Shoppers (and M&S investors) might be feeling a little confused this week. The retailer announced it is “stepping up” it store-opening programme plans to launch 20 new “bigger and better” shops. But hang on, just three months ago it unveiled plans to close 67 stores, saying market headwinds and falling footfall were impacting the business.
There’s a somewhat hokey-cokey feel to these announcements, with analysts and investors unclear whether the retailer is in, or out, of the high street. M&S execs insist it depends very much on what type of store you’re talking about – and it is certainly shaking it all about, with convenience foods and sushi appearing to take priority over knickers and socks. The newer stores will all feature larger foodhalls, along with home furnishing departments, while the company is also planning to invest in 100 new food sites.
Economic conditions may be tough but that doesn’t seem to have acted as a brake on corporate excess. This time it is not an investment bank or oil company executives in the news, but streaming giant Netflix, which is advertising for a flight attendant to work on its fleet of private jets, with a salary of up to $385,000 a year. What might a prospective candidate be expected to do to earn such a salary – fly the plane? Apparently not, as the advert outlines the normal duties performed by a flight attendant. The apparently astronomical pay package may be due to new Californian legislation, rather than Netflix largesse. Rules now require firms to show a full salary range. Those applying should note that the lower end of this pay band is just $60,000 a year (£48,500). Still, if Netflix is hiring staff for its private jet division it can’t be feeling the pinch of cancelled subscriptions too much.
Are Things Looking Up?
Experts seem cautiously optimistic that the economic outlook for the UK is somewhat sunnier. Bank of England governor Andrew Bailey said the UK faced a slightly easier path ahead, with inflation “turning a corner”. CPI figures fell marginally this week, for the second month running. This should mean interest rates peak at just 4.5%, Bailey said, in contrast to previous predictions northwards of 6%. Bailey’s positivity was echoed by former Bankgovernor, Mark Carney who gave a more upbeat view on Britain’s economic prospects at the World Economic Forum at Davos, rather than re-iterating observations previously made about the economic damage wreaked by Brexit. Still as economic forecasts go, an “easier path out of recession” remains a fairly unsettled outlook, at least in the immediate term. If Bank of England governors were weathermen they’d no doubt be advising us not to forget our umbrellas when leaving the house, as there remains a chance of showers.
… But the High Street is Still Struggling
Economic pundits might be forecasting sunnier times ahead, but this week the bad corporate news kept coming. Some retailers might have had a better-than-expected Christmas, but not Ocado, which reported its first annual decline in sales. Customers of the online supermarket have been “downsizing their baskets” amid a cost-of-living crunch. Shares in the retailer have fallen by about 50% over the year. Elsewhere, premium stationery outfit, Paperchase, is in trouble again and talking to buyers about a possible rescue deal, while also consulting administrators. Paperchase, founded in 1968 by two art students, was bought out of administration in 2021, though this meant closing 40 stores and making 500 of its staff redundant. It remains to be seen whether another rescue will be on the (pastel-edged) cards this time.
Big Tech Wields the Axe
You’d have thought a highly skilled job in computing or technology might be one of your more secure employment options. Not any more. Microsoft is the latest tech company to announce swingeing job cuts, axeing 10,000 jobs globally — about 5% of its workforce. This follows similar moves by Amazon (cutting 18,000 jobs) Meta (reducing its workforce by 11,000) and Twitter, which has laid off a few thousand staff since Elon Musk took the helm. Many of these technology companies increased staffing levels substantially during the Covid pandemic, on the back of demand for more remote technology options. But are all now reversing this trend with profits dipping during last year’s economic slowdown. There used to be IT training for those leaving older industries, to help them find employment. It seems doubtful they’ll be any help for those leaving this sector, beyond “down-skilling” to fill the myriad vacancies now available in the job market in the UK.
Batteries Go Flat at Britishvolt
The UK’s nascent space industry was dealt a blow last week as Virgin Orbit failed to launch its first satellites into orbit. This week, hopes that the UK might be a hub for manufacturing electric vehicle batteries were also dashed as Britishvolt went into administration, making most of its staff redundant. The start-up had planned to build a “mega factory”in Northumberland, and was widely championed by ministers as part of its “levelling up” agenda. Currently the UK has one Chinese-owned battery plan, adjoining the Nissan car factory in Sunderland. In contrast, 35 plants to make electric car batteries are already under construction in the EU.
Wind Farm Windfall
King Canute famously demonstrated the limits of kingly power by failing to hold back the waves. Our current monarch, King Charles — who collects royalties from wave and wind power generated on the UK’s coastline, via the Crown Estate — has made a similar concession, asking for surplus profits from these wind farms to be used for public good rather than further enriching the monarchy. A smart move many might say, at a time when the institution has come under increasing scrutiny. The Royal family’s annual grant is based on the profits made by the Crown Estate, profits that were boosted last year by six new offshore wind energy leases, and rising prices for energy generators. It is understood that should add millions to UK tax revenues. Let’s hope the chancellor spends them wisely.
Musk Faces More Lawsuits
Last year Elon Musk faced protracted legal action after initially appearing to backtrack on plans to buy Twitter. A courtroom showdown was averted after he bought the social media platform for $44 billion. Now it is a Tesla shareholder who has brought a lawsuit against him, arguing that Musk’s tweets manipulated the company’s share price in 2018, with one reading: “Am considering taking Tesla private at $420. Funding secured.” Share prices rose on the back of these tweets, before dropping sharply when no deal emerged. Five years on the company remains listed on the stock market.
In a San Francisco court this week, lawyers for Musk denied this was market manipulation. Musk, they argued, made a “split second decision” after learning Saudi Arabia’s Public Investment Fund had taken a $2 billion stake in Tesla. Days earlier Musk had met with PIF to discuss taking Tesla private, and lawyers said the tweet was sent amid concerns details of the meeting could leak. The lawyer pointed out Musk was in a car on the way to the airport at the time, adding “in a rush he used the wrong words”. Of course this isn’t the first time Musk fondness for tweeting has landed him in trouble. It remains to be seen how costly these “wrong words” might prove.
Will FTX Have a Second Act?
Surprising news from US following the collapse of FTX and the legal action against its founder, Sam Bankman-Fried. FTX’s new boss – liquidator John Ray, previously hired to sort out Enron – is considering opening the international cryptocurrency exchange again. A task force is weighing up whether this would deliver more value for customers, investors and lenders who have lost an estimated $8bn after a run on funds led to FTX filing for bankruptcy. Liquidators say they’ve recovered around $8 billionn in assets, though this includes $3.5 billion in “liquid” cryptocurrencies (which fluctuate in price of couse). The question is, would cryptocurrency traders, many of whom are highly suspicious about banks and fiat currency, be happy to trade again on this troubled site if it’s taken over by a “mainstream” finance firm – particularly given the news that hackers have made away with more than $400 million in assets since it went under?
… while SBF’s Spreadsheets Mocked on Twitter
Sam Bankman-Fried might be charged with orchestrating one of America’s largest financial frauds, but this doesn’t mean he is keeping a dignified silence, now he is released on bail. The 30-year one-time billionaire, now living with his parents, has taken to Twitter (where else) to question figures published by FTX’s administrators, claiming FTX US (rather than the international platform) is solvent “and always has been”. Unfortunately, the Excel spreadsheet SBF drew up to back up his points has been widely mocked on social media for its rather amateur appearance. As one wag put it: “if my intern had given me this spreadsheet I’d fire him on the spot”, while another was even harsher, comparing SBF’s efforts to “something that belongs to a 5th grade lemonade stand”. More seriously, many commentators pointed out that SBF failed to address the issues of FTX’s missing funds – and questioned whether this latest outburst went against his own legal counsel.
