Powerscourt

By Powerscourt on 16/06/2020

Powerscourt Coronavirus Briefing – 16 June 2020

ANALYSIS

Thankfully, the British are still a nation of shoppers. Yesterday pent-up demand for goods and distraction after months without led to huge UK queues outside the first retailers to open, from Primark to John Lewis. Top selling items at John Lewis in Kingston and Poole included bedding, televisions and printer cartridges for more comfortable and productive time at home and also face masks for venturing out.

After the burst of life yesterday, more sobering news as figures released this morning showed the number of people being paid fell by 600,000 in the three months to May. Imagine where we would be without the UK government furlough payments.

In further signs of opening up abroad, Australia is nearly doubling public transport capacity from 1 July and even poor US-China relations have allowed plans for the recommencement of four weekly flights each way.

The picture in terms of transmission still varies widely across the world but hard-won progress feels fragile. Some countries are marking positive milestones, like Thailand, which recorded no new infections for the third time in six days.

Meanwhile, the Novotel Ellerslie in an Auckland suburb is cordoned off by police today in a salutary reminder of the near-term risk of opening international travel. Two New Zealand women who had arrived from the UK nine days ago tested positive for coronavirus when they were taken ill after they left quarantine and drove for eight hours to Wellington. New Zealand, which had no new cases for 24 days, is searching for contacts of the pair.

The Chinese has turned against imported salmon after an outbreak of 100 new cases linked to a market in Beijing. The chairman of the market claimed that the outbreak had been traced to a chopping board used by a seller of imported salmon. Right across China, imported salmon is now off the menu and China has asked Norway, the biggest supplier of the $700m a year Chinese market, for more information.

Research continues, with a notable $2m donation from China’s TikTok to an Australian research institute and a new vaccine starting testing at Imperial College London today, but more immediately promising are measures governments and businesses can take to reassure individuals and incentivise safe behaviours. United Airlines for example has announced that it will blacklist passengers who won’t wear facemasks.

And finally, Royal Ascot, a glorious London horseracing meet patronised by people who mostly don’t care much from racing, starts today. Prize money is halved, jockeys and trainers will wear masks and instead of 70,000 spectators, the place will be empty. The good news is the bookmaker shops are open. If you want to have a bet, try Mogul in the 3:00.

 

WHAT ARE COMPANIES SAYING?

Consumer & Retail

Greggs 
The bakery chain has announced this morning a plan for the phased re-opening of its shops, following successful trials carried out across a small number of its sites in early May to test new social distancing measures and operational processes. In mid-June, a larger scale opening of selected shops with new procedures and equipment will take place, and in early July the chain expects to re-open the rest of the shop estate. The company also intends to re-open around 800 shops to takeaway customers later this week. 

Joules 
The British clothing company has released a pre-close trading update today, sharing that Group revenue has reduced by 12 per cent for the year, with store sales down by approximately 20 per cent. E-commerce sales increased by 5 per cent for the year however, and were 40 per cent higher from the start of lockdown to 31 May, compared to the same period last year. On 15 June, the clothing chain re-opened 12 stores, and expects to re-open its remaining sites on a phased basis over the coming weeks.

TUI 
The tour operator announced today that it expects to offer around 30 per cent of usual capacity in the fourth quarter of 2020, with many of the European markets including Germany, Belgium, the Netherlands and Switzerland resuming operations to some destinations from mid-June. The UK is expected to follow later in the summer. The Hanover-based company shared that average prices have risen by 14 per cent, in order to help business resume, and included that the summer programme is already 25 per cent booked. 


Industrials & Transport 

Ashtead Group 
The industrial equipment rental company released its results for the fourth quarter ended 30 April today, reporting a fall in profit of 52 per cent compared to the same period last year, and a fall in annual profit of 7 per cent. The Board has decided to maintain the company’s dividend, which will be paid in September. Chief Executive Brendan Horgan said: “The diversity of our products, services and end markets coupled with ongoing structural change opportunities put the Board in a position of confidence to look to the coming year as one of strong cash generation and strengthening our market position”.

International Airlines Group
CEO Willie Walsh has formally rejected the findings of the Commons’ transport select committee, following a report last week which labelled British Airways a “national disgrace” over its treatment of staff throughout lockdown. During this time it announced plans to cut up to 12,000 of its staff and consult on changes to the terms and conditions for many others. In a letter to committee chairman Huw Merriman, Walsh has explained that BA was “fighting for its survival, in the face of overwhelming and unprecedented challenges”. 

Financials & Real Estate 

Nationwide 
The building society has offered redundancy packages for around 200 employees, in an attempt to avoid compulsory job cuts. If there are not enough volunteers for the redundancy programme, it will begin making layoffs early next year, with a spokesperson explaining: “As a result of Covid-19, we are consulting on potential redundancies with a number of individuals”. 

 

TMT

Cineworld
The world’s second largest cinema chain has announced today that it will reopen cinemas across some territories in the last week of June, with all remaining theaters expected to open throughout July. Several new measures have been introduced to allow this to happen safely, with the booking system updated to ensure social distancing within auditoriums, and the movie schedule adapted to manage queues and avoid the build-up of crowds.

Telecom Plus 
The utility supplier announced its full year results today for the year ended 31 March 2020, sharing that revenue had increased by 8.9 per cent, and adjusted profit before tax by 8.0 per cent. The number of services it provided throughout the year increased by 6.4 per cent, and over 30 per cent of its customers now take energy, broadband and mobile services from the provider. The statement explained that this outcome demonstrates the resilience of its business model in the face of Covid-19 which brought its “consistently strong levels of customer gathering activity…to a near standstill as the country went into lockdown.”

4imprint
The marketing group released an update on the impact of Covid-19 on current trading today, sharing that the partial or full lifting of lockdown restrictions across the US has seen its weekly order counts increase to 50% of 2019 levels, from 20% in April. The company continues to acquire new customers, with the new-to-existing customer ratio remaining stable for the period. 

 

IN THE NEWS

Labour calls for full emergency summer Budget and stimulus – The Financial Times

Holiday bosses demand firm date for reopening – The Times

Benefit claims hit 2.8m as UK faces jobs nightmare – The Daily Telegraph




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