Powerscourt

By Powerscourt on 29/03/2020

Powerscourt Coronavirus Briefing – 29 March 2020

ANALYSIS

Amidst a slew of sobering landmarks, projections and statistics as the virus continues to escalate in the US and Europe, a tentative but potentially symbolic piece of good news has emerged this weekend. Wuhan, where the pandemic first began, is beginning to partially reopen after more than two months of total lock-down.

Reports by Reuters suggest that people are being allowed to enter the city but not to leave it, and Chinese state media outlets published pictures of crowds of passengers arriving at Wuhan train station yesterday. The reopening comes as China’s National Health Commission reported only 54 new cases of infection in the last 24 hours, all of which are said to be “imported” as Chinese residents returned from abroad.

While experts are urging caution about the speed at which Wuhan should lift its restrictions due to concerns about a possible resurgence of the virus, those parts of the world that are currently in lock-down with seemingly no end in sight will surely take some comfort from the easing of the quarantine. More practically, the region will now be seen as one of a number of rough indicators – for better or for worse – as to how long a social, economic and industrial recovery in other parts of the world might take.

Closer to home, the UK government last night announced new insolvency measures that are designed to prevent businesses from collapse as a result of not being able to pay off their debts due to the coronavirus. The measures, which include the temporary suspension of the wrongful trading law, will allow companies to pay staff and suppliers even if there is a risk that the business could become insolvent.

The decision looks particularly timely for the UK’s ailing leisure industry, which is again in focus in the business pages of this morning’s papers. The Sunday Telegraph reports that The Restaurant Group, owner of Wagamama, Frankie & Benny’s and Garfunkel’s, is “scrambling to prop up its finances”, while the Mail on Sunday notes the ongoing fights for survival of Carluccio’s, Yo, and the Casual Dining Group.  For the staff and business partners of these and many other businesses, the news will not have come a moment too soon. 

 

WHAT ARE COMPANIES SAYING?

 

Consumer and Retail

Arcadia
Sir Philip Green’s fashion group has announced it will be halting payments to its pension scheme in an effort to save cash. The parent company to brands like Burton, Dorothy Perkins and Topshop, will defer a deficit of recovery contributions agreed with pension watchdogs last year. The company was previously due to pay £25m per year for the next three years.

Tesco
The UK supermarket giant has announced that online shoppers will have all their deliveries capped at 80 items from now on. In an email to customers it said that the aim was “to increase the number of customers we can safely deliver to.” This follows an earlier move by the company to limit all products to a maximum of three per customer, warning that they are “at full capacity for the next few weeks.”

Burberry
The UK fashion house has announced it will repurpose its famous trench coat factory in Yorkshire to make non-surgical gowns and masks for patients. In a statement, the company also said that it would use its global supply network to deliver 100,000 surgical masks to NHS workers. The brand has also committed to funding research for a single-dose vaccine, currently underway at the University of Oxford. 

Peacocks
The budget fashion chain owned by Philip Day has told suppliers that it was cancelling orders currently in productions and also said it will only accept already dispatched goods at half the agreed price. Alternatively, it has said it will pay when starks are sold. The company said that this was an “essential step” in controlling the impact of the virus on their business. It said that it had approached the suppliers as early as was possible.

AllPlants
A plant-based delivery start-up has said in an interview with its founders that it is hiring chefs for its commercial kitchen in Walthamstow due to increased demand as a result of coronavirus. Sales were three times higher last week than they had expected and it hired 24 chefs this month taking its total to 70. JP Petrides, the co-founder, said that that the company “couldn’t even for a week stop harvesting fields, processing ingredients, cooking, producing and delivering” if they wanted the business to survive.

Monsoon Accessorize
The fashion chain owned by Peter Simon has said in a statement that it has been “badly affected by the outbreak” and was “looking at options”, including a sale. The chain currently employs over 3,500 people in the retail sector.

 

Travel & Leisure 

Airbnb
The accommodation marketplace has announced that it wants to help “heroic” medical staff during the crisis caused by the virus. Homeowners who list their properties through Airbnb are able to opt in to a new programme and offer an entire home for free, with Airbnb waiving all the usual fees. This offer is being extended to all frontline NHS workers, with 1,500 places stay being offered in the UK on the company’s website. The company said that it was their “priority” to “do what we can to help.”

Flybe
The Telegraph has reported that the administrator of Flybe has opened talks with the government to nationalise the bankrupt airline, as they are increasingly looking to intervene in the Covid-19 impacted economy. This follows a letter last week to the Chancellor from 2,500 unemployed former staff who were asking him to take action to give them access to the coronavirus furloughed wage support.

Juventus
Italy’s richest football club has announced that its players will take a collective pay cut worth €90 million, as it seeks to cut costs in response to the coronavirus cut down. They are the latest big European side to agree a reduction in player salaries, following Barcelona, Borussia Dortmund and Bayern Munich.

 

Industrials

Ventilator Challenge UK
A consortium including Ford, Smiths, Rolls-Royce, Airbus, GKN, Thales, BAE Systems, McLaren, Meggitt and Renishaw has received an order for 10,000 ventilators from the government and says that it could produce more. The group is boosting production of two existing designs by FTSE100 engineer Smiths and medical devises company Penlon.

BYD Co

The Chinese electric-vehicle maker backed by Warren Buffett has announced that it will start offering a full suite of EV components to rivals and aspiring auto manufacturers to diversify its revenue sources amid failing car demand. In an online press conference, the founder Wang Chuanfu said that the company would start selling the parts it has been making for its own cars including batteries, powertrains and lights.

 

Financials & Real Estate 

Virgin Money
The challenger bank has said that it is reviewing plans announced previously to close some of its branches. As part of its integration with CYBG the bank had previously unveiled a plan in February to cut jobs, however it has now put the round on hold. Lloyds Bank also announced that as a result of the outbreak it would delay the 780 jobs it had been due to cut.

Crowdcube
The founder of the equity crowdfunding website has said that for start-ups “Sunak is leading lambs to the slaughterhouse.” Many fast-growing technology businesses are loss-making and so do not qualify for the coronavirus business interruption loan scheme. This is reportedly made worse by the fact that money coming in to EIS schemes, a crucial source of funding for start-ups, has collapsed in the last few weeks by more than half.

 

TMT

Gilead Sciences
The US biotechnology company has said it will expand access to its experimental ‘anti-coronavirus’ drug remdesivir to accelerate its emergency use for multiple severely ill patients. This means switching to “expanded access” from a “compassionate use” programme, under which the drug was given to more than 1,000 Covid-19 patients. Multiple clinical trials of the medication, originally developed for Ebola, may report initial results in the coming weeks.

Virgin Mobile (UAE)

The telecoms business confirmed in a press release that it had set up home working for all employees, including its customer care team. Describing themselves as “a fully digital mobile brand”, the UAE arm of the company has said that all staff are now able to work remotely, while still offering 24/7 customer care.

 

IN THE NEWS

Trump decides against coronavirus quarantine of states – Financial Times

How Russia is using authoritarian tech to curb coronavirus – CNN

 




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