The week’s news included; UBS cuts 3000 jobs despite record $29bn Q2 profit, Burger King sued over misleading adverts of Whopper burger, HMV owner nearing Wilko rescue deal.
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:
- City A.M. – Why London tech unicorns are becoming much harder to spot.
- Sky News – The UK actually fared much better after COVID than first thought – here’s why it matters
- BBC News – Netflix: Streamer’s expansion into gaming is ‘natural extension’
- City A.M. – We still have a ‘class’ ceiling in City firms
1. UBS JOB CUTS
UBS is slashing 3000 jobs despite posting record Q2 profits of $29.3 billion. Switzerland’s largest investment bank, UBS, rescued Credit Suisse from collapse for $3.25 billion earlier this year. UBS’s bumper profits derived largely from this takeover as it got Credit Suisse assets at a cheap price. As UBS is fully integrating Credit Suisse into its business, these cuts are largely part of the restructuring process. 2000 jobs will be lost from the restructure and 1000 jobs will be redundancies resulting from the integration process. The integration is set to begin in 2024 with full completion expected in 2025. We explored Credit Suisse’s collapse in our previous top 10.
2. BURGER KING SUED OVER MISLEADING WHOPPER PICS
Burger King is facing a lawsuit in the US alleging that its Whopper burger is larger on menus than in reality. Claimants allege Burger King is misleading customers with Burger King menus showing burgers 35% larger than reality. The advertised burgers have meatier patties with more ingredients that “overflowed over the bun”. Burger King denied the claims and tried to block the legal action. They argued they are not required to provide burgers identical to pictures. Last week, a US judge allowed the case to proceed to trial. A jury will now decide whether the menu images are reasonably similar to the real burgers. McDonald’s and Wendy’s are facing similar lawsuits in the US.
3. BREXIT CHECKS DELAYED AGAIN
Post-Brexit checks on EU imports have been delayed for a fifth time over inflation concerns. New border controls were meant to have been implemented on products coming to the UK from the EU. Checks on UK exports going to the EU were in place in January 2021, immediately after we left the EU. This is not the case for EU exporters into the UK. EU exporters still have easy access to the UK market without any additional checks or red tape. The government has delayed the implementation until January 2024 to give businesses more time to prepare. There is also concern that the checks could affect food supply chains as businesses face longer import times or suppliers stop UK sales altogether. Amid the cost of living crisis, this could worsen inflation and put more pressure on households. Labour called the government’s implementation of the checks a “chaotic mess”.
4. WILKO RESCUE DEAL
Sunrise Records is on track to takeover Wilko but job cuts are now imminent. 12,500 jobs were thrown into jeopardy as Wilko fell into administration last month. Private equity firm M2 Capital’s bid was in talks to buy Wiko and pledged to retain all jobs for at least 2 years after the takeover. This bid fell through on Thursday, leaving Sunrise Rise records in pole position to buy Wilko. Sunrise is only looking to purchasing roughly 300 of Wilko’s 400 stores. The deal could save up to 9,000 jobs, if it goes through. Stores currently remain open as the final details of the deal are being hashed out. Sunrise Records also owns HMV in the UK and Toys R Us in Canada.
5. X STEPS IN RECRUITMENT & COMMS
Elon Musk is making even more changes to X, formerly known as Twitter. X will begin collecting biometric data and will add video and voice calls to the service. An update to its privacy policy shows that biometric data such as fingerprints or facial photographs, employment and educational data can all be collected by X. Further details on how the new voice and video call system on the platform have not been provided. The policy update comes into force from 29 September and is a statement of intent from Musk. Musk is set on turning X into an “everything-app”. Along with collecting employment and educational data, X had even purchased tech recruiting service, Laskie, earlier this year. X could soon compete with LinkedIn in the online recruitment and networking field. How successful this will be remains to be seen.
6. NATURA & CO SELLS AESOP FOR $2.58BN
The owner of Body Shop, Natura & Co, has finalised its sale of cosmetics company Aesop to L’Oreal for $2.58 billion. The deal was announced in April but has finally cleared all hurdles. The sale will see Natura integrate its own brand along with Avon in Latin America into the wider business. Aesop grew rapidly under Natura’s ownership, as its stores and counters rose from 52 in 2012 to 395 currently. Aesop will fit nicely with L’Oreal which holds the title of the world’s largest cosmetics and beauty company in the world. L’Oreal posted €5.7 billion in profit last year.
7. LAW FIRM PAYMENT LOCK UP TIMES HIT 4 MONTHS
Clients of law firms are taking increasingly longer to pay their bills. New figures from accountancy firm Lubbock Fine highlighted that the average time for funds to be released after completion is 124 days. These stats are for the top 100 UK firms. For the highest profile firms the average time for payment, also known as lockup period, is around 200 days. Many lawyers are hesitant to press too hard in the pursuit of outstanding payments to avoid damaging client relationships. Slow payments are anticipated by firms as listed law firm DWF, for example, has a target of 170 days for payments. The areas with the slowest payments litigation, probate and property. This is however, causing serious cash flow problems for firms. Law firms may have to restratigize if lock-up days become unsustainably lengthy.
8. ULEZ COMES INTO FORCE
London’s Ultra Low Emission Zone (Ulez) has come into effect, charging drivers with polluting cars £12.50 per day to enter it. Petrol vehicles registered before 2005 and diesel vehicles built before 2015 are generally considered non-compliant. Around 90% of vehicles on London’s roads are compliant according to RAC. Failure to pay the charge results in a £180 fine, reduced to £90 if paid within 14 days.
A £160 million scrappage scheme was introduced to help residents and businesses buy Ulez compliant vehicles. Sadiq Khan expressed frustration that the government did not provide any funding to help with the scheme, as help was provided to low-emission zones in other cities like Bristol and Birmingham. Ulez has, however, received staunch opposition. Over 450 cameras have been vandalised or removed altogether by vigilantes against Ulez.
9. OCTOPUS BUYS SHELL’S HOUSEHOLD BUSINESS
Octopus Energy is buying Shell’s household energy business for an undisclosed sum. Shell provides energy for 1.4 million homes and even broadband for 500,000 homes. Octopus has swelled to become the second largest domestic energy supplier in the UK after British Gas, serving 6.5 million homes once this acquisition completes. Subject to regulatory approval, the deal is expected to close by the end of 2023.
10. MARKS AND SPENCER RE-ENTERS FTSE 100
Marks and Spencer (M&S) has reentered the FTSE 100 for the first time in four years. The retailer was in a slump before the pandemic, struggling with declining footfall and huge overheads. Last week, however, M&S’s share price soared to a 19 month high, sending its market capitalisation to £4.3 billion. M&S shares have risen 80% in 2023 alone, a rare high street success story. There’s more good news to come for M&S as it expects to post increased profits later this year. The FTSE 100 is a stock index of the largest UK companies by market capitalisation. M&S will re-enter the FTSE 100 on 18 September.
