Thursday 06/08/26

Iran says it has reached agreement with Oman on Hormuz shipping route (Financial Times, Andrew England and Bita Ghaffari) highlights the latest in the Iran war. It seems that the two countries have come to an agreement about a shipping route through the Strait of Hormuz although Iran cautioned that the agreement on its own would not ensure safe passage as long as the US continued with its naval blockade on Iranian ports. Sounds like a pretty useless agreement to me as it stands but I guess everyone will get excited that a tiny bit of progress seems to have been made.

In China hits back at US with sanctions and tighter drone export rules (Financial Times, Thomas Hale) we see the latest niggles in trade between the two sides as China tightened restrictions on drone exports to the US and slapped new sanctions on a number of US companies following recent actions by the US regarding tech imports and various bans. * SO WHAT? * This all seems to me to be a bit of a 🍆-measuring contest between both sides following Trump’s visit to China in May and ahead of an expected visit to the US by Xi Jinping in September. It’s getting pretty boring TBH…

Sweltering summer lifts Next sales as profit outlook upgraded again (The Guardian, Lauren Almeida and Sarah Butler) shows that Next, yet again, has outperformed expectations and upgraded forecasts as its reputation for being a serial over-deliverer continues! The hot summer has helped boost clothing sales and it’s seen decent performance in the Middle East and northern Europe over the quarter. * SO WHAT? * The fact that this is the third profit guidance upgrade so far this year is particularly impressive given that rivals have been complaining about a tricky trading environment! At the moment, it seems that Next and M&S are winners on the high street while H&M and Zara are losers.

John Lewis boss warns of ‘really tough’ trading (Daily Telegraph, Eleanor Harmsworth) illustrates the point I just made about what the chairman of the John Lewis Partnership called a “really tough” trading environment at the moment as he continues with turnaround efforts. * SO WHAT? * FWIW I think that Jason Tarry is doing the right thing by investing back in the business and upgrading the existing offering rather than getting distracted by all sorts of rubbish, which is what his predecessor seemed to be obsessed by. I guess that, at the moment, he’s just trying to manage expectations.

Then in Judge casts doubt on future of WH Smith replacement TG Jones (The Guardian, Sarah Butler) we see that the very judge who waved through the rescue plan in July has pointed out that there are still “very considerable” risks in achieving a turnaround and that the plans “might strike the sceptic as more in the nature of generic aspirations than concrete grounds for confidence in a successful outcome”. Last month, he approved the restructuring that involved the closure of 150 of the 450 ex-WH Smith high street stores but his words so soon after won’t be music to employees’ ears. In a way, they probably are for Modella Capital – the current owner of TG Jones – because they soften everyone up for more brutal decisions to come. * SO WHAT? * This whole acquisition just doesn’t seemed to have worked out as far as I can see. It has appeared to be half-hearted from the beginning as I have yet to hear an actual plan about the future of the business apart from cutting costs. Even that whole re-naming exercise looked pretty amateurish. What I would WANT to see is the installation of some high street veteran to run the business, do a three month review and then come up with a five-year plan of where the business is going to go. But I haven’t seen a whiff of that…have Modella been sleeping at the wheel on this one or did they ever want to actually turn the business around in the first place??

Google DeepMind CEO Demis Hassabis steps aside in shake-up of AI lab (Financial Times, Madhumita Murgia and George Hammond) shows that the founder of DeepMind is now stepping away from the chief executive role at Google DeepMind but will become its chairman whilst also taking on the role of chief scientist at Alphabet. The vacant position will be taken by his right-hand man Koray Kavukcuoglu. The current chief scientist at Alphabet is leaving to form his own start-up, which Google will back. * SO WHAT? * Apparently this was not a sudden decision and is a reflection on Hassabis’s desire to address the bigger picture regarding artificial general intelligence and the regulation of AI. Hassabis has been key to Google’s AI efforts to compete with OpenAI and Anthropic over the last few years so this will be a bit of a blow but I guess he will be replaced by an acolyte and is staying on in a strategic capacity.

‘Toy Story 5’ box office boosts Disney as US theme parks rebound (Financial Times, Peter Wells) heralds good news for Disney as the new film is doing well and attendance at Disney’s US theme parks is on the up versus last year. Although its revenue increase fell short of market expectations, it announced a pretty decent share buyback programme. The company is looking at offering a free channel for its streaming product to attract more potential viewers who then convert to the paid service but for now it’s just going to be putting efforts into cutting costs.

Etsy to Cut 12% of Workforce as CEO Focuses on Core Marketplace (Wall Street Journal, Katherine Hamilton) shows that the ecommerce platform has decided to reduce headcount as it tries to adapt to changing consumer habits. The CEO said that this was not driven by cost-cutting initiatives or AI – just a need to be more in tune with the evolution of their customers, who are using different tools to find the products that Etsy sells. On the plus side, the Q2 earnings were solid enough for the company to raise its projections for annual gross merchandise sales. * SO WHAT? * I guess this is part of a broader effort to streamline the operation after it sold its second hand clothing app Depop to Ebay in July so that it can focus on its core marketplace business.

Then in Shares in Sorrell’s S4 Capital jump by a fifth as losses narrow (The Times, Emma Powell) we see that the digital-first advertising company, S4 Capital, seems to be turning a corner as its losses have narrowed and the rate of decline in its revenues has slowed down. * SO WHAT? * This will certainly come as welcome respite to the usually-embattled company but its outlook isn’t what you’d call outrageously positive as the CEO said that he expected clients to continue to be cautious about ad spend in the near term thanks to ongoing macro uncertainty. There’s been a downturn in ad spend by the company’s tech clients, which is painful because they account for over 50% of the company’s revenues.

In a quick scoot around some of today’s other interesting stories, Record electric vehicle sales drive market to seven-year high (The Times, Martin Strydom and Charlotte Bend) cites the latest figures from the SMMT which show that sales of electric battery electric vehicles rose by a chunky 44.5% year on year to make up 27.5% share of the market, an increase from 21.3% in July last year. I thought that it was particularly interesting to note that demand was across private buyers, business fleets and commercial operators and that it was the eighth month in a row of growth for new car registrations. It was actually the best July since 2019! Sales of plug-in hybrids were up and while sales of traditional petrol – and particularly diesel cars – were down. Chinese EV makers continue to grow market share although the top three best sellers are the Ford Puma, the Nissan Qashquai and the Kia Sportage. * SO WHAT? * It really feels like EV adoption is gathering momentum now – but I think that the current bump is being flattered by weak figures last year and outrageously expensive petrol prices that have clearly tipped buyers over the edge. I thought it was interesting to see the other day that story about how EV batteries are proving to be more robust and long-lasting than everyone had originally thought because this could prove to be a positive for resale values in the used market – something that might have been putting people off buying a new EV up to now because the depreciation is so bad. If second hand sales start to improve, then I think it will actually help the new car market as well.

Cost of filling up a family car hits £100 (Daily Telegraph, Melissa Lawford) highlights the real-world impact of higher oil prices as filling the family car with diesel has now breached the £100 mark (which is probably why EV sales are rising – as per the story above!). The RAC pointed out that diesel prices have risen by 10% in the last month, which means that fuel prices have risen by 27% since the end of February when the Iran war began! Although oil prices have fallen overall, they are still high on a historical basis. No wonder EV sales are doing so well!

Self-driving Ubers to be launched in London within weeks (Daily Telegraph, James Titcomb) is an interesting article which alerts us to the fact that we’ll be seeing self-driving Ubers on the road in London within the next few weeks as TfL has approved 15 vehicles operated by AI company Wayve, to operate private hire rides under the Uber brand. There will be a safety driver in the vehicles initially. In order to provide rides without a safety driver, the companies will need to get additional approval under the government’s automated passenger services scheme. Chinese tech giant Baidu and Uber announced that they will also be offering autonomous rides in London using

vehicles from Chinese robotaxi maker Apollo Go. * SO WHAT? * Will this be the beginning of the end for Black Cabs? I think it’s going to take a very long time for that to happen but it will be interesting to see how autonomous vehicles fare with tricky London driving. If it works here, I’d say it could work pretty much anywhere in the world…

Honda Doubles Profit, Lifts Guidance on Weak Yen (Wall Street Journal, Kosaku Narioka) highlights some good news for the embattled Japanese car maker as it managed to more than double Q1 net profit and raise its annual forecasts! It benefitted from a weak yen boosting quarterly results. * SO WHAT? * This signals a welcome departure from the constant stream of bad news from the car maker. It’s trying to improve its hybrid EV offering and has abandoned its previously-stated target of having a 100% electric model line-up by 2030. Let’s hope that the good news continues…

Flutter chief steps down as gambling group cuts guidance (Financial Times, Stephanie Stacey) shows that the company’s long-serving CEO is stepping down, to be replaced by the head of its international business. The company said yesterday that it would spend more on bonuses, promotions and loyalty schemes in the US in an effort to fend off rising competition from the likes of Polymarket and Kalshi. These plans will weigh on profitability in the first instance although it added that there are signs that Q3 revenues are actually running ahead of expectations.

In Video game maker EA bought by Saudi-led group for $55bn (The Guardian, Joanna Partridge) we see that Electronic Arts – famous for games including The Sims, Madden NFL and Battlefield – has just been bought by Saudi Arabia’s sovereign wealth fund and a consortium of investors for $55bn. * SO WHAT? * This ends the company’s 36-year history as a publicly traded company and the deal ranks as one of the biggest buyouts in history.

In pharmaceuticals news, Eli Lilly and Novo Nordisk raise profit outlook as weight-loss drug demand soars (Financial Times, Aanu Adeoye and Patrick Temple-West) shows that the two pharmaceuticals companies have raised their full-year forecasts thanks to the ongoing success of their respective weight-loss drugs but shares in Novo Nordisk were sold down because of investor concerns about their lack of diversification.

TBH this looks like a bit of over-engineering to me – but what do you think? If you look at your croissant and ever wanted to do something creative with it, this could be for you 😁!