1. NEXT TO ACQUIRE 25% STAKE IN REISS
Next is set to acquire a 25% stake in global fashion brand and retail company Next worth £33 million. Next will also loan Reiss £10 million as part of the deal.
Next has insisted that their infrastructure will enable Next to act as a “launch pad for Reiss’s growth plans, both in the UK and overseas” and will not remove Reiss’s creative independence. But, from 2022, Reiss will outsource its online operations to Next, such as their warehouse and distribution services.
The deal, which expires next July, gives Next an option to buy an additional 26% stake, which would take its total holding to 51%.
THOUGHTS AND IMPLICATIONS
Next has already expanded its beauty business by taking on five former Debenhams sites to open beauty halls, and has taken a majority 51% stake in a joint venture operating Victoria’s Secret lingerie stores in the UK, which saved 500 jobs. As part of the deal, Next will get a control of its digital business.
Next had also been involved in a bid to take over Topshop, part of Sir Philip Green’s collapsed Arcadia empire, but pulled out earlier this year. Nevertheless, Next has been a resilient performer thanks to its big online business and is only planning on growing.
2. UBER & LYFT TO SHARE BANNED DRIVER DATA
Serious safety incidents and concerns have encouraged ride hailing firms Uber and Lyft to share data on drivers who have been banned on their platforms in the US. It is hoped that this will improve passenger safety.
Both Uber and Lyft have faced scrutiny and legal action over their handling of sexual assault and other safety issues. The new programme will mean that details of the drivers who have been banned for serious offences will be shared between the two firms so drivers will “no longer be able to hide or escape accountability by simply switching ridesharing platforms”, according to Scott Berkowitz, president and founder of the Rape, Abuse & Incest National Network. Berkowitz also states that the companies are “putting aside competition” and placing users first.
THOUGHTS AND IMPLICATIONS
Concerns over the safety of the apps caused Uber to have its London License suspended in the UK. However, Westminster Magistrates’ Court ruled the firm could continue operating in September last year as it had improved its record despite ‘historical failings’.
In 2019, Uber said it had received nearly 6,000 reports of sexual assault in the US in the previous two years out of the 2.3 billion rides. Numerous other incidents however inevitably occurred and went unreported. But, it is hoped that this new programme will encourage other firms to join this programme to reduce the number of reports and make the industry a safer place.
Whilst the programme offered by the firms perhaps gives passengers better protection, it will only be focusing on ‘serious’ assaults that have been reported and subsequently caused a driver to be banned. Kristen Barton, a representative of women who have sued the ridesharing companies for inadequate protections from sexual violence believes that this will not “capture enough information to stop assaults from occurring”.
However, although more needs to be done to ensure the greatest protection of passengers, this is definitely a step in the right direction.
AP Photo/Steven Senne
3. ROLLS-ROYCE POSTS £4BN LOSS
Rolls-Royce, a premier engineering firm, has posted a £4 billion loss for 2020 – its biggest loss on record. This comes after the collapse in air travel – where Rolls-Royce makes half its revenue – hammered its engine business.
The loss was worse than analysts had expected as turnover tumbled by 29% to £11.8bn. The £4 billion loss compares with a £583 million profit in 2019.
In an effort to survive the crisis and keep the company going, the firm cut 9,000 jobs from its 52,000-strong workforce as part of a restructuring plan last may. It also sold off parts of the business worth £2bn. Nonetheless, the firm has raised over £7bn and has access to £9bn, which is enough cash to keep it operating,
Despite the vaccine rollout giving Rolls-Royce and many other companies hope, Rolls still foresees another £2bn in spending throughout the rest of the year to keep it afloat.
4. M&S TO SELL RIVAL BRANDS
British retailer Marks & Spencer is to sell clothes by other brands online as part of a ‘transformation programme’. The retailer will now sell clothes from 11 rival brands, including Jack & Jones, Phase Eight and Hobbs – some of its biggest competitors. This is in a hope to draw more customers to the site and effectively grow its online presence.
Last year M&S saw its own online sales rise by 34%, but it also saw its first loss in 94 years as a publicly-listed company as Covid hit shop sales. The brand also cut 7,000 jobs across stores and management.
THOUGHTS AND IMPLICATIONS
Next, another British retailer, has been selling rival brands online for some time now. This highlights that traditional retailers are recognising the need to adapt to survive. M&S have been reluctant to make the move online, being one of only a few retailers who do not have their own food delivery system. Only within the last year have M&S partnered up with Ocado to make the online home deliveries, who were previously partnered with Waitrose.
It is evident that online retail is booming, especially as the British high street has remained closed for the majority of this last year. Online retailer ASOS have recently bought Topshop, and Boohoo have recently bought Debenhams, Oasis, Warehouse, Karen Millen and more. Adapting to the online way of selling is how many companies will survive the pandemic, especially if we are to face further lockdowns in the future.
A bigger move online could see more high street stores closing their doors.
Photo: Marks & Spencer
5. THE RESTAURANT GROUP PLANS TO RAISE MILLIONS
The Restaurant Group, owner of Wagamama, plans to raise £175 million from its shareholders as part of a restructuring plan to settle its debt and offer the chain protection.
Chief executive Andy Hornby said that TRG has “responded decisively” to restructure the businesses while preserving the “maximum number of long-term roles for our colleagues”.
“Whilst the sector outlook remains uncertain, and we are mindful of continuing restrictions across the UK, we are confident that the actions announced today will allow us to emerge as one of the long-term winners.”
Following pandemic pressures, many of the group’s restaurant sites had to close. In 2020, total sales fell by 57% to £459.8mn. The group also reported a £127.6mn pre-tax loss, compared to a £37.3mn in 2019.
THOUGHTS AND IMPLICATIONS
Restaurants and other hospitality venues are not able to open its doors until at least 17th May, but can open outdoor seating from 12th April. But, many of The Restaurant Group’s sites do not offer outdoor seating. Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said that this could mean TRG are “unlikely to fully benefit from the phased opening of the hospitality industry”.
It seems that businesses who offered a renowned delivery service before the pandemic hit have benefited out of lockdown, such as the delivery giant Domino’s Pizza. Domino’s saw a huge increase in online sales during the pandemic’s lockdown and has plans to expand its business in a bid to improve hostile relationships with franchisees. Companies like Domino’s do not offer seating in their venues so will not be affected by the governments reopening plans, and they even plan to open 200 new stores and a widespread drive-thru service.
Just Eat Takeaway reported a sharp increase in sales to £2bn in 2020, up 54% from the previous year. They have said that orders were 88% higher in the first two months of 2021, with delivery orders up by more than 600% compared with a year earlier.
Photo: The Restaurant Group plc
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