Post-Christmas apocalypse for the retail sector?

brexit economy retail Nov 12, 2019

As we head for its most crucial shopping period in the wake of Mothercare and Mamas & Papas collapsing into administration, I make no apologies for revisiting the UK’s retail sector.

Following last month’s Brexit Halloween deadline and with Black Friday, Cyber Monday and Christmas ahead of us retailers have reportedly stockpiled seasonal products earlier than usual but the consumer uncertainty remaining no one knows how much stock will remain unsold in the new year.

The Confederation of British Industry, the country’s leading business lobby group, said retailers’ stock levels compared with the volume of expected sales had risen to the highest point in October since it began compiling retail sales estimates in 1983.

This is against a backdrop of dramatically narrowing profit margins, falling consumer confidence and repeated demands for comprehensive reform of business rates falling on seemingly deaf Government ears.

A new report by the global professional...

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Diversity of thought is about more than challenging stereotypes and ticking a box

Too often the word diversity as applied to directors of companies is seen as demonstrating representation by gender, ethnicity, religion, and possibly of age. But it should actually be about more than that, it should also be about diversity of thought and ideas.

The challenges facing businesses in the 21st Century are becoming more complex and happening at a faster pace so it makes sense to have people at board level who think differently and can communicate their ideas.

In a recent survey carried out by Social Mobility Pledge as reported by The Times newspaper, the researchers found that by and large “who you know” was still the most important factor when promoting staff.

Sadly, the inference from this is that recruitment tends to favour like-minded people, which is hardly helpful to businesses wanting to avoid being stuck in a rut.

The ability to challenge the status quo at all levels and in particular a board level was a topic discussed in a recent vimeo by Kenneth...

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No respite for the global economy as conditions get worse

brexit economy growth Nov 05, 2019

As we head towards the end of the year it is a good time to look at the current state of the global economy.

Trade wars and the threats of tariffs being imposed by the US on China have become a wearyingly familiar story as US President Donald Trump continues his policy of ‘putting the American economy first’ at all times. It is not just China in the firing line, the rhetoric has escalated with his threat made in October to introduce a series of 25% tariffs on a range of exports worth an estimated £5.8bn from the EU.

But this is not the only trade dispute in the global economy as Japan and South Korea’s disagreements threaten the production of smartphones, computers and other electronics, while yet another Brexit delay, and now a UK general election, all add to the uncertain economic outlook in both the EU and the UK.

Growth has been slowing in India, particularly in its automotive sector, and to an extent in China also.

At the same time there seems to have...

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Is your business one of the many just hanging on?

The newly-published insolvency figures for Q3 (July to September) show a massive increase in the number of businesses entering Administrations.

A mid-October report by Begbies Traynor reported that the number of British businesses in significant financial distress has risen by 40% since the Brexit vote – with those in the property, construction, retail and the travel sectors the hardest hit and 489,000 companies in significant distress up by 22,000 on this time last year.

This was followed by KPMG’s recent analysis of London Gazette notices of companies entering into Administration and the picture became clearer with yesterday’s statistics from the Insolvency Service.

Administrations increased by 20% in the last quarter, compared to the previous quarter, to reach their highest level since Q1 2014. CVLs (Company Voluntary Liquidations) rose by only 2.3% compared to the previous quarter but were still at their highest quarterly level since Q1 2012.

The...

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Why you should think 'Environment First' if you need an investor

The UK’s largest investors put environmental concerns and corporate governance issues as top of their lists when considering companies in which to invest, according to research by EY.

However, the respondents awarded a “could do better” to such areas as audit, corporate reporting, trust, and reputation, according to a report on the research published by CityAM.

Clearly the activities of campaigners like Greta Thunberg and Extinction Rebellion have significantly raised awareness on environmental issues.

But the profile of environmental concerns is also being raised by the annual world summits on ethical finance, the most recent of which was held in Edinburgh in early September and was attended by senior representatives from more than 200 companies and organisations.

The summit is organised by the Global Ethical Finance Initiative, which oversees, organises and coordinates a series of programmes to promote finance for positive change.

In early October, Mark...

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Directors of companies in financial difficulties should be aware of their pay and perks!

Executive pay and perks have been creeping up the agenda with politicians and the public increasingly questioning the rewards given to top CEOs when companies fail.

But should this be done well before any potential failure and in particular when highly paid executives are seeking support for the restructuring and reorganisation initiatives that is necessary when their company is in financial difficulties?

Leadership involves setting an example and when the chips are down this means making demonstrable self-sacrifices.

This week, the Financial Times reported that Standard Chartered bank CEO Bill Winters may have his total pay cut and Namal Nawana will be leaving his CEO role at Smith & Nephew after less than a year after investors turned down his request to increase his $6m package to nearer $18m-$20m.

But it is not only executive pay that has come under fire, this is also true of pensions and other executive benefits.

In September the influential investor group IA (The...

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Is the death of Thomas Cook a sign of more to come in the travel industry?

failure insolvency Oct 22, 2019

Commentators have been quick to predict the death of the package holiday and in some cases of much of the travel industry following the demise of Thomas Cook in September.

But is this really the case?

Johan Lundgren, the chief executive of easyJet, argues that it is too soon to predict the demise of the travel industry, or indeed of package holidays.

In an article in the Daily Telegraph he says: “sales of holiday packages have grown faster than the economy every year for the past 10 years”.

There is no doubt, however, that technology has made a significant difference to the way people search, book and pay for their holidays.

Lundgren acknowledges that requirements and buying methods have changed significantly: “Rapid development in technology and AI, combined with a focus on data now allows the customer to find holidays suited to them online”.

Holiday companies, he said, needed to invest in technology to support customer interactions.

The tour...

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WeWork reminds us why we should not rely on charismatic leaders and the investment bank advisers who flatter them

This week the new management of WeWork the business space property rental company announced that it was preparing to axe 2,000, or 13%, of its workforce.

It has been calculated that up to 5,000, or a third, of the workforce will ultimately have to go.

This is the latest episode in an increasingly sorry saga, which last month saw its co-founder Adam Neumann step down as chief executive and relinquish control over the company. Mr Neumann also returned $5.9m worth of stock to the firm, which he had controversially received in exchange for his claim over the “We” trademark.

After announcing its intention to launch on the US stock market earlier in the year, the company, which has more than 500 locations in 29 countries, had to postpone its plans when its viability and corporate governance came under closer scrutiny.

The business, which was estimated to be worth some $47bn when the intended float was first unveiled has since had its credit rating downgraded by...

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‘Caveat Emptor’ Is peer to peer lending too risky for peers?

Peer to peer lending (P2P) enables individuals to obtain loans directly from other individuals, cutting out the financial institution as the middleman.

As such, the lack of trust in middlemen has seen the emergence of peer to peer lending platforms as an attractive proposition for retail investors in a climate of low interest rates because they can offer better rates thanks to the lower overheads associated with online businesses. The lower overheads are also related to not having to pay a middleman!

The platforms are generally a website or app that facilitates this alternate method of financing, where the first emerged in 2005 and was brought under FCA (Financial Conduct Authority) regulation in 2014.

However, the FCA has been criticised as being too “light touch” in its oversight following the collapse in May this year of UK property finance peer to peer firm Lendy with £160m in outstanding loans of which it has been calculated more than £90m are in...

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Recession, imminent or not is it time to ban the word?

brexit economy Oct 10, 2019

Recession is a word that has immense power, striking apprehension into the hearts of businesses, politicians and consumers alike.

Talk of a recession can also precipitate the very economic conditions that are so feared and it is worrying that the word is currently appearing regularly in the daily news media.

But is recession a useful concept especially in the context of increasing pressure to move to sustainable, rather than perpetual, economic growth, in order to combat climate change and global warming?

Should we keep growing?

The generally-accepted definition of a recession is, according to the Business Dictionary: a contraction in the GDP for six months (two consecutive quarters) or longer. It goes on to say: “Marked by high unemployment, stagnant wages, and fall in retail sales, a recession generally does not last longer than one year and is much milder than a depression. Although [they] are considered a normal part of a capitalist economy, there is no unanimity of...

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