Thursday 10/10/19

1. In TECH NEWS, the OECD targets tech giants on tax, Apple annoys China and Twitter misuses data
2. In RETAIL/CONSUMER GOODS NEWS, LVMH shines, Tilbury sparks takeover rumours, Hays Travel buys Thomas Cook stores, BT announces high street revamp and Links goes bust
3. In INDIVIDUAL COMPANY NEWS, Johnson & Johnson gets another legal battering and Alibaba stops e-cigarette sales to US buyers
4. In OTHER NEWS, I bring you a pet care incident and hypnotism for Marmite haters…

So the OECD targets tech giants, Apple frustrates China with an app and it turns out that Twitter is being naughty with data …

OECD takes aim at tech giants with plan to shake up global tax (Financial Times, Chris Giles) shows that the OECD unveiled a raft of proposals yesterday to shake up global taxation to stop the likes of Facebook, Apple, Amazon, Netflix and Google (aka “FAANGs”) from shuffling their profits around the world to minimise the taxes they pay. The Paris-based organisation wants to get an agreement in principal by the end of January before getting into the nitty-gritty of the actual rules themselves. * SO WHAT? * Winners will include countries such as the US, China, UK, Germany, France and Italy as well as developing economies while the FAANGs, tax havens and low tax destinations such as Ireland could lose out big time (if the proposals were actually put into place). This would negate the need for individual countries to pass their own guidance. Call me cynical, but IF these proposals get approval in principle there are plenty of entities, governments and countries who will do their utmost to drag things out for as long as possible – not least places like Ireland who have built their economy up by attracting businesses who want to minimise their tax bill. I think that this sounds eminently logical and WAAAAAAY overdue, but at least someone has stuck their neck out with some concrete(ish) proposals. Accountants will no doubt be rubbing their hands in anticipation of advisory fees that will come their way in a brand new international tax regime!

Apple pulls Hong Kong cop-tracking map app after China uproar (Wall Street Journal, Tripp Mickle) highlights a serious misstep in Apple/China relations as Apple approved an app called HKmap.live – which Hong Kong protesters used to track police activity – to go on its Appstore and then pulled it just days later following serious criticism from Chinese state media. The company said in a statement that it pulled the app because Hong Kong’s Cyber Security and Technology Crime Bureau verified that HKmap.live was being “used to target and ambush police, threaten public safety, and criminals have used it to victimise residents in areas where they know there is no law enforcement”. * SO WHAT? * Apple just can’t do anything right when it comes to China. Things like this will just give Chinese authorities more reason to go hard on the company that is desperate to expand there but keeps on coming up against resistance. As I have said before, I think that it should pull back China expansion plans and concentrate on India where it may stand more of a chance (but only if it can somehow lower the cost of its offering there to more realistic levels).

Twitter admits misusing personal data (Daily Telegraph, Natasha Bernal) shows that Twitter admitted yesterday that it had allowed advertisers to use personal data of up to 14.1m people in the UK to sell targeted advertising without them knowing. The company generated around £595m of ad revenue in the UK in the second quarter alone but it also seems that all of Twitter’s 140m users around the world could also have been affected by this. * SO WHAT? * On the face of it, this seems to me like a big admission. Will this be a class-action-in-waiting, I wonder?? If it is, Twitter may surely have to take a massive hit. 

LVMH does well despite Hong Kong protests, takeover rumours surround Tilbury, Hays Travel gives Thomas Cook staff a lifeline, BT announces store plans and Links goes bust…

LVMH sales jump 11% despite Hong Kong protests (Financial Times, Harriet Agnew) highlights an impressive performance by the world’s biggest luxury group which managed to post double-digit revenue growth for the third quarter against a backdrop of trade wars and regional protests. The owner of brands such as Louis Vuitton, Moet & Chandon and Bulgari announced sales growth of 11% year-on-year, which was ahead of market expectations of 8.8% growth. The company said that Europe and the US made “good progress” and Asia still managed to put in a decent performance despite what’s going on in Hong Kong. * SO WHAT? * This is important good news for a company whose biggest market is Asia ex-Japan with the region accounting for around a third of group sales versus about 25% for the US and roughly 20% for Europe (excluding France). Asia ex-Japan growth was about 18% in the first six months of this year. This has set the bar for competitors including Kering, Richemont and Hermes who are yet to report results – so investors will be interested to see how they fare in comparison.

In other news on luxury goods but on a much smaller scale, Speculation of a takeover bid as revenues soar at Tilbury (Daily Telegraph, Laura Onita) shows how the success of make-up brand Tilbury is sparking takeover rumours. The company announced a 44.5% rise in revenues on the back of its popularity with celebrity fans including Nigella Lawson and Amal Clooney with Estee Lauder already having considered (and then abandoned) a $1bn takeover. The company – which is also backed by the likes of Mario Testino, model Stella Tennant and venture capital firm Sequoia – was set up by Charlotte Tilbury only seven years ago at Selfridges in London and its creams and makeup can now be found in John Lewis, Harvey Nichols and Space NK.

Surprise in Square Mile as Hays Travel buys Thomas Cook stores (Daily Telegraph, Michael O’Dwyer) will come as a massive relief for some of those who’d lost their jobs following Thomas Cook’s collapse. Family-owned firm Hays Travel, which is the UK’s biggest independent travel agent, has swooped in for an undisclosed sum to take over

Thomas Cook’s 555 UK stores, rescuing up to 2,500 jobs in the process. This will take its existing store estate of 190 to 745 and its founder, John Hays, believes that his company’s balance between offline and online presence will give it the edge it needs to survive. The Thomas Cook stores will be rebranded and staff who had been made redundant have been encouraged to apply for jobs there. The shops have been taken on at current rents but obviously they are going to be renegotiated. * SO WHAT? * This is a great lifeline for the staff at the moment, but surely there will be branch closures to come. Although Ryanair’s chief exec Michael O’Leary famously contended that no-one under 40 goes to a travel agent these days, We shouldn’t be too sceptical about rescue of Thomas Cook shops (The Guardian, Nils Pratley) suggests that Hays’ success thus far should not be underestimated and that the package holiday still has legs as a concept. That said, it makes the very valid point that longer term success could well depend on how much they can squeeze down rents when they enter into negotiations with landlords.

BT hopes new stores will go down a storm (The Times, Alex Ralph) highlights BT’s decision to return to the high street for the first time since 2002 as part of a push to provide services that will help customers deal with internet-connected devices. It will overhaul its 600 EE mobile network stores as part of the revamp and staff it with experts “who can help with everything from getting online for the first time to the latest in smart home technology”. The company will also accelerate the “reshoring” of its customer contact centres to Britain and Ireland a year ahead of schedule. * SO WHAT? * This is all part of an overhaul instigated by Philip Jansen, who joined as chief exec in February this year. Given that BT also owns Openreach and BT Sport and provides corporations with security, cloud and networking services, he has got plenty to work with. It’s interesting to see another telecoms company revamping their UK high street stores after Vodafone announced something similar earlier this week. 

It looks like there are going to be more gaps in the UK high street as Links of London goes bust after failing to find a buyer (Daily Telegraph, Laura Onita) shows that the London-based jewellery seller called in the administrators from Deloitte yesterday as efforts to find a buyer, raise finance and cut rents ultimately all failed. The company has 28 stores and seven concessions in the UK and Ireland – a far cry from its peak of 50 shops when the husband-and-wife founders sold the business to Greek retail group Folli Follie in 2006. Unsurprisingly, Mike Ashley’s Sports Direct Group reportedly made a (presumably risible) bid for the company when Savigny Partners were looking for buyers. As the song says, another one bites the dust…

Johnson & Johnson gets into even more trouble, Alibaba stops selling e-cigarettes to US buyers and the EU stands firm on a Brexit extension…

Johnson & Johnson hit with $8bn court order over antipsychotic drug (Financial Times, Hannah Kuchler) shows that the world’s biggest pharmaceutical company has been ordered to hand over $8bn after claims that it did not warn young men that taking its antipsychotic drug Risperdal could result in irreversible breast growth. * SO WHAT? * J&J is having an absolute nightmare at the moment as it is facing accusations of mis-selling opioids, contributing to the US opioid epidemic, and liability lawsuits that claim its talcum powder caused cancer. The company plans to appeal. At the moment, the company appears to be losing its firefights.

Further to all the negative newsflow on e-cigarettes at the moment, Alibaba to stop sales of e-cigarettes to US buyers (Wall Street Journal, Jennifer Maloney) highlights the latest kick in the teeth for e-cigarettes. Increasing numbers of people developing lung diseases after having

used often counterfeit product from dodgy online sources has led to bans and increased restriction of e-cigarette and related accessory sales. It seems to me that the noose continues to tighten on what was, until recently, seen to be a wonder-product.

You are no doubt sick to the back teeth of Brexit, but it is important and there has been a major new development in No extension without new referendum or election (Daily Telegraph, James Crisp, Anna Mikhailova and Peter Foster) which says that the president of the European Parliament, David Sassoli, made the announcement during a debate in Brussels yesterday. BoJo has been itching for an election but Remain-MPs have said they will only vote for one if he delays Brexit. It was revealed last night that Jeremy Corbyn will grant BoJo a general election on November 26th if he fails to deliver Brexit this month. * SO WHAT? * Clearly a lot can happen this month, but as things stand I would have thought that the LibDems will win votes from Labour and Conservative Remainers, Labour will probably lose out because of its seemingly constant wavering over the issue and the Conservatives will effectively be the party representing Leavers. It looks like fortune may be favouring BoJo as he wants an election (because he think he can win), but if he DOES manage to hammer something out with the Europeans in the meantime, he will look like a hero. However, as I said earlier, so many things can change in the coming weeks.

And finally, in other news…

I thought I’d leave you with a couple of things today! The first involves a pet carer who got a bit of a shock in Woman’s horror as she thinks dog’s nose fell off – then she realises mistake (The Mirror, Courtney Pochin https://tinyurl.com/yyrsyfbz) and then there’s the slightly sinister intent in Marmite is hunting for its biggest haters – so they can hypnotise them (The Mirror, Courtney Pochin https://tinyurl.com/y3ztucmj). Creepy!