By Powerscourt on 14/06/2020
Powerscourt Coronavirus Briefing – 14 June 2020
Ikea, the world’s largest furniture retailer, has announced that it is in talks over returning money to all nine countries that provided it with government support through furlough schemes as it has suffered less than expected from the COVID-19 crisis. We expect others may follow suit.
This move comes as the Bank of England is expected to inject a further £150bn of stimulus in its latest attempt to stem the economic fall out from the pandemic. The Bank is expected to announce its latest efforts to support the economy on Thursday after the claimant count for May showed a further 350,000 jobs are at risk and with the UK government’s furlough scheme requiring firms to pay more employee costs as of August, so businesses are preparing to initiate redundancy proceedings.
In the US, New York’s daily deaths from Coronavirus dropped to 32, the lowest figure since the beginning of the pandemic and prompted the Governor, Andrew Cuomo, to claim that “we have tamed the beast”. However, as the most populous city in the US progresses towards fully reopening the economy, figures from other states remains gloomy with Florida reporting a record number of new cases for the third day in a row and California and Texas still recording thousands of new cases each day.
China has announced 57 new confirmed infections, its highest single-day tally in two months, leading to concerns that the Country at the origin of the infection has not fully secured and contained the pandemic. Beijing authorities are conducting mass testing following confirmation that 38 transmitted cases in the Country’s capital were directly linked to a major seafood, fresh fruit and vegetables market that services 90 percent of the city’s produce. It is the most cases the city has reported in one day since the coronavirus first emerged.
In the UK, non-essential shops as well as zoos, safari parks and drive-in cinemas prepare to open their doors tomorrow for the first time in three months. However, retailers are ratcheting up the pressure on ministers to half the current two-metre social distancing rule, in line with the less strict guidelines from the World Health Organisation as the outgoing CBI president, John Allan, believes the current measures will have “an enormous impact on the capacity of an awful lot of businesses” pushing some of them over the edge.
Alas, while retailers can open, we still have another three weeks to wait before pubs, bars and restaurants can open their doors, although the Government has hinted that a week tomorrow, pubs with sufficient outdoor space can allow drinks to be consumed on site. While some lockdown restrictions ease in the UK, so other precautionary measures are on the rise as tomorrow will see it compulsory in the UK to wear face coverings when travelling by public transport in England. Under the new rules, operators will be able to prevent passengers from travelling if they refuse to adhere to the rules and police will be able to issue £100 fines.
WHAT ARE COMPANIES SAYING?
Consumer & Retail
Booho, fast-fashion powerhouse is expected to report that sales grew by about 20% in the first quarter. Its annual meeting will be held on Friday. Influential advisory group ISS has recommended that Boohoo’s shareholders vote against its pay policy, citing a lack of explanation either for Lyttle’s payout or for salary increases handed to the other senior executives, which ranged from 18% to 30%
Michael Ward, managing director of Harrods noted that “Big shops are much better prepared — at Harrods we even have our own fire department, the biggest private security force and our own health and safety department…We started preparing even before we closed. Our crisis management team started meeting daily in February when we saw what happened in China.” Social distancing rules means the seven-floor store can take only 4,500 customers instead of the 70-80,000 who used to pass through on a busy day. “That means what we normally take four weeks to sell will probably now take four months,” Ward said
Ikea, the world’s largest furniture retailer is in talks with nine countries that offered government support to return money from furlough scheme as it suffered less than expected from the coronavirus pandemic. Tolga Oncu, retail operations manager at Ingka Group, the main Ikea retailer, said the company had decided to start a dialogue with Belgium, Croatia, the Czech Republic, Ireland, Portugal, Romania, Serbia, Spain and the US. “Now we know more than what we did in February and March, it’s just the right thing to go back and say, ‘hey guys thanks very much you helped us through this difficult period and so now can we see about paying this back or forward’,” he told the Financial Times
The owners of Italy’s AS Roma are searching for new buyers for the Serie A football club after a planned €750m sale collapsed due to the pandemic. The search comes after a deal clinched late last year with Texas-based billionaire Daniel Friedkin fell apart in recent months.
Industrials & Transport
French carmaker PSA said it was working on an alternative to bringing Polish workers to its factory in northern France, instead of hiring temporary workers locally, to help with the ramp up of production after weeks-long shutdown caused by the pandemic.
Financials & Real Estate
US private equity group with $207bn AuM has requested discounts of at least 15 per cent from financial and legal advisers it refers to as “long-term partners”. KKR is believed to be the first private equity firm to request discounts on work carried out by its professional advisers since the outbreak of the coronavirus, several people who received the request said.
Lloyds Bank has signalled that it could shrink its property portfolio after the lockdown. Matt Sinnott, people and property director at Lloyds, said in a memo that it was likely the bank would “need fewer buildings and different types of spaces” after the crisis because of “changes to the way we work”. “This is new for us, and we don’t have all the answers right now, but I hope it will give us an opportunity to reset and improve the way we work,” said Sinnott.
IN THE NEWS
Two-metre rule will push businesses over a cliff, warns CBI – The Telegraph
Coronavirus: jobless total to hit 4.5m as firms wield axe – The Times
MPs brand British Airways a ‘national disgrace’ over job cuts – Financial Times
Coronavirus: Boris Johnson launches review into 2m social distancing rule – BBC