (WTI) p/b||Oil (Brent) p/b||Gold Per t/oz||£/$||€/$||$/¥||£/€||$/₿|
(markets with an * are at yesterday’s close, ** are at today’s close)