Watson’s Weekly 09-08-2020

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

• TikTok was definitely the star of the week! There were rumours over the weekend that Trump was not endorsing any deals (Monday) but he subsequently changed his mind saying that negotiations with any interested party should be concluded with ByteDance by or around September 15th. This was the first time that Microsoft had officially acknowledged that it had been in talks and the talks cover the business in the US, Canada, Australia and New Zealand. Later on in the week, there was speculation that a deal would encompass all of TikTok’s overseas business (Friday), which would be pretty incredible as it would also include India where it was banned recently. The US and India are TikTok’s biggest markets! Meanwhile, talks resumed about a London HQ for TikTok (Tuesday) after being suspended recently due to the trickiness between the US and China and ByteDance’s chief exec was criticised in China for caving to Trump’s demands (Wednesday). The longer TikTok is in limbo, the more ground rivals such as Triller, Byte and Facebook’s Reels are going to make
• Trump started the week by saying that he was going to broaden his clampdown on other Chinese tech companies (Monday) and then he actually followed through with that with some executive orders towards the end of the week (Friday). Tencent’s share price fell in trading on the news but Tencent crackdown poses threat to US champions from Apple to Nike (Financial Times, Christian Shepherd, Yuan Yang and Kiran Stacey) makes the excellent point that the crackdown could also affect companies like Apple if it is forced to pull the app from its App Store. The plot thickens!

• It was all rather tricky again on the UK high street this week. Dixons Carphone said it was cutting 800 managers (Wednesday), WH Smith said it was cutting 10% of its staff (Thursday), William Hill is closing 119 stores (Thursday), River Island is considering a CVA (Thursday) and Pizza Express is also having problems as well (Wednesday). Interestingly, rival pizza purveyor Franco Manca is looking to expand (Friday). Fulham Shore owns Franco Manca and the Real Greek and its current top dog, David Page, is the one responsible for Pizza Express’ massive expansion in the 90s
• Given the ongoing carnage in the retail sector, it was interesting to see that retail landlord Hammerson is changing the way it charges rents (Friday). Like some other landlords, it is moving towards basing rents on tenants’ turnover rather than charging a flat fee every quarter no matter what
• I thought that it was interesting to note, on the consumer side of things, that there’s a lot of movement re the two main “big ticket” items that people buy in their lives – houses and cars. Purple Bricks said that it saw a major uplift in property listings (Tuesday) following Sunak’s raising of the stamp duty threshold and the SMMT said that new car registrations were up by 11% in July year-on-year (Thursday). Don’t get the Bolly out yet, though – we need to see those listings turning into sales and, with regard to cars, July and August are generally quiet months because many people wait for the new registration plate in September. This means that yearly comparisons can look overly generous – so this although this is good news, it’s still a bit early to start celebrating!

I define coronatrends as trends of behaviour that stem from the outbreak of the coronavirus. This week, they have continued to evolve thus:

• AT HOME – it seems that we have been getting all crafty as Hobbycraft saw a 200% boost in online sales since the start of the pandemic (Monday) and we’ve also been watching loads of telly as Disney’s streaming service was about the only highlight in some dismal results (Wednesday). We’ve also been using our Switch consoles rather a lot as Nintendo’s profits surged by an astounding 541% (Friday), with online game downloads being a particular highlight
• AWAY FROM HOME – the recently-imposed travel restrictions/new quarantine requirements have meant that European travel has taken a battering, meaning that Hays Travel, the company that bought Thomas Cook travel shops last year, announced it was to cut 900 jobs (Tuesday), while Brits have been lapping up a bit of staycation action (Monday), according to new Visit Britain figures. Cruises have taken another blow as a number of passengers and crew contracted coronavirus on a ship (Tuesday) but EasyJet appears to be keen to increase the number of flights over the summer (Wednesday), presumably to service travellers who don’t mind a bit of lockdown at the end of their holiday
• AND THE COMPANY-OF-THE-WEEK-AWARD goes to Segro, the warehouse landlord! It’s interesting to see that the valuation of the humble landlord of warehouses is now 45% higher than the combined market cap of British Land and Land Securities (Thursday)!

• Watson’s Yearly updates: watch this space!

This week, I quite liked the Japan’s sushi that’s actually cake fools the eyes, blows the mind, pleases the stomach (SoraNews24, Casey Baseel) story as well as the rather bizarre No escape from the terror with Japan’s new haunted Ferris wheel (SoraNews24, Casey Baseel). Not great if you are claustrophobic, I guess!