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THere are some unpleasant trends in the high street that are circulating at the moment, ranging from tie-dye to zebra to white jeans, but for traders, the most difficult to wear this season is the fashion of rent cuts.
On Friday, distressed department store chain Debenhams launched its long-awaited Voluntary Company Agreement (CVA). He joins a list of retailers who already include Mothercare, Carpetright and New Look, who are asking their owners to collect the keys to their underperforming stores and, if they wish, to reduce the rent of their owners. . they really want to keep.
Debenhams wants to abandon 50 of its 166 stores, thus freeing up a host of retail spaces – often owners of publicly traded shopping centers, such as Hammerson and Intu, who have their own mouths to feed. They are already struggling to keep up with inboxes full of letters of begging. An even larger number of confiscated shops threaten to aggravate an already gloomy picture: a recent health report on Britain's 500 highest streets showed 2,500 net closures in 2018, up 40% from 2017.
But are CVAs the solution to the problems of the retail sector? On the one hand, they are not all created equal, despite calls for the introduction of standard terms and conditions. At least Debenhams has had the decency to go bankrupt, but billionaire Sir Philip Green is working on one of them at Arcadia – the group that controls Topshop and Dorothy Perkins and has gone through a period of difficult. Let's not forget that in 2005, the Greens paid a dividend of 1.2 billion pounds sterling to Arcadia, which is still the record for the biggest payment of this type in the history of British companies. The owners could be forgiven for humming Cry Me a River in Green, but the stakes are even more numerous.
You may despise Green or do not care about the mbad of real estate that has benefited for years from an upwardly rent-only review, but it's worth considering the fate of a street worker who is attacked and where job losses have a disproportionate impact on women.
Retail trade represents 3.2 million jobs, in which women are over 500,000 men. Yet the jobs lost in the shops are not as romantic as the male jobs in shipyards and steel mills, although many retail business leaders seem ill-equipped to deal with the dramatic consequences of the Internet retail revolution.
Usdaw, the traders' union, has called for an industrial strategy for retail, but it is hard to imagine that we will have one from this government. So, until someone offers a better plan, CVAs seem to be the default strategy of large street chains.
Revo, the body that represents the £ 360 billion commercial real estate industry, describes them as "sticky plaster, not the cure." Ed Cooke, chief executive of Revo, said last week: "Many retailers blame all their problems on rent, but in reality high levels of debt, lack of investment and disability. to adapt quickly enough to changing consumer preferences often go far. bigger problems. "
This is not a bad idea of the difficult situation in Debenhams: the retailer still has a herculean task to prove its relevance to buyers, even without the luggage of a third of its chain of stores.
Owners have opposed several CVAs, but their backs are against the wall, as the number of retailers looking for new premises decreases. The only thing we can be sure of is that there will still be a lot to do on the street.
The difficult road of Daimler
Daimler's declining sales speak volumes about the current state of the global economy. The Stuttgart-based automaker, the parent company of Mercedes-Benz, has sold 7% fewer cars in the first quarter of 2019 than during the same period of 2018.
It's partly a story of China. Germany, along with Finland and Ireland, is one of three EU countries with a trade surplus with China and is particularly sensitive to the ups and downs of the world's second-largest economy. When China slows down, Germany slows down.
This has been the case for 12 months, during which time Beijing's attempts to make the economy less debt-dependent have led to slower growth and falling demand for luxury goods. Mercedes-Benz is a luxury car builder and sales have fallen by 3% over the last year.
The flip side, however, is that Germany has more to gain now than it seems that China – thanks to a new economic stimulus package – is coming out of its slump.
But it's not just good news. The short-term prospects for China are more promising, but its approach to economic management is beginning to resemble the stop-go policies that the United Kingdom favored in the 1960s. debts that China accumulates.
In addition, Beijing's stimulus packages are subject to the law of diminishing returns. As attractive as they are, but for the same momentum of growth, it is necessary to have more and more credit and investment in infrastructure projects.
Daimler, however, should be concerned that its sales in its other major markets – Europe and the US – have also declined compared to a year ago. This highlights a generalized and worrisome slowdown in the global economy rather than a simple problem specific to China.
The gaming giant in every bet
Large gaming companies have increased their ability to calculate the probability of future events. This is a technique that relies heavily on a detailed badysis, with a hint of runes reading.
Now that they have been deprived of £ 100 fixed-odds betting terminals (FOBTs), they are spying on regulation as they fly to their lucrative, high-growth online businesses.
GVC – owner of Ladbrokes Coral and many brands of online casinos and bingo – is not waiting to see how it all moves. Instead, he broke with the ranks of the industry last week, with a number of proposals to position themselves as the face of responsible gaming.
The Isle of Man-based company will end both its sponsorship of soccer jerseys and television advertising, with the exception of horse racing programs. It will also donate 1% of its revenue (10 times the 0.1% that companies contribute voluntarily) to research, education and treatment – and indicates that its rivals should do the same.
While welcome, these measures are not entirely altruistic. For starters, GVC sponsors the jerseys of only two football clubs, Sunderland and Charlton Athletic, third. Smaller rivals, such as 32 Red, rely on several larger contracts to increase brand visibility.
A general end to football sponsorship and TV commercials could be a net gain for GVC if it stifled the growth of rivals of its own brands, some of which already enjoyed domestic brand status. GVC has not offered to cancel Ladbrokes' Scottish Premiership sponsorship or other offers such as Bwin Darts.
Supporters of the game are likely to welcome any industry acceptance of the dangers of advertising, especially if the GVC decision announces a broader consensus. But other regulatory battles, such as a possible ban on credit card betting and the imposition of affordability controls, are equally important.
With the defeat of the FOBT in their minds, money game companies may offer sacrificial lambs now to escape new regulation later.
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