This week’s news includes; Huawei CFO may be extradited, LK Bennett falls into administration, Diesel jeans bankruptcy, vegan sausage rolls give Greggs a sales boost.
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. Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
- BBC News Huawei: The world’s most controversial company?
- The Independent The UK’s cash system is “on the verge of collapse, report finds
- Legal Cheek UCL law professor: Lawyers who draft dodgy non-disclosure clauses could be perverting the course of justice.
1. NO DEAL BREXIT WARNINGS
As Brexit D-Day draws nearer, business leaders have amped up their warnings about the detrimental effects of a no-deal. BMW claimed that it could consider moving production of its Mini out of the UK in the event of a no-deal Brexit. Toyota also expressed concerns that a no-deal could create “hurdles” which may damage Toyota’s competitiveness. Japan’s ambassador to the UK has warned that without a deal, more Japanese firms could leave. On a positive note however, he assured that a UK-Japan trade deal would not take long to arrange.
Car manufacturers are severely concerned about a no-deal due to the uncertainty it creates about the movement of goods. Without a deal the regulatory framework that allows free movement of goods may not be in place, leading to a halt in production. Car manufacturers operate on a “just-in-time” basis, meaning any disruption to flow of goods could have a significant adverse impact on production.
Theresa May looks set to lose the meaningful vote due to take place on Tuesday. If the deal is rejected, Parliament will vote on whether to delay Brexit or opt for a no-deal. There is certainly no majority in Parliament for a no-deal so a delay appears to be most likely. What will ensue in this delay remains to be seen. (BBC News)
Canada has given its courts permission to extradite Huawei’s CFO Meng Wanzhou to the US. The court will have the final decision, but this has sparked outrage from China. Meng was arrested in Canada last December upon the request of the US government. The US allege that Huawei and Meng violated US sanctions on Iran, committing numerous offences such as bank fraud and obstruction of justice in the process. Meng and Huawei deny all wrongdoing. The Canadian government allowed Meng’s extradition case to proceed in courts due to the US-Canada extradition treaty.
This forms just another obstacle to repairing the relationship between China & the US. Huawei is deemed the crown jewel of Chinese tech and the Chinese government has been vocal in its criticism at the treatment of Huawei and Meng. The US has banned all federal agencies from using Huawei products due to security concerns. Huawei is now considering legal action against the US government over this ban. (City A.M)
3. LK BENNETT FALLS INTO ADMINISTRATION
Designer fashion store LK Bennett has fallen into administration. LK Bennett is another victim of the high street environment. A cocktail of challenges has left the retailer in dire straits. The company posted an operating loss of £6 million in its last results. The firm has announced it has brought in EY as administrators. Five shops have already closed during the administration shops will remain open but online sales will be suspended as a buyer is sought. The brand has 39 shops in the UK and employs over 500 people.
4. HSBC PENSION ROW
HSBC is engaged in pension row and it will face a shareholder vote over controversial “clawback” systems. Clawbacks, also known as “state deduction” apply when members reach retire age and receive both state pension and the occupational pensions. It applied to over 50,000 members of the 1974 Midland Bank defined benefit pension scheme. HSBC bought out Midland Bank in the early 1990’s. Clawback was introduced to allow workers to pay less into their occupational pension schemes. There is now action to stop the practice of clawing back of affected member funds. If the action is successful, it would cost HSBC £450 million on future pension payments alone. It is likely to run into billions if HSBC had to reimburse clawbacks retrospectively. (BBC News)
5. DIESEL FILES FOR BANKRUPTCY PROTECTION
Jean maker Diesel USA has filed for Chapter 11 bankruptcy protection. Diesel USA has posted consecutive losses for the past six years, with sales falling by 53% over the period. The firm has also been severely affected by cyber-attacks which have cost $1.2 million. The bankruptcy filing is only applied to the USA and the Italian parent company Diesel SpA is unaffected. About 28 stores are expected to close at locations with substantial rents. The firm will shift its focus to more profitable stores.
6. USA-EU TRAVEL
From 2021 Americans will need to preregister in order to travel to the EU. US citizens will now need to apply for a European Travel Information and Authorization System (ETIAS) permit. This permit is similar to the Electronic System for Travel Authorization (ESTA). US citizens are currently exempt from preregistration before travel.
These permits require less background checks that VISAs but payment beforehand. The EU has stated it will not require US citizens to have visas as long as the US reciprocates. The permits will not be required for US citizens traveling to the UK (regardless of Brexit).
7. GIRAFFE JOB CUTS
The owner of restaurants Giraffe and Ed’s Easy diner has announced that the chains will cut hundreds of jobs. The Boparan Restaurant Group has entered a Company Voluntary Agreement (CVA) to try and turn its business around. The group posted a £1.6 million loss last year. Under the agreement, over 27 of 87 restaurants owned by the Group will be closed with rent reductions being sought on 13 other sites. The deal would put roughly 300 jobs at risk. Creditors will vote on the proposed CVA later this month and it requires 75% approval to go through.
Check out our insight article exploring the decline in the casual dining sector
8. CMA VIAGOGO LEGAL ACTION
The CMA is taking further legal action against Viagogo who is allegedly still not complying with the law. The competition watchdog took action when it found numerous breaches by Viagogo. For example, Viagogo customers are not informed whether they could be refused entry at the door where venues operate limits on resold tickets.
The ticket resale platform was ordered to implement a number of reforms. It was required to make tickets information and publish the information of sellers who tout over 100 tickets a year. Some improvements were made but despite requests from the regulator has failed to do fully adhere. The CMA will now push for a motion to hold Viagogo in contempt. If Viagogo is found in contempt it could face more fines and senior officials could face prison.
9. AMAZON SUPERMARKETS
Amazon has announced plans to open several supermarkets in the US. The tech giant has made serious in roads into the supermarket sector. In 2017, it acquired Wholefoods for $13.7 billion. Last year, it launched a checkout-free supermarket, Amazon Go. Shoppers scan an Amazon Go smartphone app and enter through gates and the items they take off shelves are picked up by cameras and sensors. Shoppers are then charged after leaving the stores using a stored credit card.
It now hopes to open stores in cities such as Chicago, San Francisco and Philadelphia. They are also exploring acquiring regional chains.
10. GREGGS PROFITS
Greggs vegan sausage rolls have led to big boost in sales. Sales at the bakery rose to 9.6% in the 9 weeks to February, helping annual sales break through £1 billion for the first time. Pre-tax profit also rose last year 15% to £82.6m. Protests took place outside Greggs upon the release of its new vegan sausage roll.
Greggs is one of the many companies opting for a light-hearted approach to its social media and it has paid off. Upon the release of the sausage rolls Piers Morgan waded in the debate with staunch criticism. Greggs replied saying Oh hello Piers, we’ve been expecting you,”. Greggs now has 165,000 Twitter followers and many people vowed to try their sausage rolls after seeing this online encounter. With numerous protests at its stores and across social media, it’s clear that any publicity is good publicity.