Tracing ones family – or genealogy as it is known – is hardly a new idea. After all, who as a child has not asked their granddad what he did when he was growing up? But since the turn of the century interest has ballooned in the UK. There are many reasons, some linked to our changing society and others driven by technology.
The increase in migration in and out of the UK has fuelled interest in tracing ones roots, especially for second-generation immigrants. Britain’s empire history has left links with most English-speaking countries.
Meanwhile people who served on the battlefield or the home front in the Second World War are reaching the end of their lives. At the same time the oldest of the “baby boom” generation reaches retirement age in 2012, giving them more free time to research their forebears. Lastly the dawn of a new millennium and the terrible events of 9/11 have created the feeling of the end of an old era.
But it was the Internet that took genealogy out of the domain of the professional researcher and into people’s front rooms. Vast swaths of information became accessible at the touch of a button, culminating in the Government’s decision to put the 1901 Census online. The level of interest was so great the site crashed on its first day as it was besieged by thousands of amateur family historians.
The Internet enabled amateurs to swap information and tips across continents in a similar way that “open source” exchange of information was key to the growth of the Internet itself. Television has also got into the game with shows such as the BBC’s Who Do You Think You Are? (WDYTYA?) that took household names such as Moira Stuart and Natasha Kaplinsky on journeys into their family past with unexpected and sometimes deeply moving destinations – and in Kaplinsky’s case 6.5 million viewers.
The private sector has not been slow to tap into the new market. The UK has several websites offering assistance to people tracing their family history. Some, such as Genes Reunited, an offshoot of Friends Reunited, have adapted the “open source” principle by enabling members to collaborate by sharing family trees that might contain cross-overs with each other. Access is free but users subscribe to send messages to members. The site enables people to search for relatives in all other trees, enabling them to spot areas where other trees overlap with their own.
Another key element is the ability to access key sources of information such as records of births, marriages and deaths, passenger lists, the BT phone books, and wartime and parish records. Ancestry.co.uk, part of US group ancestry.com, has around 200,000 members, many of whom pay annual membership of almost £80. One predominantly free resource is FamilySearch.org, a non-profit service sponsored by The Church of Jesus Christ of Latter-day Saints that has the world’s largest collection of microfilmed records.
A separate growth industry is the software that enables users to build a family tree by attaching photos, documents and new facts and records found on the web. Examples include Family Tree Maker and Genealogy Pro. Meanwhile the Society of Genealogists next year hosts its second ticket-only three-day conference based on the WDYTYA? programme.
The business model for genealogy may initially seem akin to information providers, such as financial information databases, - online information and an e-commerce portal. However there is a key difference.
Searching family history has a strong community aspect, as shown by Genes Reunited’s facility to swap details. In other words successful genealogy businesses give the users a sort of “virtual family”.
Investors are increasingly aware of the potential for these companies, given that a million and a half people are engaged in tracing their ancestors.
More importantly, the results of genealogical research may be useful for organisations involved in the fields of human genetics, genomics, bio-ethics, and bioinformatics. Venture capital firms and other investors are showing increasing interest. Earlier this year Google and US venture capital firms New Enterprise Associates and Mohr Davidow Ventures invested in 23andme, a start-up venture that will allow customers to gain deeper insights into their ancestry, genealogy and inherited traits.
World Vital Records, another US-based site, is reported to have raised around $1.2m from vSpring Capital, Provo Labs and TTP Capital Advisors. Geni.com of the US, which is free to users and funded by advertising, has become the symbol of financiers’ interest in genealogy. The company this year raised $10m in funding from Charles River Ventures valuing it at $100m.
This was a tenfold increase in valuation for Geni, whose first round of financing, led by Founders Fund, was $1.5m, giving a $10m valuation. This has prompted talk of a bubble in genealogy and social networking websites. Advocates of the sector point to Accel Partners’ £12.5m investment in FaceBook in 2005, which looked pricey at the time but was clearly a bargain.
They also point to potential web applications beyond research. It could offer to send birthday cards to family members automatically, buy and dispatch Christmas presents or even form the basis of a family-based eBay-style network.
The real test will be when the first genealogy website opts for a stock market flotation. Many observers, including Fortune magazine, rates The Generation Network (TGN), which includes ancestry.co.uk, as a leading candidate. Such is the pace of change in the sector that, at the time of writing, a private equity firm is reported to have taken a majority stake in TGN for $300m.
It will be fascinating to see whether MyFamily/Ancestry or FaceBook becomes the first social networking site to float. Either way, if investors show a fraction of interest that these websites’ users have shown, their corporate future seems assured.
November 6, 2007
November 4, 2007
October 24, 2007
Links to websites that we recommend include...
http://news.independent.co.uk/business/
http://www.thebusiness.co.uk
http://www.economicsuk.com/blog/
http://blogs.ft.com/wolfforum/
http://ftalphaville.ft.com/
http://www.voxeu.org/
http://www.csfi.org.uk
http://www.bbc.co.uk/blogs/thereporters/evandavis/
http://www.theworkfoundation.com
http://www.zerochampion.com
http://www.enlightenmenteconomics.com
gttp://www.realfd.net
http://www.thebusiness.co.uk
http://www.economicsuk.com/blog/
http://blogs.ft.com/wolfforum/
http://ftalphaville.ft.com/
http://www.voxeu.org/
http://www.csfi.org.uk
http://www.bbc.co.uk/blogs/thereporters/evandavis/
http://www.theworkfoundation.com
http://www.zerochampion.com
http://www.enlightenmenteconomics.com
gttp://www.realfd.net
October 23, 2007
G7 parades its irrelevance
The meeting of the finance ministers of the Group of Seven (G7) nations is increasingly looking as irrelevant as the final of the US baseball World Series that began this week. Whoever wins the title of best baseball team, the rest of the world shrugs as, by and large, it does not play the sport or take part in the contest. Even the term “world series” is seen as hubris.
The latest communiqué from the G7, which called on China to allow an “accelerated appreciation” of the renminbi, led to predictable headlines. It was “the mostly strongly worded statement yet”, one said. The problem is that the G7 is a tournament that China does not participate in. Its members – Canada, France, Germany, Italy, Japan, the US and UK – met in Washington, DC, to debate the implications of the falling dollar.
The three eurozone countries, and France in particular, were angry that the euro has taken the brunt of the dollar’s depreciation. The single currency has soared by 7.8% so far this year, putting pressure on the euro zone’s exporters and threatening, politicians claim, to stifle the economic recovery. They want co-ordinated action to stem the fall in the dollar that they fear could turn into a full-scale rout that could destabilise the world economy.
That was never going to happen and the Europeans probably knew that. It is fruitless to intervene to prop up a currency when the markets are determined to sell it. Even as finance ministers started their meeting the key index of the dollar’s value slumped to a lifetime low against the euro of $1.4319 as poor US housing data raised the chance of another cut in interest rates on 31 October to 92%.
The next best for the French was public statement demanding that China let the renminbi against the dollar appreciate to take the pressure off the euro. To add salt to the wound, while the renminbi is firmly pegged to the dollar it has actually fallen 11.4% against the euro.
China, of course, will ignore the message from the communiqué, sticking to its long-held line that it needs to complete major reforms of its financial system before adjusting the exchange rate. It can also be forgiven for refusing to take advice from a group of which it is not a member. The G7 yet again spurned the opportunity to reform itself and open the way for countries such as China to join.
The last time the G7 attempted to play God in the currency markets was in 2000 when it stemmed the euro’s decline. Back then it represented two-thirds of world GDP. According to Alliance Trust, a financial services group, that could fall to a third by 2050. That might be more significant that World Series baseball but it is hardly a mandate to supervise world exchange rate policy.
The latest communiqué from the G7, which called on China to allow an “accelerated appreciation” of the renminbi, led to predictable headlines. It was “the mostly strongly worded statement yet”, one said. The problem is that the G7 is a tournament that China does not participate in. Its members – Canada, France, Germany, Italy, Japan, the US and UK – met in Washington, DC, to debate the implications of the falling dollar.
The three eurozone countries, and France in particular, were angry that the euro has taken the brunt of the dollar’s depreciation. The single currency has soared by 7.8% so far this year, putting pressure on the euro zone’s exporters and threatening, politicians claim, to stifle the economic recovery. They want co-ordinated action to stem the fall in the dollar that they fear could turn into a full-scale rout that could destabilise the world economy.
That was never going to happen and the Europeans probably knew that. It is fruitless to intervene to prop up a currency when the markets are determined to sell it. Even as finance ministers started their meeting the key index of the dollar’s value slumped to a lifetime low against the euro of $1.4319 as poor US housing data raised the chance of another cut in interest rates on 31 October to 92%.
The next best for the French was public statement demanding that China let the renminbi against the dollar appreciate to take the pressure off the euro. To add salt to the wound, while the renminbi is firmly pegged to the dollar it has actually fallen 11.4% against the euro.
China, of course, will ignore the message from the communiqué, sticking to its long-held line that it needs to complete major reforms of its financial system before adjusting the exchange rate. It can also be forgiven for refusing to take advice from a group of which it is not a member. The G7 yet again spurned the opportunity to reform itself and open the way for countries such as China to join.
The last time the G7 attempted to play God in the currency markets was in 2000 when it stemmed the euro’s decline. Back then it represented two-thirds of world GDP. According to Alliance Trust, a financial services group, that could fall to a third by 2050. That might be more significant that World Series baseball but it is hardly a mandate to supervise world exchange rate policy.
October 19, 2007
Falling dollar should force G7 to find a new role
Just as the clocks change twice a year, so finance ministers of the Group of Seven (G7) wealthy nations troop off to Washington for their biannual meetings. The latest one takes place this weekend (19/20 Oct). Yet again the issue at the top of the agenda will be the fall in the dollar.
Finance ministers – at least those outsider the dollar bloc – are worried for two reasons, one altruistic and one selfish.
The altruistic reason is a worry it could turn into a full-blown slump that triggers a spike in inflation, forcing the Federal Reserve to raise interest rates that in turn delivers a consumer recession.
The selfish reason is that they are concerned that the appreciation in their currencies, most notably the euro, is harming their export sectors. They say that villain in the piece is China which keeps its exchange rate artificially low against the dollar, forcing the euro to take the brunt of the pain. This is true enough. Since Beijing revalued the renminbi in July 2005, the dollar has fallen 9% against the Chinese currency but 18% against the euro.
Ministers will doubtless issue the same sort of statement they have for some years. Emerging economies with large current account surpluses “especially China” must let their effective exchange rates move, they will say. These statements rarely move currencies as the markets have decided the G7 has little relevance in a world where Italy and Canada are members but China is not. The first step towards using finance ministers as a conduit for discussing currencies would be to include the BRICs – Brazil, Russia, India and China.
The problem is that would imply a single European Union seat at the table, a move opposed by the four EU members – France, Germany, Italy and the UK. The real reason for the increasing irrelevance of the G7 is it assumes the dollar is the world’s reserve currency. Overseas investors do not see life that way. They are shunning US equities in favour of other markets and may do the same to US credit in the wake of the crisis on Wall Street.
In terms of currency transactions, the dollar has lost 2.4% of global share over the last three years while emerging market currencies have gained 4.6%. Several countries have reduced the importance of the dollar in their currency baskets while others mull pricing oil in euros not dollars.
The challenge for the US is to accept the solution to the imbalances in the financial system may involve a less pivotal role for the dollar. In a perfect world the G7 communiqué would acknowledge that the future will be less dollar-centric. Sadly just as millions of households prepare to turn their clocks back for winter, finance ministers will try to do the same for the financial markets.
This article first appeared in The Business (www.thebusiness.co.uk) on 18 October 2007
Finance ministers – at least those outsider the dollar bloc – are worried for two reasons, one altruistic and one selfish.
The altruistic reason is a worry it could turn into a full-blown slump that triggers a spike in inflation, forcing the Federal Reserve to raise interest rates that in turn delivers a consumer recession.
The selfish reason is that they are concerned that the appreciation in their currencies, most notably the euro, is harming their export sectors. They say that villain in the piece is China which keeps its exchange rate artificially low against the dollar, forcing the euro to take the brunt of the pain. This is true enough. Since Beijing revalued the renminbi in July 2005, the dollar has fallen 9% against the Chinese currency but 18% against the euro.
Ministers will doubtless issue the same sort of statement they have for some years. Emerging economies with large current account surpluses “especially China” must let their effective exchange rates move, they will say. These statements rarely move currencies as the markets have decided the G7 has little relevance in a world where Italy and Canada are members but China is not. The first step towards using finance ministers as a conduit for discussing currencies would be to include the BRICs – Brazil, Russia, India and China.
The problem is that would imply a single European Union seat at the table, a move opposed by the four EU members – France, Germany, Italy and the UK. The real reason for the increasing irrelevance of the G7 is it assumes the dollar is the world’s reserve currency. Overseas investors do not see life that way. They are shunning US equities in favour of other markets and may do the same to US credit in the wake of the crisis on Wall Street.
In terms of currency transactions, the dollar has lost 2.4% of global share over the last three years while emerging market currencies have gained 4.6%. Several countries have reduced the importance of the dollar in their currency baskets while others mull pricing oil in euros not dollars.
The challenge for the US is to accept the solution to the imbalances in the financial system may involve a less pivotal role for the dollar. In a perfect world the G7 communiqué would acknowledge that the future will be less dollar-centric. Sadly just as millions of households prepare to turn their clocks back for winter, finance ministers will try to do the same for the financial markets.
This article first appeared in The Business (www.thebusiness.co.uk) on 18 October 2007
October 17, 2007
Philanthropy - the ultimate paradox
The rich, as the late American satirist Peter de Vries noted, are not like everyone else; they pay less taxes. Perhaps a more telling difference is that they are more willing to give their wealth away.
This is a striking paradox. The super-rich, and the companies they control, spend vast amount of financial and human resources on minimising their tax liabilities. Yet at the same time entrepreneurs are increasingly deciding to give much of their money away voluntarily, particularly towards the end of their working life.
Before trying to answer this puzzle it is worth looking at the reasons for the growth in private philanthropy. Most obviously the amount of wealth in the world is rising rapidly. More importantly the share of that extra wealth that goes to the wealthiest in society is growing.
In very crude terms, globalisation has created more wealth and allocated it to a smaller band of people. This year’s Rich List 2007 published by the Sunday Times showed the fortunes of the richest 1,000 had risen by a fifth over the past year to almost £ 360bn. A decade ago that figure was £99bn, meaning that the volume of wealth held by this elite has risen almost four times.
A parallel Giving List showed the 30 leading philanthropists pledged or donated more than £1.2bn. Several donations ran into tens or hundreds of millions. While admirable in itself, this is dwarfed by philanthropy in the United States. There has been a strong American tradition of benevolence, particularly for large infrastructure projects such as art galleries or hospital wings that carry the donor’s name in perpetuity.
Some of the philanthropic efforts taking place are of mind-boggling proportions. Microsoft founder Bill Gates donated $22bn in 2000 to found the Bill and Melinda Gates Foundation, making it the US’s largest philanthropic trust.
Last year Warren Buffett, the investor, announced he would gradually give away 85% of his $44bn fortune, of which 85% would go to the Gates foundation.
Philanthropy has been a feature of the UK too, but perhaps less so until recently. There is some evidence that the more the state does to help its citizens, the less people are willing to give. In the Victorian era when capitalism in Britain was red in tooth and claw, business dynasties such as Guinness, Cadbury, Peabody and Lever, made charitable bequests whose legacies can be seen on Britain’s streets today.
However after the welfare state was born, a 1948 opinion poll found that more than 90 per cent of people felt there was no longer a role for charity in Britain. Whether the rebirth in UK philanthropy is a reaction to change in the welfare system under Conservative and Labour governments of the last three decades is open to debate.
One strong feature of recent large-scale donations may shed light on that issue. Philanthropy is increasingly focused on problems that globalisation has brought to the fore. Charity no longer begins at home. Thus the Gates’ foundation’s activities are focused on world health - fighting malaria, HIV/AIDS, and tuberculosis. Three years ago Sir Tom Hunter gave £100m to his charity, which invests in projects in Africa, and plans to disperse a further £1bn. These donations are often for purposes that overlap with government policy and agendas that politicians have campaigned on for many years.
What these donations symbolise is a willingness to donate money where the donor feels able to determine the fate of the finance – something currently impossible with general tax revenue. David Nickson, a partner at KPMG Europe, suggests in an article in Tax Journal magazine this month that it may indicate a cynicism about the way governments raise and disperse money or may be symptomatic of the rise of the individual.
There may be other factors at play. The huge public support for campaign by Bob Geldof and Bono to get rich nations, i.e. their taxpayers, to cough up more money to relieve poverty and disease in Africa received widespread support.
Individuals also seem more personally committed to issues such as African poverty and global warming. One civil servant I know took a career break to spend time working with an aid agency in Tanzania.
The $64m dollar question for governments is how to harness this philanthropy. They are certainly making it easier for people to give their money away – even if it isn’t destined for the Treasury’s coffers. Charitable giving in America has attracted tax relief since the 18th century while Britain joined the party in 1986. Income tax relief is now available on every cash donation made by a UK taxpayer.
Perhaps governments should go further. They are increasingly frustrated by the ability of the super-rich to avoid tax payments. Governments could exploit their voluntary generosity by more closely meshing their public policy interests with those of donors. For instance they could offer tax incentives to corporations making donations. One model might be the freedom companies have to reduce their tax bill by topping up their pension fund, because of the wider benefit of knowing the pension system is well-funded.
The same technique could be applied to donations towards a menu of spending options. Should a housebuilder gain tax relief in exchange for donating land or building affordable homes for free? Could a pharmaceutical giant lower its tax bill in exchange for major donations of basic medicines?
This is just one idea and there must be a myriad of other options. One thing is clear – the depth of poverty across the world calls for a resolution of this paradox of tax avoidance and generous donation.
This article first appeared in 'the city magazine' in October 2007
This is a striking paradox. The super-rich, and the companies they control, spend vast amount of financial and human resources on minimising their tax liabilities. Yet at the same time entrepreneurs are increasingly deciding to give much of their money away voluntarily, particularly towards the end of their working life.
Before trying to answer this puzzle it is worth looking at the reasons for the growth in private philanthropy. Most obviously the amount of wealth in the world is rising rapidly. More importantly the share of that extra wealth that goes to the wealthiest in society is growing.
In very crude terms, globalisation has created more wealth and allocated it to a smaller band of people. This year’s Rich List 2007 published by the Sunday Times showed the fortunes of the richest 1,000 had risen by a fifth over the past year to almost £ 360bn. A decade ago that figure was £99bn, meaning that the volume of wealth held by this elite has risen almost four times.
A parallel Giving List showed the 30 leading philanthropists pledged or donated more than £1.2bn. Several donations ran into tens or hundreds of millions. While admirable in itself, this is dwarfed by philanthropy in the United States. There has been a strong American tradition of benevolence, particularly for large infrastructure projects such as art galleries or hospital wings that carry the donor’s name in perpetuity.
Some of the philanthropic efforts taking place are of mind-boggling proportions. Microsoft founder Bill Gates donated $22bn in 2000 to found the Bill and Melinda Gates Foundation, making it the US’s largest philanthropic trust.
Last year Warren Buffett, the investor, announced he would gradually give away 85% of his $44bn fortune, of which 85% would go to the Gates foundation.
Philanthropy has been a feature of the UK too, but perhaps less so until recently. There is some evidence that the more the state does to help its citizens, the less people are willing to give. In the Victorian era when capitalism in Britain was red in tooth and claw, business dynasties such as Guinness, Cadbury, Peabody and Lever, made charitable bequests whose legacies can be seen on Britain’s streets today.
However after the welfare state was born, a 1948 opinion poll found that more than 90 per cent of people felt there was no longer a role for charity in Britain. Whether the rebirth in UK philanthropy is a reaction to change in the welfare system under Conservative and Labour governments of the last three decades is open to debate.
One strong feature of recent large-scale donations may shed light on that issue. Philanthropy is increasingly focused on problems that globalisation has brought to the fore. Charity no longer begins at home. Thus the Gates’ foundation’s activities are focused on world health - fighting malaria, HIV/AIDS, and tuberculosis. Three years ago Sir Tom Hunter gave £100m to his charity, which invests in projects in Africa, and plans to disperse a further £1bn. These donations are often for purposes that overlap with government policy and agendas that politicians have campaigned on for many years.
What these donations symbolise is a willingness to donate money where the donor feels able to determine the fate of the finance – something currently impossible with general tax revenue. David Nickson, a partner at KPMG Europe, suggests in an article in Tax Journal magazine this month that it may indicate a cynicism about the way governments raise and disperse money or may be symptomatic of the rise of the individual.
There may be other factors at play. The huge public support for campaign by Bob Geldof and Bono to get rich nations, i.e. their taxpayers, to cough up more money to relieve poverty and disease in Africa received widespread support.
Individuals also seem more personally committed to issues such as African poverty and global warming. One civil servant I know took a career break to spend time working with an aid agency in Tanzania.
The $64m dollar question for governments is how to harness this philanthropy. They are certainly making it easier for people to give their money away – even if it isn’t destined for the Treasury’s coffers. Charitable giving in America has attracted tax relief since the 18th century while Britain joined the party in 1986. Income tax relief is now available on every cash donation made by a UK taxpayer.
Perhaps governments should go further. They are increasingly frustrated by the ability of the super-rich to avoid tax payments. Governments could exploit their voluntary generosity by more closely meshing their public policy interests with those of donors. For instance they could offer tax incentives to corporations making donations. One model might be the freedom companies have to reduce their tax bill by topping up their pension fund, because of the wider benefit of knowing the pension system is well-funded.
The same technique could be applied to donations towards a menu of spending options. Should a housebuilder gain tax relief in exchange for donating land or building affordable homes for free? Could a pharmaceutical giant lower its tax bill in exchange for major donations of basic medicines?
This is just one idea and there must be a myriad of other options. One thing is clear – the depth of poverty across the world calls for a resolution of this paradox of tax avoidance and generous donation.
This article first appeared in 'the city magazine' in October 2007
May 15, 2007
No pregnant pause for the housing market
HERE is a terrifying story that sends a clear signal that the current house price mania – In London at least – is far from over. A large house went on the market in Crouch End, a reasonably nice area of North London with reasonably good schools and reasonable access to public transport. In other words one of many similar properties in the wider area.
The asking price was north of £800,000 as it typical for four and five bedroom homes in the capital’s nicer suburbs. The lucky vendor ended up having eight potential buyers come to visit the house on one day, meaning the the winner was going to have move fast.
For one of the buyers speed was of the essence as she was heavily pregnant and on her way to hospital to deliver her baby. Four people put in an offer and she was one of them. Sadly I don’t know whether she was the winner – it doesn’t really matter for the purpose of this tale.
The point is that its shows that the market is being sustained by a large amount of demand and a shortage of supply. Yes it is plainly not rational to go househunting when nine months pregnant, but then the market has reached levels where the irrational is rational.
That is not the same as saying that house prices themselves are irrational when they can be explained by fundamental factors such as demand, supply, real incomes and the cost and ease of access to finance.
The issue is whether any of these underlying factors will change. Apart from Gordon Brown’s latest initiative on eco-friendly homebuilding there does not look to be a huge amount of supply coming down the track. Opopulation trends point to continued growth in the number of households. Interest rates have risen by a percentage point in the last year and may go further. So far this has not had a major impact on the housing market although the jury is still out on that.
House prices rose 1.0 per cent in April, according to Halifax bank, although this was the lowest monthly grwoth this year after a run of bumper rises. The Government's measure, the Deparment of Communities and Local Government index, picked up a similar slowdown in March.
The Royal Institution of Chartered Surveyors, whose index of activity captures elements other than prices, found a slowdown in both the number of sales and new buyer enquiries although nothing dramatic or worrying. Certainly the RICS data continue to suggest that while interest rate rises are slowing demand, they are not leading to an abrupt shift in behaviour.
As long as the heavily-pregnant are happy to ensure the labours of househunting, it seems that this cycle has still to reach maturity.
The asking price was north of £800,000 as it typical for four and five bedroom homes in the capital’s nicer suburbs. The lucky vendor ended up having eight potential buyers come to visit the house on one day, meaning the the winner was going to have move fast.
For one of the buyers speed was of the essence as she was heavily pregnant and on her way to hospital to deliver her baby. Four people put in an offer and she was one of them. Sadly I don’t know whether she was the winner – it doesn’t really matter for the purpose of this tale.
The point is that its shows that the market is being sustained by a large amount of demand and a shortage of supply. Yes it is plainly not rational to go househunting when nine months pregnant, but then the market has reached levels where the irrational is rational.
That is not the same as saying that house prices themselves are irrational when they can be explained by fundamental factors such as demand, supply, real incomes and the cost and ease of access to finance.
The issue is whether any of these underlying factors will change. Apart from Gordon Brown’s latest initiative on eco-friendly homebuilding there does not look to be a huge amount of supply coming down the track. Opopulation trends point to continued growth in the number of households. Interest rates have risen by a percentage point in the last year and may go further. So far this has not had a major impact on the housing market although the jury is still out on that.
House prices rose 1.0 per cent in April, according to Halifax bank, although this was the lowest monthly grwoth this year after a run of bumper rises. The Government's measure, the Deparment of Communities and Local Government index, picked up a similar slowdown in March.
The Royal Institution of Chartered Surveyors, whose index of activity captures elements other than prices, found a slowdown in both the number of sales and new buyer enquiries although nothing dramatic or worrying. Certainly the RICS data continue to suggest that while interest rate rises are slowing demand, they are not leading to an abrupt shift in behaviour.
As long as the heavily-pregnant are happy to ensure the labours of househunting, it seems that this cycle has still to reach maturity.
April 20, 2007
Barbarians at the chemist's counter
The outbreak of a bidding war between two groups of private equity investors for control of Alliance Boots, the chemists and drugs group, will reignite the debate over whether this type of ownership is good or bad for companies, their workers and the country in general.
On the same day that the Boots’ board backed a £10.6bn takeover bid from Kohlberg Kravis Roberts (KKR) and Boots' executive deputy chairman Stefano Pessina, a rival appeared on the scene. A group that includes private equity firm Terra Firma, medical charity The Wellcome Trust, and banking group HBOS outlined a conditional bid worth 2.3 per cent more.
Whoever wins, it will mark the first time that a FTSE 100 company has been taken out of public ownership by a private equity consortium. If KKR wins it could turn out to be as symbolic as the group’s $31bn takeover of RJR Nabisco in the 1980s that was portrayed in the bestselling book Barbarians at the Gate.
The issue has fallen out of the news in the wake of the collapse of the private equity bid for J Sainsbury, the supermarket company, which was seen as a sign that shareholders and directors were prepared to resist such approaches. This means that the debate over the merits of private equity, which hit the headlines when trade unions mounted protests at job losses at the AA vehicle recovery group following its takeover, will be back in the media spotlight.
This seems a good moment to draw attention to a report that Clarity Economics carried out for the Work Foundation.
It found that private equity firms that took over companies and bring in new management teams were likely to cut jobs and depress employees’ wages.
Analysis of independently gathered data, which tracks companies as they enter and exit from ownership by private equity funds, found that MBOs (which account for the majority of private equity deals) cut jobs in the first year, but expand them thereafter - by an average of 36 per cent over six years. Yet workers are £83.70 a year worse off than other private sector workers because wages grow more slowly.
Where an outside management team is introduced to an organisation in a management buy-in, employment falls on average by just under a fifth (18.25 per cent) over a six-year period. And workers are on average £231 a year worse off than other private sector workers
Private equity firms tend to introduce strict new performance management systems such as performance and merit pay, regular performance appraisal, and new human resource management systems. Some 40 per cent of managers in PE firms say they are hostile to trade unions. Just one in 10 said they were positive about the role of unions.
Read the full report here: http://www.theworkfoundation.com/Assets/PDFs/private_equity.pdf
On the same day that the Boots’ board backed a £10.6bn takeover bid from Kohlberg Kravis Roberts (KKR) and Boots' executive deputy chairman Stefano Pessina, a rival appeared on the scene. A group that includes private equity firm Terra Firma, medical charity The Wellcome Trust, and banking group HBOS outlined a conditional bid worth 2.3 per cent more.
Whoever wins, it will mark the first time that a FTSE 100 company has been taken out of public ownership by a private equity consortium. If KKR wins it could turn out to be as symbolic as the group’s $31bn takeover of RJR Nabisco in the 1980s that was portrayed in the bestselling book Barbarians at the Gate.
The issue has fallen out of the news in the wake of the collapse of the private equity bid for J Sainsbury, the supermarket company, which was seen as a sign that shareholders and directors were prepared to resist such approaches. This means that the debate over the merits of private equity, which hit the headlines when trade unions mounted protests at job losses at the AA vehicle recovery group following its takeover, will be back in the media spotlight.
This seems a good moment to draw attention to a report that Clarity Economics carried out for the Work Foundation.
It found that private equity firms that took over companies and bring in new management teams were likely to cut jobs and depress employees’ wages.
Analysis of independently gathered data, which tracks companies as they enter and exit from ownership by private equity funds, found that MBOs (which account for the majority of private equity deals) cut jobs in the first year, but expand them thereafter - by an average of 36 per cent over six years. Yet workers are £83.70 a year worse off than other private sector workers because wages grow more slowly.
Where an outside management team is introduced to an organisation in a management buy-in, employment falls on average by just under a fifth (18.25 per cent) over a six-year period. And workers are on average £231 a year worse off than other private sector workers
Private equity firms tend to introduce strict new performance management systems such as performance and merit pay, regular performance appraisal, and new human resource management systems. Some 40 per cent of managers in PE firms say they are hostile to trade unions. Just one in 10 said they were positive about the role of unions.
Read the full report here: http://www.theworkfoundation.com/Assets/PDFs/private_equity.pdf
April 16, 2007
Why Wolfowitz should quit the World Bank
It’s only when times get tough that you find out who your real enemies are, as Paul Wolfowitz found out at the April meetings of the World Bank of which he is president.
Mr Wolfowitz found himself unusually on the defensive after allegations were published that he helped negotiate a large pay rise for a Bank employee with whom he was romantically linked. After he was given the top job at the poor countries’ banker by US President W Bush who by convention has that job in his gift, he was presented with a problem. His girlfriend, Shaha Riza, a Tunisian-born British citizen, could no longer work at the Bank because of tight rules aimed at enforcing good governance within the institution.
The extra twist was the claim that he had personally got involved in negotiating a deal that saw her move to the US State Department on a salary higher than that of the Secretary of State, Condoleeza Rice. Mr Wolfowitz issued a public apology and said the matter had been handed over to the executive board of the Bank, which published the full 207 pages of background material to the case.
The board said it would decide on the issue “expeditiously” which was taken as meaning that the 25 development ministers who make up its board would make a decision, one way or the other, by the end of the meetings. This in turn fuelled speculation that he would not be able to hold onto his job.
The case for the prosecution was clear. He had come from the Bush administration with a mission to tackle corruption and poor governance at borrower countries. Within 18 months however it had turned out that he was at the centre of a storm of allegations over bad governance. However it swiftly emerged that the former deputy defense secretary had amassed some enemies along the way.
His role in the Iraq war, whose long-term fallout appears worse by the day, had angered many European countries. He had angered the Bank’s 10,000 staff by bringing in advisors from his Pentagon days and the staff association came out publicly calling for the publication of documents.
Then at the last meetings in September 2006 Hilary Benn, the UK Development Secretary, went public with a threat to withhold £50m from the Bank unless it followed through on a pledge fully to abandon its practice of attaching economic policy and other conditions to its loans and grants.
The Europeans looked keen to use this affair as a way to remove Wolfowitz from office and the White House, which should have been his most vocal supporter, seemed to be caught out by the issue. This left the African, Asian and Latin American country bloc, which include the Bank’s clients. It appears that Mr Wolfowitz used the three days between his apology and the meeting of the board to garner support.
Some African countries such as Liberia and Mauritius came out in favour and found their statements put up on the Bank’s website. Others such as South Africa and Zambia voiced concerns about a “kanagroo court”. In the end Mr Wolfowitz was able to front out his closing press conference, blocking all questions about his future with the same stock answer.
The only conclusion must be that the Europeans were too soft and the African and other blocs too divided to actually carry out the coup de grace.
This leaves a mess for the Bank. Its development committee of representatives of its 185 members said the issue was of “great concern” and said it expected the Bank to adhere to a high standard of internal governance. Yet he is still in his job and no one knows when the board will come to a decision
It is for that reason – not the Iraq War, nor his antagonism of his staff – that he should have resigned. The Bank is involved in a massive anti-corruption drive and has been accused of making lending decisions based on the recipient’s allegiance to the US (a claim Mr Wolfowitz denies).
For the same reason that Conservative ministers had to resign in the 1990s after it emerged they were not exactly following John Major’s back-to-basic family agenda, so the bank’s president should have quit after it became clear that he could not apply to himself the standards he wanted to impose on others.
Mr Wolfowitz found himself unusually on the defensive after allegations were published that he helped negotiate a large pay rise for a Bank employee with whom he was romantically linked. After he was given the top job at the poor countries’ banker by US President W Bush who by convention has that job in his gift, he was presented with a problem. His girlfriend, Shaha Riza, a Tunisian-born British citizen, could no longer work at the Bank because of tight rules aimed at enforcing good governance within the institution.
The extra twist was the claim that he had personally got involved in negotiating a deal that saw her move to the US State Department on a salary higher than that of the Secretary of State, Condoleeza Rice. Mr Wolfowitz issued a public apology and said the matter had been handed over to the executive board of the Bank, which published the full 207 pages of background material to the case.
The board said it would decide on the issue “expeditiously” which was taken as meaning that the 25 development ministers who make up its board would make a decision, one way or the other, by the end of the meetings. This in turn fuelled speculation that he would not be able to hold onto his job.
The case for the prosecution was clear. He had come from the Bush administration with a mission to tackle corruption and poor governance at borrower countries. Within 18 months however it had turned out that he was at the centre of a storm of allegations over bad governance. However it swiftly emerged that the former deputy defense secretary had amassed some enemies along the way.
His role in the Iraq war, whose long-term fallout appears worse by the day, had angered many European countries. He had angered the Bank’s 10,000 staff by bringing in advisors from his Pentagon days and the staff association came out publicly calling for the publication of documents.
Then at the last meetings in September 2006 Hilary Benn, the UK Development Secretary, went public with a threat to withhold £50m from the Bank unless it followed through on a pledge fully to abandon its practice of attaching economic policy and other conditions to its loans and grants.
The Europeans looked keen to use this affair as a way to remove Wolfowitz from office and the White House, which should have been his most vocal supporter, seemed to be caught out by the issue. This left the African, Asian and Latin American country bloc, which include the Bank’s clients. It appears that Mr Wolfowitz used the three days between his apology and the meeting of the board to garner support.
Some African countries such as Liberia and Mauritius came out in favour and found their statements put up on the Bank’s website. Others such as South Africa and Zambia voiced concerns about a “kanagroo court”. In the end Mr Wolfowitz was able to front out his closing press conference, blocking all questions about his future with the same stock answer.
The only conclusion must be that the Europeans were too soft and the African and other blocs too divided to actually carry out the coup de grace.
This leaves a mess for the Bank. Its development committee of representatives of its 185 members said the issue was of “great concern” and said it expected the Bank to adhere to a high standard of internal governance. Yet he is still in his job and no one knows when the board will come to a decision
It is for that reason – not the Iraq War, nor his antagonism of his staff – that he should have resigned. The Bank is involved in a massive anti-corruption drive and has been accused of making lending decisions based on the recipient’s allegiance to the US (a claim Mr Wolfowitz denies).
For the same reason that Conservative ministers had to resign in the 1990s after it emerged they were not exactly following John Major’s back-to-basic family agenda, so the bank’s president should have quit after it became clear that he could not apply to himself the standards he wanted to impose on others.
January 25, 2007
Business journalism award winner
I was very humbled to to win the Print Journalist of the Year award from the Work Foundation's WorkWorld awards. It was for a piece written as the Stern Report on climate change was hot off the press about its nuts and bolts implications for business seeking to identify the winners and losers.
The citation follows below along with a link to the article
Print journalist of the year - Philip Thornton
Philip Thornton has a knack for telling big stories crisply - someone who puts the needs of his readers first. His writing is stylish and thoughtful. He has recently embarked on a freelance career after a stint as economics correspondent for The Independent, and the judges wished him success.
http://news.independent.co.uk/business/analysis_and_features/article1943362.ece
The citation follows below along with a link to the article
Print journalist of the year - Philip Thornton
Philip Thornton has a knack for telling big stories crisply - someone who puts the needs of his readers first. His writing is stylish and thoughtful. He has recently embarked on a freelance career after a stint as economics correspondent for The Independent, and the judges wished him success.
http://news.independent.co.uk/business/analysis_and_features/article1943362.ece
January 19, 2007
The mystery of the inverted yield curve
For anyone working in the financial markets, the inverted bond yield curve is a terrifying concept. For most, the fear comes simply from having to grapple with this odd-sounding but oft-repeated phrase. For those in the know, it claims to foretell doom and gloom.
For both groups, 2007 has got off to an unhappy start. When the yield on a long-dated government bond, such as the 10-year US Treasury, falls below that of its shorter-term sisters, such as the two-year, that is known as an inverted curve. Currently the difference is just 10 basis points (0.1 percentage point): 4.78% versus 4.88%.
This is unusual because a bond that matures in 10 years’ time should be a riskier bet than one which matures sooner as inflation can spike at any time over a decade. So investors normally demand a premium – a higher rent for taking out a greater risk – and a graph plotting yields against maturities (a yield curve) should show the latter rising as the former lengthen.
When the yield is lower long-term, it implies investors are rushing to buy long-dated bonds because they believe there is something nasty around the corner that will pull down inflation: a slowdown or recession.
Billions of pounds are invested in long-dated bonds so buying into low-yield, high-priced bonds carries a potentially expensive risk of a sudden snap-back if the outlook changes.
The American market, the largest and most complex, has had an inverted yield curve for more than a year. When it inverted just before New Year’s Eve 2005 it prompted a furious debate over its efficacy in forecasting recession. That debate is still under way a little over 12 months on.
Supporters of the standard view, such as Andre de Silva, a senior fixed-income strategist at HSBC, point out that the yield curve has correctly predicted recessions in 1973-1975, 1980, 1981-1982, 1990-1991 and most recently the mild downturn of 2001.
He sees the curve as supporting HSBC’s view that the US is headed for a slowdown to levels below the 2.3% average of forecasts logged by Consensus Economics.
Critics of the curve’s predictive merits point out that it is more than a year since inversion began and the US has posted growth above 3%. The latest figures point to an economy maintaining good speed in the face of a headwind from an ailing housing market.
Retail sales and recruitment are the latest in a litany of data pointing to an American economy heading for a soft, rather than a hard, landing. Meanwhile a substantial improvement in the budget deficit is likely to reduce supply of new short- and medium-dated issues. Little surprise short rates are rising.
So could there be any other explanations for the movement at the long-end? There are four factors that were less prevalent in previous economic cycles and which could point to a change in the fundamentals of supply and demand for long-dated paper.
The first is that major central banks can be credited for gaining the upper hand in the fight against inflation, at least when compared with the 1970s and 1980s. Investors can there-fore be more sanguine that the risk inflation will wipe out the value of their bond investments than they were in the previous three decades, even if British inflation is creeping up again (see Editorial, pages 8 and 9).
Second, China had led aggressive bond buying by Asian countries. These emerging economies have used their huge current account surpluses to build foreign currency reserves as insurance against a repeat of the 1997 East Asian currencies when they found their dollar debts became unbearable as their currencies collapsed. It has recently emerged that China had amassed $1 trillion of dollar assets (see Trusted Sources, p17).
A third and connected factor is the mass purchase of bonds by Opec countries keen to lock away their petrodollar windfall from record high oil prices as insurance against a collapse further out. Certainly yields on the 10-year Treasury points to more buyers than sellers.
Last, pension funds have either chosen – or, as in Britain, been compelled by regulators – to buy long-dated assets to match a shift in their liabilities created by the fact that people are living longer. Britain has an even more pronounced inversion than the United States, allowing the government to respond by issuing 50-year bonds. Demand was so strong it sold them for a real yield of 0.83%. Following last week’s surprise rate rise to 5.25% yields on the two-year gilt jumped to 5.35% while the 10-year was paying 4.85%.
Nick Stamenkovic, a seasoned bond analyst at RIA Capital Markets in Edinburgh, says there is less agreement now about the impact of the inverted yield curve. “Increasingly, the curve globally has been driven by the supply and demand picture,” he says.
Analysis by David Miles of Morgan Stanley shows low long-bond yields were the norm until the inflationary post-War period. Over the past 300 years, the average yield on long-term gilts has been close to the current level and in the 19th century were close to 3%.
In the United States, Ben Bernanke’s Federal Reserve has taken a dismissive stance of the relevance of the inverted yield curve, much as Alan Greenspan did under his reign.
So, who’s right – the Fed or the markets? The jury is still out but traders and analysts must beware. Investments tied up in global bond markets are huge and the consequences for financial markets being wrong-footed would be cataclysmic.
Inverted yield curves don’t last for ever, a lesson no investor should ever forget.
For both groups, 2007 has got off to an unhappy start. When the yield on a long-dated government bond, such as the 10-year US Treasury, falls below that of its shorter-term sisters, such as the two-year, that is known as an inverted curve. Currently the difference is just 10 basis points (0.1 percentage point): 4.78% versus 4.88%.
This is unusual because a bond that matures in 10 years’ time should be a riskier bet than one which matures sooner as inflation can spike at any time over a decade. So investors normally demand a premium – a higher rent for taking out a greater risk – and a graph plotting yields against maturities (a yield curve) should show the latter rising as the former lengthen.
When the yield is lower long-term, it implies investors are rushing to buy long-dated bonds because they believe there is something nasty around the corner that will pull down inflation: a slowdown or recession.
Billions of pounds are invested in long-dated bonds so buying into low-yield, high-priced bonds carries a potentially expensive risk of a sudden snap-back if the outlook changes.
The American market, the largest and most complex, has had an inverted yield curve for more than a year. When it inverted just before New Year’s Eve 2005 it prompted a furious debate over its efficacy in forecasting recession. That debate is still under way a little over 12 months on.
Supporters of the standard view, such as Andre de Silva, a senior fixed-income strategist at HSBC, point out that the yield curve has correctly predicted recessions in 1973-1975, 1980, 1981-1982, 1990-1991 and most recently the mild downturn of 2001.
He sees the curve as supporting HSBC’s view that the US is headed for a slowdown to levels below the 2.3% average of forecasts logged by Consensus Economics.
Critics of the curve’s predictive merits point out that it is more than a year since inversion began and the US has posted growth above 3%. The latest figures point to an economy maintaining good speed in the face of a headwind from an ailing housing market.
Retail sales and recruitment are the latest in a litany of data pointing to an American economy heading for a soft, rather than a hard, landing. Meanwhile a substantial improvement in the budget deficit is likely to reduce supply of new short- and medium-dated issues. Little surprise short rates are rising.
So could there be any other explanations for the movement at the long-end? There are four factors that were less prevalent in previous economic cycles and which could point to a change in the fundamentals of supply and demand for long-dated paper.
The first is that major central banks can be credited for gaining the upper hand in the fight against inflation, at least when compared with the 1970s and 1980s. Investors can there-fore be more sanguine that the risk inflation will wipe out the value of their bond investments than they were in the previous three decades, even if British inflation is creeping up again (see Editorial, pages 8 and 9).
Second, China had led aggressive bond buying by Asian countries. These emerging economies have used their huge current account surpluses to build foreign currency reserves as insurance against a repeat of the 1997 East Asian currencies when they found their dollar debts became unbearable as their currencies collapsed. It has recently emerged that China had amassed $1 trillion of dollar assets (see Trusted Sources, p17).
A third and connected factor is the mass purchase of bonds by Opec countries keen to lock away their petrodollar windfall from record high oil prices as insurance against a collapse further out. Certainly yields on the 10-year Treasury points to more buyers than sellers.
Last, pension funds have either chosen – or, as in Britain, been compelled by regulators – to buy long-dated assets to match a shift in their liabilities created by the fact that people are living longer. Britain has an even more pronounced inversion than the United States, allowing the government to respond by issuing 50-year bonds. Demand was so strong it sold them for a real yield of 0.83%. Following last week’s surprise rate rise to 5.25% yields on the two-year gilt jumped to 5.35% while the 10-year was paying 4.85%.
Nick Stamenkovic, a seasoned bond analyst at RIA Capital Markets in Edinburgh, says there is less agreement now about the impact of the inverted yield curve. “Increasingly, the curve globally has been driven by the supply and demand picture,” he says.
Analysis by David Miles of Morgan Stanley shows low long-bond yields were the norm until the inflationary post-War period. Over the past 300 years, the average yield on long-term gilts has been close to the current level and in the 19th century were close to 3%.
In the United States, Ben Bernanke’s Federal Reserve has taken a dismissive stance of the relevance of the inverted yield curve, much as Alan Greenspan did under his reign.
So, who’s right – the Fed or the markets? The jury is still out but traders and analysts must beware. Investments tied up in global bond markets are huge and the consequences for financial markets being wrong-footed would be cataclysmic.
Inverted yield curves don’t last for ever, a lesson no investor should ever forget.
January 11, 2007
A shock rise in interest rates
The Bank's of England's decision to raise interest rates to 5.25 per cent was such as a surprise that one City economist put out his initial reaction under a pre-prepared headline about a no-change decision. “It shows I had been expecting no change!!” he said later with understandable honesty.
But he was not alone. All but one of 50 economists polled by Reuters the week before the 11 January decision had predicted the same outcome, and for similar reasons. Yes, inflation was high and rising and, yes, growth was strong, house prices were booming and retailers were doing fine, but the big unknown was whether any of that would feed through to wage inflation in the current pay round.
It turned out that the Bank was not prepared to wait. Perhaps it knows something that the City does not either from next week's inflation data for December or the results of some of their own research. Either way it shows that the Bank is very worried about the inflation and inflationary pressures and a majority of its monetary policy committee is not prepared to take chances of it getting out of control.
While it might be a happy New Year for the one City economist, Simon Ward of New Star Asset Management, it could prove a very miserable 2007 for those people struggling to meet their credit cvard payments, or more importantly, their mortgage bills. The Bank is sanguine that there are a small number of people suffering a large amount of pain. The number of the former will rise and it is possible, as the Building Societies Association warns, that this will turn out to be the straw that breaks the camel's back.
More interestingly it shows a willingness at the bank to surpise the markets. At the last Inflation Report press briefing, Governor Mervyn King was asked about academic research showing there was a danger of central banks becoming too transparent as they would only see their own views reflected back at them by the markets. He said that all any commentator needed to know was what was in the Inflation report. Whether a shock January rate rise was in the report is open to debate. Either way it shows that the Bank is happy to get a double the “bang for its buck” by shocking the markets.
So where do we go from here? To some extent we are unchartered waters at least as far as they last couple of years are to go by. One the one hand it could be a sign that the Bank wanted to send a firm signal to wage setters during the current wage round - only nine deals have been done according to Incomes Data Services. On the other it could show a hawkish mission to curb the highest inflation for a decade. Roger Bootle, the economic adviser to Deloitte who ironically won a reputation with hi seminal book Death of Inflation, believes rates culd hit 6 per cent.
I think they are done and that rates will peak at 5.25 per cent.
But he was not alone. All but one of 50 economists polled by Reuters the week before the 11 January decision had predicted the same outcome, and for similar reasons. Yes, inflation was high and rising and, yes, growth was strong, house prices were booming and retailers were doing fine, but the big unknown was whether any of that would feed through to wage inflation in the current pay round.
It turned out that the Bank was not prepared to wait. Perhaps it knows something that the City does not either from next week's inflation data for December or the results of some of their own research. Either way it shows that the Bank is very worried about the inflation and inflationary pressures and a majority of its monetary policy committee is not prepared to take chances of it getting out of control.
While it might be a happy New Year for the one City economist, Simon Ward of New Star Asset Management, it could prove a very miserable 2007 for those people struggling to meet their credit cvard payments, or more importantly, their mortgage bills. The Bank is sanguine that there are a small number of people suffering a large amount of pain. The number of the former will rise and it is possible, as the Building Societies Association warns, that this will turn out to be the straw that breaks the camel's back.
More interestingly it shows a willingness at the bank to surpise the markets. At the last Inflation Report press briefing, Governor Mervyn King was asked about academic research showing there was a danger of central banks becoming too transparent as they would only see their own views reflected back at them by the markets. He said that all any commentator needed to know was what was in the Inflation report. Whether a shock January rate rise was in the report is open to debate. Either way it shows that the Bank is happy to get a double the “bang for its buck” by shocking the markets.
So where do we go from here? To some extent we are unchartered waters at least as far as they last couple of years are to go by. One the one hand it could be a sign that the Bank wanted to send a firm signal to wage setters during the current wage round - only nine deals have been done according to Incomes Data Services. On the other it could show a hawkish mission to curb the highest inflation for a decade. Roger Bootle, the economic adviser to Deloitte who ironically won a reputation with hi seminal book Death of Inflation, believes rates culd hit 6 per cent.
I think they are done and that rates will peak at 5.25 per cent.
January 4, 2007
Running table of like-for-like retail sales
Here is a running table of the annual incease like-for-like sales reported by major retailers over the Christmas period. I will update it as the results come through
Company period % rise
Majestic Wine 9 wks to 01.01 +4.4
Next 5 mths to 23.12 +2.8
of which stores -6.9
of which catalogue +9.3
Alexon 22 wks to 30.12 -4.0
House of Fraser 4 wks to 31.12 +7.3
Black's Leisure 5 wks to 30.12 -6.0
New Look n/a +3.2
Jessops 6 wks to 05.01 -6.9
Clinton Cards 5 wks to 24.12 +2.1
M&S 3 mths to 31.12 +5.6
of which food +3.6
of which general +7.1
Moss Bros 49 wks to 6.01 -1.4
JJB Sport 22 wks to 31.12 +6.3
Wm Morrison 6 wks to 7.01 +6.3
Sainsbury 12 wks to 30.12 +5.0
HMV 5 wks to 05.01 -0.8
Signet 9 wks to 30.12 +5.9
Alliance Boots 3 mths to 31.12 +1.5
Game Group 6 wks to 06.01 +15.6
Ann Summers 10 days to 24.12 +12.0
JD Sport 8 wks to 06.01 +4.5
Dobbies 10 wks to 10.01 +6.3
Carphone W 3 mths to 30.12 +7.3
Asos 4 wks to 10.12 +80*
Theo Fennell 3 wks to 24.12 +29
Tesco 6 wks to 06.01 +5.9
Debenhams 19 wks to 13.01 -4.0
Ted Baker 9 wks to 24.12 +11.0
Burberry 3 mths to 31.12 +25
Laura Ashley 50 wks to 13.01 +8.7
Woolworths 6 wks to 13.01 -4.6
DSG Int'l 8 wks to 06.01 +3.0
Home Retail 14 wks to 06.01 n/a
of which Argos +0.2
Homebase -2.9
Kesa (Comet) 9 wks to 08.01 +7.5
Mothercare 13 wks to 12.01 +0.8
WH Smith 20wks to 20.01 -6.0
of which high street -9.0
of which airports, rail +4.0
N Brown 21 wks to 21.01 +10.8
27 Jan Jessops
BRC month to 30.12 +2.5
ONS 5 wks to 30.01 +4.7**
*2005 affected by Buncefield fire
** total; not like-for-like
Company period % rise
Majestic Wine 9 wks to 01.01 +4.4
Next 5 mths to 23.12 +2.8
of which stores -6.9
of which catalogue +9.3
Alexon 22 wks to 30.12 -4.0
House of Fraser 4 wks to 31.12 +7.3
Black's Leisure 5 wks to 30.12 -6.0
New Look n/a +3.2
Jessops 6 wks to 05.01 -6.9
Clinton Cards 5 wks to 24.12 +2.1
M&S 3 mths to 31.12 +5.6
of which food +3.6
of which general +7.1
Moss Bros 49 wks to 6.01 -1.4
JJB Sport 22 wks to 31.12 +6.3
Wm Morrison 6 wks to 7.01 +6.3
Sainsbury 12 wks to 30.12 +5.0
HMV 5 wks to 05.01 -0.8
Signet 9 wks to 30.12 +5.9
Alliance Boots 3 mths to 31.12 +1.5
Game Group 6 wks to 06.01 +15.6
Ann Summers 10 days to 24.12 +12.0
JD Sport 8 wks to 06.01 +4.5
Dobbies 10 wks to 10.01 +6.3
Carphone W 3 mths to 30.12 +7.3
Asos 4 wks to 10.12 +80*
Theo Fennell 3 wks to 24.12 +29
Tesco 6 wks to 06.01 +5.9
Debenhams 19 wks to 13.01 -4.0
Ted Baker 9 wks to 24.12 +11.0
Burberry 3 mths to 31.12 +25
Laura Ashley 50 wks to 13.01 +8.7
Woolworths 6 wks to 13.01 -4.6
DSG Int'l 8 wks to 06.01 +3.0
Home Retail 14 wks to 06.01 n/a
of which Argos +0.2
Homebase -2.9
Kesa (Comet) 9 wks to 08.01 +7.5
Mothercare 13 wks to 12.01 +0.8
WH Smith 20wks to 20.01 -6.0
of which high street -9.0
of which airports, rail +4.0
N Brown 21 wks to 21.01 +10.8
27 Jan Jessops
BRC month to 30.12 +2.5
ONS 5 wks to 30.01 +4.7**
*2005 affected by Buncefield fire
** total; not like-for-like
January 3, 2007
Watching the Xmas trading statements
A month ago I said that the Christmas and New Year trading period would be OK for retailers – not brilliant but certainly better than the doom-mongers had forecast. Now is the time of reckoning is upon us. Majestic Wine became the first to issue a Christmas trading statement on 3 January and it was pretty robust.
Sales were up 4.4 per cent in the nine weeks to 1 January and 8 per cent. The chief executive later told Reuters that sales "over Christmas" were up 8 per cent. Significantly it said that sales were especially high among champagne brands, which tend to command the highest prices in its stores.
One positive result does not a good winter make, but it augurs well for the high street. Of course, each trading statement only really tells you something about that company. In this the case the heavy sales of champagne – the CEO indicated as much as 16 per cent growth – combined with the fact that more than a quarter of its stores are inside the M25 highlights the fact that strong sales were in the part of the UK that benefits most from City bonuses.
This bonanza will not be shared equally with all retailers. The profit warnings before Christmas had even begun were issued by HMV and Woolworths, two retailers with a customer-base more weighted towards low-earners.
On the same day that Majestic Wine reported it emerged that Music Zone, a private CD retailers backed by venture capital, was seeking administration.
These are early signs that this Christmas could be that separate the strong brands from the weak. Majestic Wine and John Lewis have done well while we are already know the identity of two of the losers. The Internet had helped create a "long tail" of small brands competing with each other for the consumers’ attention. Only so many can survive. The coming weeks could see the casualty list grow.
In the meantime I will update the incoming trading statements on a separate blog as they emerge over the coming days. In addition the Office for National Statistics, the CBI and the British Retail Consortium will publish their figures.
Sales were up 4.4 per cent in the nine weeks to 1 January and 8 per cent. The chief executive later told Reuters that sales "over Christmas" were up 8 per cent. Significantly it said that sales were especially high among champagne brands, which tend to command the highest prices in its stores.
One positive result does not a good winter make, but it augurs well for the high street. Of course, each trading statement only really tells you something about that company. In this the case the heavy sales of champagne – the CEO indicated as much as 16 per cent growth – combined with the fact that more than a quarter of its stores are inside the M25 highlights the fact that strong sales were in the part of the UK that benefits most from City bonuses.
This bonanza will not be shared equally with all retailers. The profit warnings before Christmas had even begun were issued by HMV and Woolworths, two retailers with a customer-base more weighted towards low-earners.
On the same day that Majestic Wine reported it emerged that Music Zone, a private CD retailers backed by venture capital, was seeking administration.
These are early signs that this Christmas could be that separate the strong brands from the weak. Majestic Wine and John Lewis have done well while we are already know the identity of two of the losers. The Internet had helped create a "long tail" of small brands competing with each other for the consumers’ attention. Only so many can survive. The coming weeks could see the casualty list grow.
In the meantime I will update the incoming trading statements on a separate blog as they emerge over the coming days. In addition the Office for National Statistics, the CBI and the British Retail Consortium will publish their figures.
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