Marks & Spencer and Next vying for control of British operations of Victoria’s Secret

(qlmbusinessnews.com via news.sky.com– Fri, 26th June 2020) London, Uk – –

Sky News has learnt that the pair are interested in becoming Victoria's Secret's parent company's new UK franchise partner.

Marks & Spencer (M&S) and Next, Britain's two best-known clothing retailers, are vying to take control of the British operations of Victoria's Secret, the lingerie brand.

Sky News has learnt that the two high street giants are among the parties interested in becoming Victoria's Secret's parent company's new UK franchise partner.

At least one other unnamed party is also understood to have expressed an interest in a deal with Deloitte, which was appointed as the chain's administrator earlier this month.

News of the talks has emerged on the same day that Victoria's Secret is reopening roughly a third of its 25 UK shops following the three-month coronavirus lockdown.

Industry sources said that any bidder wanting to franchise the Victoria's Secret brand in the UK and retain a physical footprint would seek fundamentally restructured rental terms from any ongoing stores.

The Victoria's Secret shops which reopen on Friday are said to have struck revised rent deals with their landlords.

The interest from M&S and Next effectively sparks a bidding battle between the two most prominent clothing retailers in Britain.

M&S's involvement is likely to be of particular interest to retail analysts.

At its recent full-year results, the company said it would open its digital platform and largest stores “to complementary guest brands to broaden appeal and increase online growth”.

M&S already controls 27% of the UK lingerie market, with 36% of the market for bras, so it is unclear whether any franchise deal could attract interest from competition watchdogs.

Analysts suggested that Next was a more likely franchisee for the Victoria's Secret brand, owing to its success selling third-party products from the likes of Abercrombie & Fitch, Boss and Under Armour.

The sale process, which is at an early stage, was triggered last month when one of the world's most prominent women's underwear groups announced that its UK arm was pursuing a ‘light touch' administration – a process that allows its existing management to remain in control of the business while offering protection from creditors.

The insolvency only affects the UK operations, and has no impact on its presence in the US or other markets.

Victoria's Secret's parent company, L Brands, had been in discussions about being taken over by Sycamore Partners, a private equity firm, before the talks were abandoned last month.

Despite its profile, Victoria's Secret has struggled financially in the UK, making an operating loss of £170m in the year to 20 February.

Uncertainty over the future of its UK outlets underlines the broader trend in British retailing, which has seen vast numbers of chains refusing to pay their full rent bills for the third quarter, with footfall and sales at a fraction of the usual levels because of the coronavirus outbreak.

Analysts believe that the pandemic has accelerated a structural shift across the industry, with clothing retailers such as Cath Kidston, Debenhams, Laura Ashley and Monsoon Accessorize among those to fall into administration since March.

Some have emerged to resume trading, but with drastically reduced physical footprints.

At the time of Deloitte's appointment as administrator, Rob Harding, a partner at the firm, said: “This is yet another blow to the UK high street and a further example of the impact the COVID-19 pandemic is having on the entire retail industry.

“The effect of the lockdowns, combined with broader challenges facing bricks and mortar retailers, has resulted in a funding requirement for this business, resulting in today's administration.”

M&S and Next declined to comment, while a spokesman for Victoria's Secret UK said: “We continue to work closely with Deloitte to review a range of possible outcomes.”

UK’s biggest shopping centres owner, Intu, warns it’s likely to call in administrators

(qlmbusinessnews.com via bbc.co.uk – – Fri, 26th June 2020) London, Uk – –

The owner of some of the UK's biggest shopping centres, Intu, has warned that it is likely to call in administrators.

The firm, which owns the Trafford Centre, the Lakeside complex, and Braehead, said it had not reached an agreement in financial restructuring talks with its lenders.

Its centres are expected to stay open if it falls into administration, at least in the short term.

Intu has already warned that longer term some of its centres may close.

The company is the UK's biggest shopping centre group, with 17 centres in the UK and three in Spain.

Should Intu fall into administration, the shopping centres are likely to remain open while the administrators decide what course of action they want to take.

Options will include trying to sell the centres on to other potential buyers.

Retail analyst Richard Hyman said he expected that most of Intu's shopping centres “will live to fight another day”.

“Possibly not all, but most,” he said. “There are some very good and important centres in Intu's portfolio.”

Intu had been struggling even before the coronavirus outbreak, and about 132,000 jobs in the company and in its wider supply chain will be in question should the firm fall into administration.

Retail expert Kate Hardcastle said one area of concern was Intu's £4.5bn debt, given the declining value of its shopping centres.

They “just aren't worth the value they once were”, she told BBC Breakfast.

While the coronavirus crisis forced the closure of all non-essential shops, retailers had already been under pressure from a host of factors including changes in shopping habits as people move online.

Big shopping centre landlords such as Intu rely on big retailers for their revenues – but in recent years retailers have been asking landlords for rent reductions due to the pressures they are under, Ms Hardcastle said.

Coronavirus effects

Mr Hyman said that retailers were already under pressure before the coronavirus pandemic, and had too much floor space.

The pandemic had then speeded up a shift to online shopping.

“What would have taken five years to evolve – we're seeing that happen now,” he said.

“People have been forced to shop online. When the dust settles, some of that spend will come back to physical stores – but not all of it will.”

Intu's centres were partially shut during the coronavirus lockdown, with only essential shops remaining open. The company had about 60% of shopping centre staff and about 20% of head office employees on furlough.

In its update to investors on Friday, Intu said it had failed to reach agreement in discussions with lenders on so-called “standstill” terms, under which it would look to defer interest payments on its large and complex debts.

It was also seeking agreements from its wide range of creditors, from big banks to hedge funds, for them not to take action if it breached certain terms on its loans.

Intu has already lined up administrators KPMG as a “contingency”.

‘The money’s gone’: Wirecard collapses owing $4 billion

(qlmbusinessnews.com via uk.reuters.com — Thur, 25th June 2020) London, UK —

FRANKFURT (Reuters) – Wirecard (WDIG.DE) collapsed on Thursday owing creditors almost $4 billion (£3.2 billion) after disclosing a gaping hole in its books that its auditor EY said was the result of a sophisticated global fraud.

The payments company filed for insolvency at a Munich court saying that, with 1.3 billion euros (£1.2 billion) of loans due within a week its survival as a going concern was “not assured”.

Wirecard’s implosion came just seven days after EY, its auditor for more than a decade, refused to sign off on the 2019 accounts, forcing out Chief Executive Markus Braun and leading it to admit that $2.1 billion of its cash probably didn’t exist.

“There are clear indications that this was an elaborate and sophisticated fraud involving multiple parties around the world,” EY said in a statement.

EY said while it was completing the 2019 audit, it was provided with false confirmations with regard to escrow accounts and reported them to the relevant authorities.

Wirecard declined to comment following EY’s statement.

The financial technology company is the first member of Germany’s prestigious DAX stock index to go bust, barely two years after winning a spot among the country’s top 30 listed companies with a market valuation of $28 billion.

“The Wirecard case damages corporate Germany. It should be a wake-up call for reforms,” said Volker Potthoff, chairman of corporate governance think-tank ArMID.

Creditors have scant hope of getting back the 3.5 billion euros they are owed, sources familiar with the matter said. Of that total, Wirecard has borrowed 1.75 billion from 15 banks and issued 500 million in bonds.

“The money’s gone,” said one banker. “We may recoup a few euros in a couple of years but will write off the loan now.”

‘TOTAL DISASTER’

The collapse of Wirecard, once one of the hottest fintech companies in Europe, dwarfs other German corporate failures. It has shaken the country’s financial establishment, with Felix Hufeld, the head of regulator BaFin, calling the scandal a “total disaster”.

Wirecard shares, which were suspended ahead of an earlier announcement that it would seek creditor protection, crashed 80% when trading resumed. They have lost 98% since auditor EY questioned its accounts last Thursday.

EY, one of the world’s “Big Four” accountancy and consulting firms, faces a wave of litigation in a debacle that has drawn comparisons with Arthur Andersen’s disastrous oversight of U.S. energy company Enron.

German law firm Schirp & Partner said that with Wirecard now effectively sidelined, it would file class actions against EY on behalf of shareholders and bondholders.

“It is frightening how long Wirecard AG was able to operate without being objected to by the auditors,” partner Wolfgang Schirp said.

Wirecard’s new management had been in crisis talks with creditors but pulled out on Thursday morning “due to impending insolvency and over-indebtedness”.

The insolvency filing did not include its Wirecard Bank subsidiary, which holds an estimated 1.4 billion euros in deposits and is already under emergency management by BaFin.

‘COMPLETE VINDICATION’

A second source close to talks with creditors said although the company had a healthy core, it had faked two-thirds of its sales. This meant there was no way it could repay all its debt, notwithstanding all the legal challenges it will face.

The ascent of Wirecard, which was founded in 1999 and is based in a Munich suburb, was dogged by allegations from whistleblowers, reporters and speculators that its revenue and profits had been pumped up through fake transactions.

Braun fended off the critics for years before finally calling in outside auditor KPMG late last year to run an independent investigation.

KPMG, which published its findings in April, was unable to verify 1 billion euros in cash balances, questioned Wirecard’s acquisition accounting and said it could not trace hundreds of millions in cash advances to merchants.

“Today is a complete vindication for those that exposed the fraud,” said Fraser Perring, who bet on a fall in Wirecard’s shares and co-authored a 2016 report that alleged fraud.

The Munich prosecutor’s office, which is investigating Braun on suspicion of misrepresenting Wirecard’s accounts and of market manipulation, said: “We will now look at all possible criminal offences.”

Braun was arrested on Monday and released on bail of 5 million euros a day later. Former chief operating officer Jan Marsalek is also under suspicion and believed to be in the Philippines, according to justice officials there.

By Arno Schuetze, John O'Donnell, Additional reporting by Joern Poltz, Hans Seidenstuecker and Edward Taylor

Coronavirus: These are the new rules businesses must implement to reopen

(qlmbusinessnews.com via news.sky.com– Wed, 24th June 2020) London, Uk – –

Businesses will have to work with each other and transport operators to ensure there is no crowding on streets.

Pubs, restaurants, hairdressers, hotels and historic sites will have to keep customers' details for 21 days under plans to limit the spread of coronavirus.

New guidance for England has been issued to businesses that are allowed to reopen from 4 July so they remain “COVID secure” as lockdown rules are relaxed.

The guidance includes advice on Boris Johnson's reduction of the two-metre rule to one metre if two is not viable – but only with “risk mitigation” such as face masks.

The government has provided advice for four different types of businesses: restaurants, pubs and bars, “close contact services” such as hairdressers, spas and tailors, hotels, and “heritage locations” such as churches and historic houses.

All of them must keep a temporary record of customers for 21 days and help NHS Test and Trace with requests for that data if needed.

Restaurants, bars, pubs and takeaways:

  • Businesses in the same area need to consider the “cumulative impact” of many venues re-opening by working together, with local authorities and travel operators to assess the risk and apply “additional mitigations”
  • This could include further lowering capacity, staggering entry times to avoid queues, arranging one-way travel routes between transport hubs and venues, advising patrons to avoid particularly crowded forms of transport or routes
  • Plan for social distancing in the event of adverse weather conditions
  • Ensure customers do not need to “unduly” raise their voices to hear each other by not playing loud music or TV
  • Reducing number of surfaces touched by staff and customers – so ordering food and drinks directly to the table instead of at the counter.

Close contact services (hairdressers, beauty salons, tattoo studios, spas, massage therapy and tailors):

  • Place markings on the floor to show people where to sit
  • Encourage customers to turn up to appointments exactly on time, and on their own, so they do not congregate in waiting areas
  • If there is a queue this should be outside
  • Customers should be seated away from each other and side to side, with at least one metre between them
  • Till points must have perspex screens while doors and windows are to be kept open to increase ventilation
  • Screens should be used, where practical, to create a barrier between work stations
  • Hairdressers must wear a protective visor that extends below the chin, but do not need to wear a face mask
  • Disposable equipment must be used, and if it cannot then it should be washed between clients
  • Customers can choose to wear a face mask but it is not mandatory, and must wash or sanitise hands when entering
  • They must bring their own drinks, and if not, disposable cups must be used
  • No magazines
  • Music must be turned down low so people do not shout
  • Blow drys are allowed.

Hotels and guest accommodation:

  • Private rooms with en suite bathrooms, or one designated shower per guest room, can reopen
  • Outdoor accommodation, such as campsites, can reopen with shared shower facilities if clear use and cleaning guidance is provided but all other shared facilities should be closed
  • Reception areas must be cleaned more and screens placed in between guests and staff
  • Minimise lift usage, drop off room service outside and encourage tips to be added to the bill
  • Housekeeping staff must following handwashing guidance and make a checklist of all hand contact surfaces to be cleaned
  • Guests should be encouraged to wear masks in corridors
  • Clean keys and key cards between guests
  • Make staff accessible via phone, emails and guest apps and encourage contactless payment or pre-payment
  • Business events at hotels are not allowed.

Heritage locations (historic buildings, monuments, sites, parks, gardens):

  • Introduce a pre-booking system, stagger entry times and ensure new guidance is summarised clearly for guests at the entrance
  • Arrange one-way travel routes between transport and the location, as well as in venues if social distancing is an issue
  • Encourage visitors to avoid handling products while browsing
  • Visitors who do not observe social distancing and hand washing measures should be refused services or entry
  • Restrict numbers to avoid overcrowding and limit tour numbers to avoid guides shouting
  • Find out the best way to regularly clean surfaces, this may be difficult for sensitive historic surfaces so they may have to be covered or rooms closed
  • Have temporary markings to stop overcrowding, taking into consideration any possible lasting damage on historic surfaces – free standing signs are best
  • Clean toilets more and have a visible cleaning schedule
  • Clean audio guides between uses
  • Stop repair work if there is no way to social distance
  • Give volunteers extra time to get up to speed with new ways of working
  • No indoor performances
  • Guided tours may have to be stopped if building layout cannot accommodate social distancing
  • Have a test run of new arrangements to make people feel safe and welcome.

Mercedes-Benz cars struck a deal with Nvidia to produce cars from 2024 with a chip and software platform

(qlmbusinessnews.com via uk.reuters.com — Tue, 23rd June 2020) London, UK —

(Reuters) – Semiconductor maker Nvidia Corp (NVDA.O) said on Tuesday it struck a deal with Germany’s Daimler Mercedes-Benz (DAIGn.DE) to provide cars produced from 2024 with a chip and software platform that can eventually be used for autonomous driving functions.

“We intend to join forces to create a software-defined vehicle and deploy this across the entire next generation’s fleet,” Nvidia Senior Director of Automotive Danny Shapiro told reporters.

Shapiro declined to disclose the financial terms of the deal. The deal covers chips and software for the vehicle system.

The new partnership followed Daimler’s move last week to pause a development alliance with rival German luxury carmaker BMW in the area of automated driving.

Shapiro said the high-end Nvidia Drive AGX Orin Platform – an autonomous vehicle processor – would be standard in every Mercedes-Benz vehicle. With that in place, consumers will be able to update the car’s software the way smartphones are updated today.

Asked how the Mercedes-Benz partnership will affect Nvidia’s decade-long collaboration with Audi AG (NSUG.DE), Shapiro said neither arrangement was exclusive. With Mercedes-Benz there is “a huge dedication, huge energy, huge investment from both companies to bring this to market,” he said.

Mercedes-Benz sold 2.39 million cars worldwide in 2019. The two companies have been working together on autonomous driving and artificial intelligence car technology for over five years.

Reporting by Jane Lanhee Lee

JD Sports buys back Go Outdoors chain for £56.5m after pushing it into administration

(qlmbusinessnews.com via news.sky.com– Tue, 23rd June 2020) London, Uk – –

Options included a sale – but JD Sports decided Go Outdoors had a potential future in the group “if fundamentally restructured”.

JD Sports has bought back its Go Outdoors chain for £56.5m after putting it into administration.

The move will “preserve as many jobs as possible”, JD Sports said, with a major restructuring plan aimed at retaining the “majority” of stores.

Go Outdoors sells camping, fishing and cycling equipment and employs about 2,400 staff.

On Saturday, Sky News had exclusively revealed that Go Outdoors was on the brink of administration – four years after retail giant JD Sports Fashion first bought it for £100m.

Sky's City editor Mark Kleinman said then that JD was expected to use an insolvency process to restructure the chain, which trades from 67 shops.

Manchester-based JD Sports, which has a market value of £6.3bn, was said to be keen to retain control of a slimmed-down Go Outdoors.

On Tuesday evening, JD Sports confirmed it had hired administrators from Deloitte.

Options for Go Outdoors included a sale, but JD Sports said the business had a potential future within the wider group “if fundamentally restructured”.

Existing staff will be transferred as part of the pre-pack administration sale, they added.

Peter Cowgill, executive chairman of JD Sports, said: “As a consequence of COVID-19, Go Outdoors was no longer viable as previously structured and would have absorbed capital at an unsustainable rate for the foreseeable future.

“Having investigated all available options for the business, we firmly believe that this restructuring will provide Go Outdoors with a platform from which it can progress whilst remaining a member of the group.

“Most importantly, we are pleased that it will protect the maximum number of jobs possible.”

Michael Magnay, joint administrator, said: “Like many high street retailers, Go Outdoors Ltd has been seeking to address a number of underlying business challenges in the current UK retail environment, which have been exacerbated by the impact of COVID-19.

“This successful sale will provide Go Outdoors with an opportunity to restructure its business to secure its future for the long term.

“I'm particularly pleased that we have been able to secure the employment of all the company's workforce, and we'd like to thank all employees and key stakeholders for their support throughout this process.”

By Sharon Marris

Will Rishi Sunak cut shop prices to boost the High Street?

(qlmbusinessnews.com via bbc.co.uk – – Mon, 22nd June 2020) London, Uk – –

“Timely, temporary and targeted” was the advice given to the Treasury Select Committee on stimulating the economy by the former US Treasury Secretary Larry Summers in the depths of the 2008 financial crisis.

These words found their way into the pre-Budget documents to describe the immediate 13-month VAT cut from 17.5% to 15% announced by then Chancellor Alistair Darling.

The same phrase was used by current Chancellor Rishi Sunak in his Budget in March to describe the first steps in pandemic support packages. And, following Germany's temporary 3% cut in VAT, the prospect of a similar tax cut is again up for discussion in the UK.

The policy is certainly timely, because it can be enacted with immediate effect. And because it is reversible, it serves as a temporary stimulus.

Stimulus

In 2008, it was argued that a general VAT cut was targeted because it was aimed at supporting consumer confidence. But that is far more debatable. It certainly was expensive, though. The upfront cost was £13bn over two years, amount to half of the Darling stimulus package.

Most of this shifted spending in time into the cheaper VAT period. The net impact? A 1% increase in retail sales, just shy of the 0.5% overall boost to consumers predicted by the Treasury at the time, according to the Institute for Fiscal Studies.

The argument floating around government earlier in the month was that there was little point in stimulating shops, restaurants and pubs that were not open. Physically enabling trade would be a prerequisite.

The thinking in Germany was to incentivise spending and consumer confidence as soon as retail reopened, rather than see those who could not physically spend during lockdown, and were so forced to save, choosing to maintain high savings.

Consumer confidence

The point about the temporary cut is to get money flowing in the economy quickly. It has some interesting quirks as a policy. Back in late 2008, 43% of local shops only changed their prices at the till, leaving shelf prices unchanged. It is a considerable logistical cost to do so.

However, the impact on consumer confidence was marked. There was a significant rise in sentiment towards both buying household goods and making major purchases, according to the Nationwide consumer confidence survey.

The major purchases index went above boom time levels and continued even after VAT went back up, but then fell sharply when VAT was increased again under the Coalition in January 2011.

The considerations here are whether the Treasury chooses to make this truly targeted on particular sectors – such as pubs and restaurants, rather than pass further boost to say mainly online retailers.

The cost may be less than normal, too, given VAT revenues are in any case going to be sharply down. But it is still pricey.

Also, it is unclear how much additional difference a 2.5% cut in prices will really achieve on top of already anticipated reopening sales and price cuts?

Wherever things go, a clear decision will be needed quickly. Speculating that VAT will be cut in the near future will simply serve to delay purchases, as consumers wait for an anticipated saving.

By Faisal Islam

Consumer numbers up 45% as high streets shops reopened in England

(qlmbusinessnews.com via theguardian.com – – Mon, 22nd June 2020) London, Uk – –

Footfall down 54% compared with 2019, but uplift expected when Scotland and Wales reopens

Shoppers flocked back to the high streets in England over the past week as non-essential stores reopened but numbers remained well down on a year earlier, according to the latest survey of retail footfall.

Springboard, a company that measures the number of potential customers at retail outlets across the UK, found that footfall in the week starting 15 June was up 45% on the previous week.

But with numbers influenced by later reopenings in Scotland and Wales, restrictions on public transport and a shift to online shopping, footfall was down 54% on the same week in 2019.

Footfall indicates the number of people going to high street stores, shopping centres and retail parks and is not a measure of how much each consumer spends. Numbers were at their weakest during April, when they were down 80% year on year, but Springboard said reopening non-essential stores in England had resulted in the biggest change since the start of the lockdown in late March.

There were smaller weekly increases of 11.5% in Scotland and 8.5% in Wales, with Scotland not due to open non-essential stores – excluding those in shopping centres – until the end of the month and Wales only opening its non-essential shops on Monday.

Footfall in London’s West End remained severely affected by a lack of international visitors to the UK and the difficulties in accessing public transport. Footfall in the West End last week was down 81% on the same week a year earlier, while in Scotland and Wales the year-on-year falls were 67% and 69% respectively.

Diane Wehrle, the insights director at Springboard, said: “The overall result for the UK was subdued by Scotland and Wales where retail reopening is yet to happen.

“We anticipate an additional uplift to come when retail in these areas of the UK also reopens and the hospitality and entertainment industry is given the green light to resume trading in the coming weeks.”

Springboard, which records 70m footfall counts a week at 4,500 counting points across 480 different shopping sites across the UK, said activity had risen by more than 30% each day from the same day in the week before, apart from on Thursday, when the rise was limited to 25% by heavy rain.

The Real Reason The Aunt Jemima Brand Is Changing Its Name

Source: Mashed

On June 15, 2020, Miami-based singer-songwriter Kirby Maurier posted a TikTok video called “How Not to Make a Racist Breakfast” that drew attention to the fact that many brands' logos and images, like Aunt, are still deeply rooted in offensive stereotypes. As the video quickly went viral, it drew a lot of attention from both social and mainstream media, with Reddit cofounder Alexis Ohanian tweeting in disbelief, “How is Aunt Jemima not canceled?”

How Beats By Dre Leveraged The Strategies of Sneaker Culture And Became A Multi-Billion Dollar Brand

Source: CNBC

Few brands have risen to the top of American pop culture as quickly as Beats by Dre. Beats was founded on a novel idea: use the principles of hype culture to sell headphones. That strategy turned over-the-ear-headphones from a niche product to a cultural phenomenon. Here’s how Beats by Dre leveraged the strategies of sneaker culture to become one of the most recognizable brands in the world.

15 Reasons Why POOR People Hate the RICH

Source: Alux

This Alux video well try to answer the following questions: What are some dumb reasons why the poor hate the rich? Why do poor people hate the rich? Why do poor people hate rich people? Why do some poor people hate the rich? Why do people, especially the poor, hate the rich? Why can't people accept that there will always be poor and rich people in any society? What do poor people think about rich people? What are some valid reasons to hate the rich? Why are people hating billionaires? Why do normal people hate billionaires? Are rich people just hoarding resources? Are billionaires hoarding resources? Are rich people corrupt? Why do rich people have nice things? Why do poor people envy rich people? What do rich people think of poor people? Why do we hate billionaires? Why do we envy successful people? Do the rich keep poor people poor? Are rich people greedy?

UK debt now larger than size of whole economy after government borrowed a record amount in May

(qlmbusinessnews.com via bbc.co.uk – – Fri, 19th June 2020) London, Uk – –

The UK's debt is now worth more than its economy after the government borrowed a record amount in May.

The £55.2bn figure was nine times higher than in May last year and the highest since records began in 1993.

The borrowing splurge sent total government debt surging to £1.95trn, exceeding the size of the economy for the first time in more than 50 years.

Chancellor Rishi Sunak said the figures confirmed the severe impact the virus was having on public finances.

“The best way to restore our public finances to a more sustainable footing is to safely reopen our economy so people can return to work.

“We've set out our plan to do this in a gradual and safe fashion, including reopening high streets across the country this week, as we kickstart our economic recovery,” he added.

Income from tax, National Insurance and VAT all dived in May amid the coronavirus lockdown as spending on support measures soared.

This is the first time debt has been larger than the size of the economy since 1963, but it is not as high as the post-war peak of 258% in 1946-47.

Record high

The deficit – the difference between spending and tax income – for the first two months of the financial year (April and May) is now estimated to have been £103.7bn, £87bn more than in the same period last year, another record.

But the ONS estimates borrowing for the 2020-21 financial year will dwarf that at £298bn. That would be the largest deficit since World War Two.

It cautioned that due to the coronavirus, its official estimates were subject to greater than usual uncertainty.

The Office for National Statistics had previously said that April's borrowing figure was the highest since records began in 1993, but it subsequently revised the figure down to £48.5bn from £62bn.

The revision was due to higher than expected income from taxes and national insurance, as well as the spending on the Coronavirus Job Retention Scheme being lower than originally estimated.

Alex Tuckett, senior economist at consultants PwC, pointed to the 46% fall in the amount of VAT collected in the month, although it said the biggest issue for the government's finances was the £29bn it spent on the various support schemes for the economy.

“In the near term, there are signs the economy is recovering as the country re-opens, and this should boost tax receipts.

“However, these figures remind us that Chancellor Rishi Sunak faces a difficult backdrop to any summer fiscal event.”

Samuel Tombs at Pantheon Economics said the emergency support measures had placed a “colossal burden” on the public finances.

In a release packed with striking figures, he singled out the fact the government had needed to raise more cash in the first two months of this fiscal year than in total in any prior 10 fiscal years.

Analysis: By Dharshini David

Busting the overdraft, with a borrowing figure nine times as high as a year ago is not an easy thing for any government to swallow. In his first full year as Chancellor, Rishi Sunak is on track for the biggest public sector deficit since World War Two,

But it is, he reckons, a price worth paying to prevent a bigger cost to the economy, in terms of lost jobs and output. Billions have been pumped into supporting millions of jobs, and many businesses, while, on the other side, tax receipts have plunged. Those lifelines will be wound down in the coming months, and the government can borrow cheaply on financial markets to fund them.

But what happens next? As lockdown is eased, the Treasury is watching closely, knowing the recovery may need extra support – perhaps tax cuts or more spending. That will present the government with more bills – but failing to provide more help risks an even higher cost.

The chancellor is to present some sort of statement before Parliament ceases for the summer in July – that won't be a full Budget but may contain some measures to boost the recovery. The tough choices aren't over yet.

DPD and Kingfisher to hire 7,500 UK staff as online shopping soars

(qlmbusinessnews.com via theguardian.com – – Thur, 18th June 2020) London, Uk – –

Delivery firm and owner of B&Q expand to deal with boom in online buying in lockdown

The delivery firm DPD and the B&Q owner Kingfisher are hiring a total of more than 7,500 staff in the UK to cope with surging demand for home deliveries during the coronavirus pandemic.

DPD is to hire 6,000 workers, including HGV drivers, warehouse staff, managers and support staff such as mechanics as part of a £200m investment in expanding its next-day parcel-delivery service.

The logistics firm, which handles parcels for Marks & Spencer and Asos and has also been delivering food boxes for the supermarket chain Morrisons since the high street lockdown began in March, is spending £100m on new vehicles and setting up 15 new regional depots, 10 more than planned for this year.

Dwain McDonald, DPD’s chief executive, said: “We are experiencing the biggest boom in online retailing in the UK’s history.” He said that demand was increasing from existing retail customers and from new clients developing home delivery services so that they could continue trading during lockdown.

Meanwhile, Kingfisher, the owner of B&Q and Screwfix, said it would be taking on 3,000 to 4,000 workers, about half of whom would be in the UK, after online sales soared more than 200% in April and May.

Thierry Garnier, the chief executive of Kingfisher, said staff would be working in stores that are being used to process online orders. He said demand for DIY goods had surged while families had been stuck at home but admitted trade may slow as the economic downturn hits jobs. “These are temporary roles across the summer but we will continue to watch what happens,” he said.

Online sales in the UK, not including food, rose by a third in May, according to the digital retail body IMRG, after a rise of nearly a quarter in April.

The lockdown has prompted particularly strong sales of home, gardening and electrical goods. Garden sales rose 288% in April and more than 162% in May compared with last year, while electrical sales doubled and homewares rose 84%.

Online clothing and footwear sales dived, however, falling by nearly a quarter and a third respectively in March and April and continuing to drop in May.

Andy Mulcahy, strategy and insight director at IMRG, said retailers had been coping with a surge in demand similar to the peak trading periods of Christmas and Black Friday but with a skeleton staff – partly because of the need for physical distancing in warehouses. He said the drop in demand for clothing and footwear – usually a very significant part of the non-food market – had meant some resources could be diverted to manage demand from other sectors.Advertisement

Mulcahy said about two-thirds of the websites IMRG monitored were warning customers that there would be delays with deliveries. “They don’t have enough staff to deal with this,” he said.

By Sarah Butler

Coronavirus: UK abandoning existing contact-tracing app to move to Google-Apple model

(qlmbusinessnews.com via news.sky.com– Thur, 18th June 2020) London, Uk – –

The move marks a huge U-turn from the government which has asserted for months that it would not be changing the app's model.

The UK is abandoning its existing contact-tracing app and switching to the technology provided by Google and Apple, Sky News has confirmed.

The news will be announced at a briefing later today.

The move marks a major U-turn, after the government insisted its own centralised model was more effective than the model being proposed by the technology companies.Contact tracing apps explained: The problems and potential

In particular the government believed that by holding the data on contacts in a centralised manner they would have been able to develop valuable epidemiological data about how the virus is spreading.

The centralised model would also have helped prevent against people causing mischief with the system by giving the authorities an edge in detecting false positives.

Google and Apple collaborated to allow mobile devices to use Bluetooth in the background and register when they come within close proximity of another mobile phone.

But the collaboration required health authorities' apps to utilise a decentralised model of data storage – keeping the list of contacts on each device, rather than uploading it to a central authority – which they said would protect users' privacy.

As the iOS and Android mobile operating systems are run on 99% of the world's smartphones, the companies' technical designs have a fundamental say in how contact-tracing apps work.

For months the government had asserted that its app, designed outside of the requirements set by Apple and Google, would be more effective than what could be achieved within those requirements.

Despite being initially promised for mid-May, a health minister has now said the app would not be ready before Winter.

Lord Bethell confirmed the government still planned to introduce a contact-tracing app, describing it as “a really important option for the future”.

The app has been the subject of a trial on the Isle of Wight, where the Department of Health says it has been downloaded by 54,000 people.

Lord Bethell said the trial had been a success, but admitted that one of its principal lessons had been that greater emphasis needed to be placed on manual contact tracing.

“It was a reminder that you can't take a totally technical answer to the problem,” he said.

Problems with manual contact tracing have been apparent in NHS statistics which today revealed that at least a quarter of people who test positive for COVID-19 in the UK are being missed.

Virus crisis may boost demand for fresh bank notes

(qlmbusinessnews.com via bbc.co.uk – – Wed, 17th June 2020) London, Uk – –

Countries may replace banknotes more frequently because of the coronavirus crisis, De La Rue chief executive Clive Vacher has said.

But some experts say the virus will speed up the decline in cash use in favour of digital payments.

Mr Vacher also said De La Rue is to end banknote printing at its Gateshead plant, putting 260 jobs at risk.

The firm plans to raise £100m as part of a turnaround plan focused on shifting to plastic notes.

De La Rue shares rose more than 4.5% following the announcements.

Clean cash?

The firm said it expected demand to grow around the world for its plastic banknotes as governments try to slow the spread of coronavirus.

However, some experts have said coronavirus will hasten the decline in the use of cash as people make a long-term switch to digital payments.

The Bank of England and the World Health Organization have both stressed that the risk of virus transmission from banknotes and coins is no greater than for any other items and have repeated advice on regular hand washing.

There have been no tests on how the virus sticks to paper or polymer, and there is no scientific evidence that Covid-19 can be transmitted via bank notes, Mr Vacher said.

However, he added: “There is no doubt that a big driver – apart from the longevity of [plastic] notes – is the cleanliness of them, and that's why state banks and state printworks are making the decision to switch.”

Gateshead job losses

De La Rue said it would begin a consultation process with staff about stopping banknote production at its Gateshead plant.

It expects banknote production to stop at the plant by the end of 2020.

In addition, UK passport production will stop in the first half of 2021 as the contract transfers to Franco-Dutch firm Gemalto.

De La Rue said it would continue to print banknotes in the UK at other facilities.

Fundraising

Mr Vacher's comments came as De La Rue set out a plan to raise £100m from shareholders.

The firm, which prints the UK's banknotes, has been hit by setbacks including losing the contract to make Britain's blue post-Brexit passports to Gemalto in 2018.

In May of that year, it had to write off £18m after Venezuela's central bank failed to pay its bills.

The loss of the British passport contract, two profit warnings in 2019, and ballooning debt prompted De La Rue to warn late last year of uncertainty over the future of the business.

At the time, the company was also under investigation by the Serious Fraud Office (SFO) in connection with “suspected corruption” in South Sudan.

However, on Tuesday the SFO said it had dropped its investigation.

Mr Vacher said in February that “considerable” work was needed at the firm, while unveiling plans to boost profitability by reining in costs and investing in plastic notes.

Turnaround plan

On Wednesday, De La Rue said most of the money it planned to raise, about £80m, would go into the company's turnaround plan.

Some £15m will be invested in plastic note production, which at the moment is based in the UK.

“It's very likely to be in the UK, but actual location is still under discussion,” Mr Vacher said.

The company has drawn up a shortlist of potential sites.

UK banks told to prepare for pandemic debt pile

(qlmbusinessnews.com via uk.reuters.com — Tue, 16th June2020) London, UK —

LONDON (Reuters) – British banks need to accelerate preparations for dealing with businesses unable to repay money borrowed to bridge the coronavirus pandemic, the national financial sector regulator said on Tuesday.

Over 800,000 businesses have taken out state-backed loans worth around 34 billion pounds under schemes introduced by the government as lockdowns forced companies to shutter temporarily.

Financial Conduct Authority (FCA) Chair Charles Randell said some of the debt incurred will turn out to be unaffordable and will need to be tackled fast to avoid dragging on recovery.

“Lenders will need to scale their arrears-handling functions quickly, and invest in training and controls,” Randell told an online meeting with the chairs of Britain’s banks.

“There needs to be an appropriate dispute resolution system, and we are working with the Financial Ombudsman Service and the Business Banking Resolution Service to ensure that there is capacity to deal with the volumes we may see.”

Banks were criticised for being slow initially in building up capacity to dole out loans, sparking complaints from small companies struggling to stay afloat.

“We can’t allow this to become a replay of the 2008 crisis where the treatment of some small business borrowers did such serious damage to people and to trust in financial services,” Randell said.

The pandemic’s impact on markets has added to questions about the value of some high cost and risky investment products, including those sold through “long and expensive distribution chains”, he said.

“We will be saying more about the issue of high risk investments in the near future.”

There is also a need to “redesign the system” so that “polluting firms” that break the rules pay for the consequences, rather than being mutualised across the industry, he said.

Reporting by Huw Jones

Covid lockdown saw 612,000 UK workers lose their jobs

(qlmbusinessnews.com via news.sky.com– Tue, 16th June 2020) London, Uk – –

The number of people on company payrolls takes another sharp fall in May but the rate of decline eases on the previous month.

Early estimates suggest 163,000 people lost their jobs in May, on top of 449,000 the previous month, as the coronavirus crisis lockdown took its toll on the UK economy.

The Office for National Statistics (ONS) said HM Revenue and Customs (HMRC) data covering the number of paid employees showed a fall of 2% since the country entered effective hibernation in March.

It released the experimental data as its own figures showed a leap in the so-called claimant count – jobless claims applications through Universal Credit.

The ONS recorded a rise of 528,000 – or 23% – last month to 2.8 million.

It meant the total had risen by 1.6 million since March.

The figures will make grim reading for the government which has, up until last weekend, spent £59bn propping up businesses through various support schemes and paying wages to furloughed workers.

Bounce Back Loans continued to account for the bulk of corporate borrowing at £26bn – with almost 864,000 businesses helped to date.

Separate HMRC figures, released on Tuesday, showed there were 9.1 million people getting 80% of their monthly wages from the Treasury at a cost of £20.8bn so far.

The ONS said its data demonstrated the impact the Job Retention Scheme had inflicted on workforce output.

Jonathan Athow, deputy national statistician for economic statistics, said: “The slowdown in the economy is now visibly hitting the labour market, especially in terms of hours worked.

“Early indicators for May show that the number of employees on payrolls were down over 600,000 compared with March.

“The claimant count was up again, though not all of these people are necessarily unemployed,” he said.

Wider ONS figures, covering the three months to April, suggested the jobless rate remained at 3.9% as the furlough scheme got in to gear.

Economists had expected to see a surge to 4.7%.

The ONS reported the steepest quarterly decrease in vacancies on record of 342,000 to 476,000 in the period while total pay, when bonuses were included, fell in real terms for the first time since January 2018 – down by 0.4% after inflation.

The statistics body suggested that it remained to be seen whether surging Universal Credit claims and evidence of plunging payrolls would translate into actual jobs lost when official data, covering May, is released next month.

Labour's shadow work and pensions secretary, Jonathan Reynolds, said: “These numbers show that unless the Government acts, the UK is likely to face mass unemployment on a scale not seen for decades once the furlough scheme is withdrawn.”

Minister for employment, Mims Davies, responded: “Today's figures are starting to show the impact of COVID-19 on our economy, but our furlough scheme, grants, loans and tax cuts have protected thousands of businesses and millions of jobs, setting us up for recovery.

“Already our nationwide network of Work Coaches have moved in to support jobseekers across sectors and match them with employers who are recruiting.”

Neil Carberry, chief executive of the Recruitment and Employment Confederation, said: “The headline figures may not show it, but a lot has changed since April – with the claimant count rising to 2.8 million, the unemployment rate is likely to be much higher than 3.9% now.

“But with the lockdown being eased and the economy opening up, hiring should grow.”

Winding down of furlough scheme risks flood of unemployment – by Paul Kelso, business correspondent

On every metric except the headline unemployment figure, which lags behind events, the figures are grim.

Already, despite the government furlough scheme paying the wages of almost nine million people, around 600,000 workers have been removed from payrolls – likely made unemployed.

The number of benefit claimants, those claiming Universal Credit or Jobseekers Allowance, not all of whom will be out of world, has more than doubled, increasing by 1.6 million since March to 2.8 million.

Total hours worked saw a record annual fall between February and April 2020, decreasing by almost 9%.

And vacancies, a measure of how easy it might be to find work, continued to slide, with the March total of 476,000 down 342,000 than in the three months to February 2020, the largest quarterly decrease since current records began in 2001.

The only thing holding up the jobs market is a wall of government support, built with the intention of allowing economic activity to recover before it is dismantled.

But when the furlough scheme is withdrawn, starting in July when employers will have to start contributing, the trickle may become a flood.

And if the wave breaks unchecked, it may devastate prospects for a generation.

By James Sillars

Shops Reopen in England After Three Months Lockdown

(qlmbusinessnews.com via bbc.co.uk – – Fri, 15th June 2020) London, Uk – –

Pent-up demand has prompted queues at some shops as rules are relaxed in England after a three month lockdown.

Long queues were reported outside Primark shops in London and Birmingham ahead of their 8am opening time.

The chain, which like other clothing shops has been closed since 23 March, does not offer online shopping meaning customers can only buy in the store.

All shops in England are allowed to open, although retailers have had to introduce strict safety measures.

Jaydee Darrock, from Warwickshire, was one of the first inside Primark's Birmingham store after queuing from about 07:00. She described it as “surprisingly calm”.

“We thought it would be chaotic, it's not, it's quite nice,” she said.

In Manchester, people waited for almost an hour for some shops. Big queues formed outside Primark,TK Maxx and Foot Locker.

Although food shops, pharmacies, banks and other essential retailers have stayed open, vast swathes of the High Street, from bookshops to clothes outlets, have been closed since 23 March.

What are people shopping for?

Shantel Brown, 35, was shopping in Milton Keynes with her daughter Tee, who is 16.

Shantel said: “I bought nightwear and baby clothes because Primark was open. I'm pregnant and I've been waiting to get some baby stuff.

“Everyone keeps their distance. They've got sanitiser at the entrance. As long as we've got our masks on we're fine.”

Tee added: “I bought tops, shorts and summer clothes. I came because Mum forced me.”

Greg Dulson, 68, was shopping for a new watch strap.

“The strap on my favourite watch broke and I brought it in to the watchmaker's the day before lockdown,” he said.

“They said come back tomorrow, but it was closed!”

Katie Kirby, who is 18, from Windsor, was shopping with 21-year-old her boyfriend Zac Hopkins.

“I bought a jumpsuit because Primark was open and the weather's getting better again,” said Katie. “I did go just to get some essentials like pants and socks, but I when I saw the jumpsuit I had to treat myself because the shops haven't been open for so long.”

“We do keep out distance in the store. We thought it would be a different shopping experience but once we were in there it was just the same.”

Zac Hopkins added: “I bought a skipping rope, so I can do some exercise at home.”

‘It's rather normal'

Business reporter Vivienne Nunis in Milton Keynes

There were socially distant queues outside Zara, Primark and TK Maxx this morning and a steady crowd of shoppers are now browsing in the centre. Lots of young people are here, mothers with strollers and some older shoppers too. Some people are wearing masks, but not many.

Lots of stores remain closed and all the lights are off in the locked cafes and fast-food restaurants.

The shoppers say they're glad they came. Many are here for a quick visit only, leaving soon after they've got hold of what they wanted: baby clothes or summer sandals. One man came to pick up a watch that he brought in to be fixed the day before lockdown. Others are leaving stores with their arms loaded with bags – they came expecting bargains and they've found them.

The shoppers are mostly sticking to the new rules and staying socially distant – when they remember. Floor markings indicate a one-way system, every second toilet cubicle is closed, touch-screen maps have been powered down and seating areas are roped off. But apart from those changes – and a growing queue outside Primark – everything feels rather normal.

HMV owner Doug Putman told the BBC's Today programme that he expected a rush in the first week of trading after his shops open their doors. But he said retailers could be faced with a problem if shoppers do not return in the same numbers as before the lockdown.

“If you've got the same cost structure to run the business but sales are down even 20% it makes a lot of companies unviable.”

“We're being very hesitant, we believe that it is going to be a tough year.”

Retailers are required to introduce plastic screens at the tills and floor markings to keep shoppers two metres (6ft 5ins) apart – measures that are already a regular fixture in supermarkets.

Other measures will include pleas not to touch items unless customers intend to purchase them and decontaminating shopping baskets after each use. Retailers are promising there will be plenty of sanitiser on hand for customers. Toilets will remain closed in Primark's shops but facilities in other stores, including John Lewis and Selfridges, will be open.

In most clothes shops, fitting rooms will be closed. Bookshops including Waterstones intend to put items in quarantine if browsed but not bought, while some jewellers are introducing ultraviolet boxes that can decontaminate items in minutes.

Government guidance suggests shops put some items aside if they have been extensively handled by customers.

Not all stores will throw open their doors immediately. John Lewis will reopen just two outlets on Monday – in Kingston upon Thames and Poole – as part of a phased approach, with 11 others to follow on Thursday.

Major High Street chains start to unlock

  • John Lewis will start by opening 13 branches in stages
  • Next will reopen just 25 of its 500 stores at first
  • Debenhams will reopen 50 stores in England and three in Northern Ireland
  • Marks and Spencer will open all its shops in England and Northern Ireland
  • JD Sports is reopening all 309 of its stores in England
  • Primark is reopening all 153 of its stores in England
  • Argos, which has kept outlets in Sainsbury's stores open, will reopen 145 standalone stores for click and collect
  • Topshop is reopening all its stores in England and selected ones in Northern Ireland
  • Music retailer HMV is reopening 93 of its 113 stores
  • Currys PC World is reopening 131 of its outlets

Some other retailers selling products classed as essential – such as DIY, furniture and bicycles – have also been reopening. Furniture giant Ikea opened 19 of its stores across England and Northern Ireland recently, prompting long queues.

Many stores are encouraging customers to make purchases by contactless card payments, with limits increased to £45. Arcadia, which owns the likes of Topshop, Miss Selfridge and Dorothy Perkins, has said it will not accept cash.

London's West End, which includes Oxford Street, is expecting about 80% fewer visitors when it reopens on Monday.

The British Retail Consortium (BRC), the trade body representing the sector, warned that the unlocking was unlikely to provide any immediate boost for the sector. It wants the government to help stimulate demand with a short-term cut in VAT or a temporary income tax cut for lower-income workers.

Zoos, safari parks and drive-in cinemas were also allowed to open from Monday.

On Monday morning, queues formed outside London Zoo, which has reported financial struggles during the pandemic.

In Northern Ireland, non-essential shops reopened on Friday, but there is still no date for Wales and Scotland.

In England, pubs, restaurants, hairdressers, hotels and cinemas will not be allowed to open their doors until 4 July at the earliest – and even then, only if they can meet social distancing measures.

Key to a successful reopening of the economy is the two-metre social distancing rule, the hospitality industry says. Pubs and restaurants have warned that they cannot make money if customers are required to keep two-metres apart, and have urged that the distance limit be reduced to one metre.

Prime minister Boris Johnson has commissioned a review into two-metre distancing, saying there was “margin for manoeuvre” as the number of coronavirus cases falls.

The government is under intense pressure to get the economy moving as fears grow of a new wave of job losses as furlough scheme that has supported eight million workers is wound down.

Unilever pledge to invest €1bn in green projects over the next 10 years

(qlmbusinessnews.com via theguardian.com – – Mon, 15th June 2020) London, Uk – –

Multinational’s 10-year plan puts focus on plastics and greener transport and production

Unilever has pledged to invest €1bn (£900m) over the next decade in environmental projects that will improve the “health of the planet”.

Alan Jope, Unilever’s chief executive, said that while the world was rightly focused on the devastating coronavirus outbreak and serious issues of inequality raised by the Black Lives Matter protests, the climate emergency should not be overlooked. “We can’t let ourselves forget that the climate crisis is still a threat to all of us,” he said.

The consumer goods giant, which owns more than 400 brands including Marmite, Dove, Comfort and Sure, said that in response to the “scale and urgency of the climate crisis”, it was also setting a target of net-zero emissions from all its products by 2039.

The company has already promised to reduce the mountain of plastic rubbish that its products generate, but Jope said it was just as important to look at the “impact they have on the planet at the start of their life” – in the sourcing of materials, as well as in their manufacture and transport.

Unilever said its €1bn “Climate & Nature Fund” would be used to fund projects ranging from landscape restoration and carbon capture to wildlife protection and water preservation. It also pledges to have a “deforestation-free” supply chain within three years, and to harness emerging digital technologies – such as satellite monitoring and geolocation tracking – to increase traceability and transparency.

Jope has warned that the company would sell off brands that could not meet its own sustainability targets. It was no longer enough for consumer goods companies to sell washing powders that made shirts whiter or shampoos that make hair shinier, because consumers wanted brands that had a “purpose” too, he said.

Last week, the FTSE 100-listed company announced that it had picked London as its home in an about-face on the company’s 2018 decision to opt for Rotterdam, which was abandoned after a revolt by British shareholders. If investors back the plan, it will bring an end to the company’s complex dual structure, a hangover from Unilever’s formation through the merger of a Dutch margarine producer and a British soapmaker 91 years ago.

By Zoe Wood