Wednesday 10/02/21

1. In BITCOIN & OIL NEWS, we look at Bitcoin’s immediate future and Total reports a big loss
2. In RETAIL NEWS, web grocery sales rise and Ocado prospers. Oxford Street holes get bigger and JD Sports has the Brexit blues
3. In CORONATRENDS NEWS, China’s birth rate falls, Salesforce opts for a reduced footprint and Mattel prospers
4. In INDIVIDUAL COMPANY NEWS, Twitter gets new users, Lyft cuts costs, Match Group goes shopping and Tui has summer hopes
5. AND FINALLY, I bring you a rather unusual breakfast combo…

So we take a look at Bitcoin’s near-term future and Total reports a loss…

Buckle up, we’re off to Mars…cryptocurrency investors on a high after Tesla’s Bitcoin punt (Daily Telegraph, James Titcomb) highlights the continued march of Bitcoin in the aftermath of Monday’s revelation about Tesla buying $1.5bn-worth as the massively-Bitcoin-exposed Tyler Winklevoss Tweeted “Buckle up, we’re passing the Moon and heading to Mars”. $1.5bn represents less than 10% of Tesla’s $19bn+ cash holdings, so it’s not too much of a shocker. Investor may put brakes on Musk’s future bitcoin sprees (The Times, Patrick Hosking, James Dean and James Hurley) suggests that one of Tesla’s biggest shareholders, the Edinburgh investment manager Baillie Gifford, was blindsided by the purchase and may be a tad uncomfortable with it (but will he really care??) but Elon Musk’s Bitcoin tweets could land him in deep water with regulators (Daily Telegraph, Hannah Boland) highlights potential scrutiny from the US Securities and Exchange Commission about the timing of the $1.5bn revelation and his Tweet of support for Bitcoin. * SO WHAT? * Did he buy it first and then ramp up interest on Twitter? I would have

thought that focus here would be on whether he should have said that he already owned it WHEN he started to apparently endorse it, given that he has the ability to move markets – but even this is debatable. Clearly he’s had this effect on Tesla (one of the problems there is that he is an “insider”) but although he doesn’t have the inside track on other stocks he seems to have the ability to move markets at the moment. This is a murky area and I suspect that there’s not much regulators can do about it. Maybe they’ll just ask him nicely not to say anything about companies he doesn’t own??

Total reports $7.2bn loss but keeps dividend (Financial Times, David Keohane and Anjli Raval) shows that French oil giant Total is just the latest of the oil majors to report big losses BUT it did actually beat Q4 expectations and said it will maintain its current dividend – the only European major to do so. The losses were due to coronavirus-related asset writedowns. * SO WHAT? * The oil companies themselves remain pretty downbeat on prospects for this year but, as I’ve said before, the prospect of vaccines leading economies out of lockdown and higher spending leading to more trade could well help to boost oil demand.

It’s onwards and upwards for online retailing but offline is on a downhill slope…

Web grocery sales hit record amid lockdown (The Times, Ali Mitib) cites the latest data from Nielsen which shows that online grocery sales in the four weeks to January 30th accounted for 16% of the entire market versus 8% last year, with Morrisons doing the best out of the “Big Four”. Ocado pours cash into its warehouses amid surge online (The Times, Alex Ralph) confirms this trend – interestingly, Ocado’s chief exec Tim Steiner made the point that once people have shopped online between three and five times, they tend to continue – but Ocado is using the money that it has made from the early success of its partnership with Marks & Spencer to invest in technology and warehouses. * SO WHAT? * It’s no surprise that we’re spending more on online groceries given the current situation but it will be interesting to see how sustainable this is on a longer term basis when restrictions are lifted. I think that there is a danger here that people are assuming that current behaviours will continue relatively unchanged, but I would argue that people will be more than keen to go to the shops when they are allowed to.

Meanwhile, As Debenhams exits, is Oxford Street running out of road as shopping mecca? (Daily Telegraph, Laura Onita) highlights concern about the famous shopping destination as Debenhams Oxford Street closes forever next Tuesday, John Lewis converts part of its flagship store into offices and the Topshop store is up for sale following the collapse of Arcadia. Even Microsoft is thinking about closing its recently-opened store on Regent Street to save money while at least 20% of Oxford Street will be “boarded up with no hope of recovery”, according to the lobby group New West End Company. On the other hand, Selfridges is predicting a recovery and has invested £300m on its shop but then Former Arcadia staff pursue compensation over redundancies (The Guardian, Sarah Butler) shows that hundreds of former Arcadia staff left jobless by the group’s collapse are seeking legal advice with two no-win no-fee law firms such as Aticus Law and Simpson Miller picking up affected clients. * SO WHAT? * It seems that we are still in a serious attrition phase of the coronavirus aftermath but it is difficult to tell what we are left with once the dust clears on the high street. Those who survive need to concentrate on providing a superior experience IMO, so maybe Selfridges is right to plough money in now.

Fresh from its US acquisitions, JD Sports boss warns of lost jobs and £10m Brexit hit (Daily Telegraph, Laura Onita) shows that its overseas optimism stands in stark contrast to what’s going on in its domestic market as exec chairman Peter Cowgill says that Brexit has turned out worse than he had expected. He indicated that a number of jobs would be transferred to Europe as he suggested that the company may open a big depot there to avoid further deliver disruption and higher costs.

China’s birthrate falls, Salesforce aims to make changes and Mattel sees a boom…

Number of registered newborns in China drops 15% in 2020 (Financial Times, Thomas Hale, Yuan Yang and Sun Yu) highlights something I was thinking about yesterday as I walked my dog to the vets (she’s OK, btw!) – what effect is the coronavirus going to have on birth rates? Official stats from the country’s Ministry of Public Security show that the birth rate has fallen – and it has been by a bigger margin than had been expected. You may recall that China relaxed its one-child policy in 2015 to address future demographic problems but the two-child policy it subsequently adopted didn’t do much to get the population busy making babies. * SO WHAT? * This is not great given that you need the population to keep ticking over with enough young people to generate enough economic activity to take care of the older generations. However, how much effect can one or two “lost” years have on the economy over the longer term? Are worries overdone?

Elsewhere, Most Salesforce employees to work remotely at least part time after pandemic (Wall Street Journal, Katherine Bindley) just reflects what’s probably going on at a lot of places right now – that companies are thinking

about reducing their real estate footprint to take into account changing working practices instigated by Covid. The company expects over 65% of its employees to come in between one and three days per week in future – an increase from 40% before the pandemic. Some will work 100% remotely. * SO WHAT? * This is just one of many firms considering such action. I suspect that this will be bad for businesses that serve city centre employees but good for businesses in the suburbs (where a lot of workers are heading now).

Covid toy boom is not a ‘one-off’, says Mattel (Financial Times, Matthew Rocco) raises a few interesting points: one is that a massive rise in demand for toys has led to the company’s biggest holiday sales for four years as shoppers fell over themselves to buy Barbies and Hot Wheels to entertain screen-overloaded kids. The US toy market has expanded by 16.7% over 2020 in terms of sales according to figures published by the Toy Association. This is a huge contrast to the 3.5% fall in 2019. Rival toy maker Hasbro has also reported strong sales in the final quarter of last year as well. * SO WHAT? * I think that this is fascinating since the toy makers have been fighting a losing battle with screen-based fun for kids for the last few years. I sincerely hope that this isn’t just a 2020 blip and that kids appreciate non-screen fun more as a break for all that on-screen learning they’ve been doing! No doubt those at Toys R Us wish that they could have survived long enough to see this turnaround…

Twitter grows, Lyft gets strict, Match makes an acquisition and Tui hopes for a good summer…

In a quick scoot around some of today’s other stories, Twitter adds users through Trump ban (Wall Street Journal, Sarah E. Needleman) shows that the company continued to add users, although it did warn that growth rates could slow this year. It usually keeps user growth details pretty close to its chest but said that it gained more daily users in January than the previous four Januaries. It reported strong-than-expected quarterly revenues and profits and its share price has increased by 62% over the past 12 months.

Lyft curbs losses during pandemic with aggressive cost cuts (Wall Street Journal, Preetika Rana) shows that the ride hailer is moving closer to profitability as it announced a lower-than-expected annual loss despite the coronavirus decimating its business. This was powered by deep cost cuts gained through furloughing workers, cutting salaries and other operational items. * SO WHAT? * Interestingly, the company’s share price has more than doubled since early November due to getting involved in vaccine distribution and the regulatory win last year where they won the right to class workers as contractors and not employees. 

Match Group buys South Korean social media company for $1.73billion (Wall Street Journal, Georgia Wells) highlights the online dating company’s purchase of Hyperconnect in cash and shares – and is the company’s largest ever acquisition. Hyperconnect has two video apps that enable people to interact one-on-one and with new communities – Azar (live video and audio chat and can translate content) and Hakuna Live (live-streaming that provides group video and audio broadcasts). * SO WHAT? * Dating apps have seen a boom in demand over lockdown and one rival, Bumble, is aiming for an IPO with a potential valuation of $6-8bn. The acquisition of Hyperconnect is all part of Match Group’s strategy to move beyond dating.

Then in Tui says it expects vaccine will restart summer travel (The Guardian, Julia Kollewe) we see that the world’s biggest travel operator reckons that we are all going to be booking foreign holidays this summer due to the proliferation of vaccinations and rapid tests. The company said it had received 2.8m bookings for summer holidays – which is over 50% of 2019 levels – and it is offering 80% of the holidays versus 2019, saying that over 50% of bookings were made by UK-based customers. Greece, Spain and Morocco are popular destinations but bookings for Turkey have been slower. Interestingly, prices were up 20% as more people are paying up and going for more luxurious packages. * SO WHAT? * Yes, there is clearly pent-up demand, but is this summer too soon? I still think that this year will be another bumper year for staycations and camping. 2022, on the other hand will surely be massive.

…in other news…

I thought I’d leave you today with the rather unusual breakfast combo in Weetabix suggests serving them with baked beans and people fully lost it (The Mirror, Luke Matthews). Pioneering or just downright disgusting?