Your Weekly Commercial Awareness Update – w/c 5th November 2018

Your Weekly Commercial Awareness Update – w/c 5th November 2018

Here are this week’s headlines, brought to you by our Student Commercial Awareness Team:

House of Fraser Crisis has Domino Effect on Mulberry

Reported by Zara Smith

Mulberry’s ties to House of Fraser has cost it millions. Mulberry had 21 concessions within the department store chain and stated it had taken £2.1m to cover the costs of the exposure.

House of Fraser owes £2.4m to Mulberry; it even issued a profit warning in August after the department store went into administration. Despite the store being saved by Mike Ashley’s Sports Direct, the new owner has not honoured the previous management team’s trading ties with Mulberry.

Despite the ties being broken with House of Fraser, a concession deal has been struck between Mulberry and John Lewis – which is said to having a promising effect on the future sales. New store openings on Regent Street and in Heathrow airport have given the company more opportunity on yielding a higher profit, considering they no longer have a concession deal with House of Fraser.

Mulberry has encountered difficulties due to Brexit and the surrounding issues it is causing in the economy – despite it still being in a profitable position in the UK. Fewer tourists visiting the UK, has also affected their consumer market and the struggles it’s facing.

“We are proud to be the largest manufacturer of luxury leather goods in the UK and remain committed to supporting ‘Made in England’ through our two Somerset factories. We are confident that our focus on international growth is the correct strategy to develop Mulberry,” stated the Chief executive, Thierry Andretta.

International growth has begun, as Mulberry confirmed in its half-year results that it had taken a £2.5m charge on the launch of operations in South Korea. The idea is to create subsidiary companies in Korea and Japan to increse their consumer market.

See here for more.

Argos Acquisition Boosts Sainsbury’s Half-Year Results

Reported by Rui Ci Lee 

Sainsbury’s half-year results have been released and the acquisition of Argos has counter-balanced the company’s sales performance in this tough retail environment.

Sainsbury’s recorded £132m of pre-tax profits in the 28 weeks leading to 22 September 2018, which is almost half of the pre-tax profits earned in the previous year at the same time – £220m. The performance of the UK’s second-largest supermarket has been hit by various factors, including the restructuring of the store management teams, the integration of Argos into the company, preparation for the Sainsbury’s-Asda merger, and the impact of Brexit on the supply of goods from the EU.

The company’s like-for-like sales increased by just 0.6% while its overall retail sales increased by 1.2%. Like-for-like sales is a method of financial analysis that attempts to exclude any effects of expansion, acquisition, or any event that artificially enlarges a company’s sales. The reason for the contrast between the two figures is because of the opening of new Argos outlets in Sainsbury’s stores. Laith Khalaf, a senior analyst at Hargreaves Lansdown, explained that the acquisition of Argos has been a good move because customers will be able to buy gifts while doing their weekly grocery shopping, which would be even more beneficial during festive seasons such as Christmas.

While Sainsbury’s proposed merger with Asda is currently being decided by the Competition and Markets Authority and the outcome remains uncertain, chief executive Mike Coupe has expressed his confidence in the company with or without the Asda deal. This can be seen in light of the contribution of Argos towards the company overall.

For more information, see the BBC and Independent.

Google and Sexual Harassment

Reported by Sarah Mullane

Following a very public week of protests and walkouts, CEO of Google, Sundra Pichai, has pledged that the company will overhaul all policies relating to sexual harassment in the workplace.

Over the last week, Google employees managed to orchestrate a walkout of more than 20,000 workers from corporate offices across fifty cities. The global protests were aimed at highlighting current issues surrounding sexual harassment within Google, specifically following on from the New York Times investigation which revealed a $90m pay-out to a top Google executive, even after the company had found sexual allegations against him to be credible.

Sundra Pichai emailed staff yesterday to inform them that Google would end its current use of forced arbitration in cases of sexual misconduct, and will look to revamp investigations, share claim ad outcome data, and provide support systems for those who come forward with claims of sexual misconduct. Although these actions somewhat represent a victory for protestors, critics still say more must be done to address pay disparities and improve the rights of temporary employees.

Backers of the news hope that future Google practices will prove a stark change to the usual behaviours of the Silicon Valley giant which, only this year, had pursued private arbitration in a case where a female software engineer claimed to have endured daily harassment within the company, including lewd comments and even physical violence.

In his email, Pichai acknowledged that Google’s leaders had “not always gotten everything right in the past” and promised to implement more transparency and support in the future for all employees. Going forward, he has pledged to “double down on [..] commitment to be a representative, equitable and respectful workplace.”

Read more at The Guardian and The Telegraph.

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