This week’s news includes; Huawei takes hit from Trump ban, Jamie’s Italian collapses, Pret acquires EAT to open new Vegan stores, Facebook launches own cryptocurrency
Below are our top 10 stories that you need to know about. Be sure to check our twitter page, Facebook page and Instagram 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 – What Jamie’s collapse can teach chains
- Business Insider – Snap has surged more than 100% since hitting rock bottom months ago — even as user growth flatlines and TikTok’s threat looms
- City A.M – The future eminence of our legal sector rests on more than Brexit.
1. THERESA MAY RESIGNATION
Theresa May has announced in an emotional speech that she will step down as Conservative Leader on June 7 and as prime minister until her successor is in place. Any shred of authority she held has now well and truly gone, leaving her as prime minister in name only.
The First step is a leadership competition. Conservative MPs and party members will now choose their leader from range of candidates. There are currently over 15 candidates who have put their names forward and this number keeps increasing by the day. Former Foreign Secretary, Boris Johnson is currently front runner. Although he divides opinion amongst fellow MPs, he has incomparable support amongst Tory members. Prominent Tory MPs however, have said they would not serve in a Boris Johnson Cabinet.
Fundamentally however, the deadlock in Parliament over Brexit still remains. Any Brexit proposal by the new leader will face the same opposition as Theresa May’s plans. Furthermore, parliament will likely challenge the authority of any new leader to carry out their vision of Brexit. In practice, this means opposition will dig their heels in further until some alternative is reached. The possibility of a general election is now highly likely, and this will be pivotal in shaping Brexit or whether we leave at all.
Donald Trump’s Executive Order banning all US companies from buying telecoms equipment from blacklisted companies is starting to hit Huawei. This move largely targeted the Chinese tech giant, who has been at the forefront of US concern as trade tensions escalate. The Executive Order has seen Huawei immediately lose its US partners. Microsoft removed all Huawei laptops from its stores, Panasonic halted business with Huawei and chip makers such as Qualcomm are also cutting ties. Google revoked Huawei’s Android license but restored it on after a temporary license was issued, allowing Android operations to continue for existing users.
The loss of Google’s Android could prove particularly costly for Huawei. Huawei has grown exponentially, becoming the world’s second largest smart phone maker. Huawei will now however, be prohibited from including Google Services on its smartphones, meaning they will need a suitable back up plan. Google Services includes; Google Play Store, Maps, Gmail and Google Assistant. Google’s Android dominates the smartphone market boasting an 80% market share. Huawei claims it is not worried. It has already revealed that it is working on a backup plan which could be rolled out by early 2020. Whether this plan B can keep customers happy remains to be seen.
3. JAMIES ITALIAN COLLAPSE
Jamie Oliver’s restaurant chains have collapsed into administration putting 1,300 jobs at risk. Jamie’s Italian along with Berbecoa and Fifteen London have called in KPMG to carry out the administration. The business narrowly escaped collapse in 2017 and underwent a restructuring but this has failed to save the businesses . Now, the companies are no longer able to meet their debt obligations. KPMG will seek to find a new owner and a substantial number of restaurant closures will be inevitable.
This follows the fate of a number of high-profile restaurants such as Cau and Gaucho. The casual dining sector has become increasingly competitive and businesses are dropping like flies.
Check out our insight article exploring the challenges of the decline in the casual dining sector.
4. PRET VEGGIE DEAL
Pret A Manger is acquiring EAT, to boost its vegan and vegetarian offerings. In the UK, the number of vegans have quadrupled in the past four years, according to the Vegan society. Companies have been keen to cash in and make vegan foods more accessible.
Pret A Manger currently only has four Veggie Pret stores since their introduction in 2016. Following completion of the deal, Pret aims to convert up to 90 EAT stores into Veggie Prets. The deal will be reviewed by the Competition and Markets Authority. The acquisition price was not disclosed.
5. CARMAKER CRISIS
Jaguar Land Rover has posted a record £3.6 billion loss. This is largely due to a huge £3.1 billion accounting charge in the third quarter. JLR has also been suffering due to a continuing slump in demand in China. The firm posted a pre-tax loss of £358 million where one-off costs were removed. Despite, rising sales in the US and UK, China is JLR’s largest market and economic decline has hurt JLR. The company cut 4500 jobs and issued redundancy packages as part of this, contributing to the loss. JLR has asserted however, that it is on track to meet its cost efficiency savings.
Ford has announced that it will shed 10% of its global workforce, with over 7,000 jobs in jeopardy. This forms part of its huge cost cutting scheme to become more competitive. Its cutting diesel production and investing in electric and hybrid models. 500 UK jobs will be cut under this programme.
6. UBER ELECTRIC BIKE SHARING SCHEME
Uber’s new electric bike sharing scheme in London went live last week. 350 bikes are available in Islington and are unlocked through the Uber app. The scheme is only available in Islington but there are plans to roll the scheme out across London. The bikes will cost £1 to unlock, the first five minutes are free and then users are charged 12p per minute thereafter. Bikes have electric pedal assist and with a max speed of 15 mph. The scheme has already been successfully rolled out across mainland Europe, the US and Canada.
These new initiatives are going to be crucial to Uber’s success and survival. Uber’s share price tanked at its IPO earlier this month and it has been struggling to make up ground. Investors believe Uber is overvalued and aren’t convinced of Uber’s potential. This is largely due to its severe lack of profitability without scope for a turn around.
7. AVON ACQUIRED FOR £1.6 BILLION
Natura, the owner of Body Shop, is set to acquire Avon for £1.6 billion. The acquisition will create the fourth-largest cosmetics company in the world with combined revenue of over $10 billion. The company will be active in over 100 countries with 3200 stores.
Avon has been reshaping its business in recent years as customers fall out of love with its door-to-door sales model. Three years it shifted its HQ to the UK from New York and shed 25000 jobs. Avon currently has 2.2 million marketing consultants across the globe.
Natura is the largest cosmetics company in Brazil. The company also bought The Body Shop in 2017 for an estimated $1.1 billion.
8. MARKS & SPENCER STORE CLOSURES
Marks & Spencer has announced that it will close 20 more high street stores. The company saw sales decline by £170 million last year and is now seeking to reshape the business in order to stay competitive. Marks & Spencer has already shut 48 large high street shops and had earmarked a further 72 for closure. It no longer wants so many stores that offer both clothing and food as the costs of running such establishments is becoming unsustainable. All unprofitable stores will be shut in the near future. The bosses deem this drastic action as fundamental to the survival and growth of the company.
M&S recently bought a stake in Ocado’s retail business for £750 million. This will eventually allow it to provide grocery delivery services. M&S currently boasts over 1000 stores and was founded in 1884.
9. FACEBOOK TO LAUNCH CRYPTOCURRENCY
Facebook is set to launch its own cryptocurrency next year. The coin will be called Globalcoin and will form part of a payments system within Facebook. Facebook has set up fintech company and is developing blockchain technology, which will be the foundation of the new currency.
CEO Mark Zuckerberg has already met with Bank of England Governor, Mark Carney, to discuss potential risks of the move. Facebook will share more details over summer, but the coin could be available as soon as March 2020. Check out our insight article Blockchain: Explained
10. URBAN OUTFITTERS RENT-A-FIT
Urban Outfitters is launching a subscription service allowing customers to rent clothes. Under the service, customers can borrow up to six items for a month and then swap them thereafter. The service will be cover womenswear and will be called Nuuly. It will launch in the US in the next few months. The company has not indicated whether the service will be rolled out to the UK.
Urban Outfitters predicts a speedy uptake, with an estimated $50 million in sales and 50,000 subscribers in its first year.
This follows a similar model to companies like Rent the Runway where customers subscribe to rent designer clothes. The online clothing rental industry is set to hit $2.5 billion by 2023 according to GlobalData.