Upheaval at fashion icon
Among the great British value-creating corporate breakups of recent decades was that of great Universal Stores. out of the embers of the empire built by the late Sir Isaac Wolfson were born three enterprises: Burberry, credit data giant Experian and Argos, now part of Sainsbury’s. Burberry has had a great run as an independent entity capturing the Zeitgeist in the US, Japan and China as a quintessentially British upscale fashion group defined by its trench coats and signature check.
The value at Burberry is in its traditional virtues. The most successful chief executives and designers, such as Angela Ahrendts, sought to build new products around the core offering rather than drift into the world of ultraluxury of LVMH, Hermes et al. Jonathan Akeroyd, who has been ousted as chief executive, clearly thought the way to compete was to move into high fashion and charge Sloane Street prices for products that no one wants.
His summary dismissal comes as annual profits are set to fall below expectations, the dividend is to be suspended and redundancies are announced. Replacing Akeroyd will be Joshua Schulman. Encouragingly he is a former chief executive of Coach and Jimmy Choo, both firms with distinctive brands which do not directly compete with those at the very top.
normal rules of corporate upheavals are that boards do not part company with chairman (gerry murphy) and chief executive at the same time. meanwhile Bradford-born designer Daniel Lee survives. But it remains to be seen for how long.
Slowdown in China, a key market for Burberry, has not helped. Recapturing that space, at a time when geo-politics is changing the relationship between Beijing and the West, is going to be an uphill task. nevertheless, Burberry still has enormous cachet as is evident from sales in Japan, which values heritage and authenticity.
The shock of the loss of dividends and poor outlook sent Burberry stock down 16.1pc and it has fallen by nearly half since the start of the year. Investors may comfort themselves with the idea that fashion is volatile and that with the right direction Burberry is a valued enough franchise to return to health. It would be bad for Burberry and UK manufacturing if murphy decided selling out to a luxury conglomerate or private equity was the way to go.
Simpler saving
AS WONDERFUL as Labour plans for new super quangos, such as GB Energy and the national Wealth Fund, may prove, they are not of themselves going to arrest the departure of private assets from these shores into global investment. If Rachel Reeves wants to end the erosion of savings in UK equities, the Chancellor could do worse than listen to the message from AJ Bell, under-siege Hargreaves Lansdown and other investment platforms.
They want to make it simpler for private investors to access UK equities. That, in AJ Bell’s view, means abolishing the distinction between cash and equity individual savings accounts (Isas) and creating one simpler, more flexible scheme. Data from HMRC shows three million people have more than £20,000 of cash sitting in Isas which could be redirected into equities.
Rather than creating a new British Isa, as proposed by former chancellor Jeremy Hunt, AJ Bell says it would be better to have one Isa (open to everyone including young people) and to set the annual limit at £25,000 as against the current £20,000.
That may appeal to brokers and platforms, which also want to see stamp duty on share transactions abolished. That is a big ask for the Chancellor. If her request for a worst case scrutiny of the public finances comes up with a big black hole, which is probably the objective, the possibility of enhanced tax relief, rather than less, will smartly vanish over the horizon.
new levies, rather than tax breaks on wealth, look more likely.
Cyber attacks
WAR may still be raging in gaza, but Israel’s status as start-up nation survives.
google owner Alphabet is in advanced talks to buy Israel-US cybersecurity pioneer Wiz for £17.7bn. That suggests the £4bn bid by Thoma Bravo for Cambridge cyber innovator Darktrace is a steal.