This weeks news includes; Amazon worth $500 billion, Jimmy Choo bought for £900 million, Sports Direct increases stake in French Connection, Barclays posts $1.2 billion loss.
Below are our top 10 stories that you need to know about. Be sure to check our twitter page and Facebook page for regular posts of important headlines. Click on the links for full stories. Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
- Business Insider explains why Bitcoin is rebounding.
- City A.M asks “Is the OPEC cartel’s output pledge sustainable in the long term?”
- The Independent claims that virgin Money looks gorgeous but can’t find love on the markets
1. UK SUPREME COURT RULES EMPLOYMENT TRIBUNAL FEES ARE UNLAWFUL
The Supreme Court has ruled that the government unlawfully imposed charges on those bringing claims to employment tribunals. In 2013, the government introduced fees for anyone bringing a claim to tribunal that ranged from just under £400 to £1200. It was hoped that this would close the floodgate of claims and help ensure only reasonable and legitimate claims came to the already overwhelmed tribunals. This objective was achieved as there was a 79% reduction in claims over the past three years that fees have been in place.
The trade union “Unison” however, brought a case against the government and successfully argued that these fees acted as a barrier to justice. The government will now be required to pay back £32 million in fees unlawfully collected from claimants.
For more on the case read the BBC’s report.
2. AMAZON WORTH HALF A TRILLION DOLLARS
Amazon’s market cap reached nearly $500 billion market cap last week, ahead of their financial figures. It is still some way behind the likes of Apple, the most valuable company in the world, with a market cap of roughly $800 billion. This made Amazon CEO Jeff Bezo’s the world’s richest man for a few hours until Amazon’s share price fell again and Bill Gates reclaimed his position.
When Amazon’s financial figures were released on Thursday however, they posted a sharp dip in profits, down 77% to £151 million. This huge decline has been attributed to Amazon’s rampant investment in technology and other services. It has invested billions in the UK recently and has announced plans to expand its London HQ, unfazed by the Brexit uncertainty. The company’s focus tends to be on expansion rather than profit margins as evidenced by these figures. These figures do not include their recent £10 billion acquisition of WholeFoods. Read the BBC’s analysis for more information.
3. PREMIER LEAGUE WINS ANTI-PIRACY COURT CASE
The High Court has awarded the Premier League a blocking order to help prevent the illegal streaming of football matches. UK internet service providers will now be required to block access to illegal streaming websites. Only Sky and BT hold the rights to broadcast live Premier League football matches and these rights cost them over £5 billion.
A similar order was granted at the end of last football season and led to the blocking of over 5000 IP addresses that provided illegal streams to matches.
To find out more about the case and the different ways people stream illegally read the BBC’s report.
4. MICHAEL KORS BUYS JIMMY CHOO FOR £900m
Designer fashion retailer Michael Kors has bought Jimmy Choo for £896. Michael Kors is most renowned for its handbags and it hopes that this deal will boost its presence in the higher end of the designer fashion market.
The designer fashion industry has been struggling in recent times. There is a constant battle between maintaining the exclusivity of the brand yet having a broad enough customer base. So while the sale of products in outlets and discount stores will increase the volume of customers, this decreases the exclusivity and luxurious reputation of the brand and turns off more affluent shoppers. Michael Kors has been no exception from this predicament, suffering a loss in share price of over 60% in the past 3 years.
For more on the deal read Bloomberg’s report.
5. AIR FRANCE BUYS MAJORITY STAKE IN VIRGIN ATLANTIC
Air France-KLM is buying a 31% stake in Richard Branson’s Virgin Atlantic. The deal is worth £220 million and will see Virgin Group’s holdings fall to just 20%. US operator Delta Airlines own the other 49% and has collaborated with Virgin Airlines for nearly five years.
Virgin, like many other UK centric airlines, has suffered since the Brexit vote as the sharp fall in the pound has deterred holiday makers from travelling as frequently and has warned it could potentially make a loss for 2017 as a result.
For more on the deal read the BBC’s report.
6. SPORTS DIRECT INCREASES STAKE IN FRENCH CONNECTION
Sports Direct has increased its stake in fashion retailer French Connection from 11$ to 27%. This puts the Sports Directs just under the 30% that would require them to launch a formal takeover bid putting pressure on the current majority stakeholder Steven Marks to consider the future ownership of the company.
Marks founded French Connection in 1972. He recently met with Sports Direct regarding this deal but has not commented on Sports Direct’s future plans nor given any indication that Sports Direct intends to hit the threshold to launch a takeover bid. French Connection posted a £5.3 million pre-tax loss last year.
This news came only two weeks after it bought a stake in struggling retailer GAME and a day after Mike Ashley won a £15 million court case against an investment banker. Despite being shrouded in controversy Mike Ashley’s plans for the growth of his portfolio remain unhindered.
7. GOVERNMENT REACHES £800m EU SETTLEMENT FOR RBS
The UK government has reached a £835 million settlement in principle on behalf of state-owned RBS with the European Commission.
After RBS’s bailout, the Commission required the bank to sell off Williams & Glyn to adhere to EU regulations and the deadline to complete the sale was the end of this year. RBS struggled to find a buyer for the bank in February so the government devised an alternative plan.
The plan will see £835 million investment packaged designed to improve competition in the banking sector primarily through investing in challenger bankers.
For more on this settlement, read City A.M’s analysis.
8. ALPHABET PROFITS SUFFER FROM EU FINE
Alphabet, the parent company of Google, has announced a 28% decline in profits for the three months to the end of June. The primary cause of this fall was the £2.1 billion fine levied on Google by the European Commission relating to the uncompetitive advertising system on its search engines. Despite this decline, they still made profits of £3.7 billion in this period and revenues were up by 21%.
For more on the issue read Sky News’ analysis.
9. BARCLAYS SUFFERS £1.2 BILLION LOSS IN 2017
Barclays posted a £1.2 billion loss for the first 6 months of 2017. This news came as no surprise due to the massive £2.5 billion loss it took on the sale of its African unit in January. Barclays sought to shift refocus their business on UK and US markets and this sale was necessary to achieve this. Excluding the losses incurred from the sale, Barclays’ profits actually rose by 13%.
Barclays has also announced that it will be setting aside an additional £700 million to settle any remaining PPI claims. The FCA has placed a deadline of 29th of August 2019 for people to bring forward their claims so there is likely to be flurry of claims as this deadlines draws closer.
For more on Barclays’ finances read the Independent’s report.
10. UK ECONOMIC GROWTH
The UK’s economy grew by 0.3.% in the three months June according to the ONS. There has been a slowdown in economic growth as for the same period last year gross domestic product (GDP) rose by 0.7%. Economic growth was boosted slightly by a stronger performance of the service sector but brought down by a decline in the manufacturing sector. Read the BBC’s report for more information.
This news came after the IMF downgraded its forecast for UK economic growth for the year to 1.7%. This has been revised down from the 2% that they predicted earlier this year. The global economy is predicted to grow at 3.5% in 2017, boosted by the EU, China and Japan. Sky News looks at more of the IMF’s predictions.
