Friday, March 1, 2024

The Body Shop set to appoint administrators in UK; Biden tells snack companies to stop shrinkflation – business live

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Introduction: The Body Shop is lining up administrators

Good morning and welcome to our rolling coverage of business, the financial markets and the world economy.

Thousands of jobs are at risk at The Body Shop, as the cosmetics retailer’s new owners line up administrators for its British arm.

The Body Shop could go into administration as early as this week, leading to store closures, having suffered disappointing trading over Christmas and in early January.

The retail chain, which has more than 200 shops, was bought by the pan-European private equity investor Aurelius last November.

Administrators at FRP Advisory are likely to be appointed as soon as this week to handle an insolvency process, Sky News reported on Saturday, citing sources who said they expected the closure of a significant number of the stores.

The Body Shop’s international businesses have already been sold to an unknown family office, according to Retail Week.

The Body Shop, known for its ethical trading ethos, dates back almost 50 years, as my colleaue Rob Davies explains:

Roddick, an environmental campaigner, activist and entrepreneur, founded the Body Shop in Brighton in 1976. The company remained under her ownership for three decades, until she sold it in 2006. Roddick died the following year.

By then, The Body Shop had become synonymous with its ethical positions, including a refusal to stock products tested on animals and a sourcing of ingredients from natural products that are traded ethically.

It looks set to be another interesting week ahead for financial markets with a good mix of central bank speakers and data coming into play as the week progresses. Asian trading sessions will experience a drop in liquidity with several markets enjoying the Lunar New Year…

— IC Markets Global (@IC_Markets) February 11, 2024

…before the Bank of England’s Governor Andrew Bailey speaks at the UK’s premier university – Loughborough.

— IC Markets Global (@IC_Markets) February 11, 2024

The agenda

  • 10am GMT: European Commission winter forecasts

  • Noon GMT: India’s industrial production data for December & inflation for January

  • 1pm GMT: Russian balance of trade for December

  • 6pm GMT: Bank of England governor Andrew Bailey gives lecture at Loughborough University

Updated at 

Key events

Heathrow slams ‘tourist tax’ as passenger numbers grow

Heathrow has managed to grow its passenger numbers close to pre-pandemic levels last month.

The UK’s largest airport reported this morning that it was used by 5.996m passengers last month, a 9.4% increase on last year, and not far below the 6.1m in January 2020.

The weight of cargo handled by the airport rose 20% year-on-year, to 122,000 tonnes.

Heathrow is also adding its weight to the campaign to reinstate tax free shopping for international tourists, something which then-chancellor Rishi Sunak abolished in 2020.

The airport says:

While exports are thriving, Britain has shut the door on home grown growth, turning away international shoppers through the tourist tax and tarnishing the UK’s reputation as a competitive country to spend and do business with.

Heathrow has joined forces with the British Chambers of Commerce and the Federation of Small Businesses to make the case for an internationally competitive tax-free shopping incentive at the Spring Budget.

The Office for Budget Responsibility (OBR) is conducting a review of the axeing of tax-free shopping for tourists, which could potentially lead to the decision being reversed.

Victoria Scholar, head of investment at interactive investor, says:

Heathrow has been enjoying strong passenger travel demand with January’s figures just shy of pre-covid levels, pointing to a significant recovery from the pandemic era doldrums. It also enjoyed a strong month in terms of cargo passing through the airport.

While cost-of-living pressures continue to hurt consumers amid the backdrop of elevated prices and higher interest rates, it looks like individuals and families continue to prioritize travel over other luxuries where possible, even in the face of higher air fares. February will be the next major test for Heathrow as a gauge of demand over the typically busy half term period following the seasonal post-Christmas lull.

Meanwhile Heathrow may enjoy a boost to airport spending if the Treasury U-turns on the axing of tax-free shopping for tourists. This has resulted in billions of pounds of lost sales and tax revenues for the UK economy and the public purse respectively so a reversal would no doubt be a welcome reprieve for the travel, luxury, and hospitality industries.”

Families need help saving more for rainy days

The cost of living squeeze has made it harder for retailers such as The Body Shop to grow sales.

And new research today shows that one-in-three working age families have not managed to build up a basic “rainy day” savings of at least £1,000.

This highlights how the poorest households are struggling to build up financial resilience amid the cost of living crisis.

The Resolution Foundation said people across Britain faced a “triple savings challenge” of insufficient savings, an inability to cope financially with major life events such as family breakdown, and inadequate retirement incomes.

It said 11.2 million people lived in households that had savings of less than £1,000, accounting for about one in three working-age households. As many as half lived in the poorest third of households in Britain.

More here:

The Body Shop has been hit by strong competition, and a lack of innovation, says Diane Wehrle, CEO of Rendle Intelligence and Insights:

“News of The Body Shop calling in administrators is a serious blow to UK high streets and retail destinations who will be nervous of how the 200 store portfolio could be rescued to avoid closures and job losses in local communities.

Against a backdrop of the strong performance of the health and beauty sector over Q4 2023, it undoubtedly reflects a lack of innovation and far stronger competition than ever before with many health and beauty brands moving into the natural and socially conscious space which was once owned by Body Shop.

It’s likely that the focus moving forward will be geared much more to online which will be better suited to what is now clearly a disparate customer base.”

Administration might allow The Body Shop to extract itself from markets where it is struggling.

David Boynton, the former chief executive of The Body Shop, told Radio 5’s Wake Up To Money this morning that The Body Shop is a “big and complex international business”, operating in over 80 markets.

Some are very successful and profitable, but others are less so, and in recent years the company didn’t have the money to either improve its loss-making markets or quit them.

Boynton explains:

The fact is it’s very expensive to close markets, because of lease obligations and redundency costs, especially in countries like Germany and France.

There are people speculating that the potential administation might be a means of removing some of the obligations in closing less profitable markets.

Joe Biden tells snack companies to stop shrinkflation

President Joe Biden has launched an attack on food and drink companies who are cutting the size of their products but not the cost.

In a video posted ahead of last night’s nail-biting Super Bowl LVIII, Biden pointed out that sports drinks bottles are smaller, while you get fewer crisps in a packet than you used to, and less ice-cream in a carton too.

As Biden puts it:

I’ve had enough of what they call shrinkflation. It’s a rip-off.

“Some companies are trying to pull a fast one by shrinking the products little by little and hoping you won’t notice.

“Give me a break. The American public is tired of being played for suckers. I’m calling on companies to put a stop to this. Let’s make sure businesses do the right thing now.”

While you were Super Bowl shopping, did you notice smaller-than-usual products where the price stays the same?

Folks are calling it Shrinkflation and it means companies are giving you less for every dollar you spend.

I’m calling on the big consumer brands to put a stop to it. pic.twitter.com/wL1NsEh78F

— President Biden (@POTUS) February 11, 2024

Shrinkflation has helped consumer goods makers to grow profits despite inflationary pressures, and it isn’t only a US phenomenon.

Retailers in the UK have been cutting the size of their products for several years, and also changing their ingredients, as they try to absorb the impact of higher raw material, energy and staff costs….

…while in France, supermarket chain Carrefour has put labels on its shelves this week warning shoppers of “shrinkflation”, to shame retailers who have been cutting product sizes.

Biden also seems happy with the result from Las Vegas:

With their third Super Bowl win in just five seasons, the Kansas City Chiefs aren’t just champions today – they’re a dynasty.

Congratulations, Chiefs Kingdom.

Ready to welcome this team back to the White House. pic.twitter.com/8GZDRiopRX

— President Biden (@POTUS) February 12, 2024

Updated at 

Introduction: The Body Shop is lining up administrators

Good morning and welcome to our rolling coverage of business, the financial markets and the world economy.

Thousands of jobs are at risk at The Body Shop, as the cosmetics retailer’s new owners line up administrators for its British arm.

The Body Shop could go into administration as early as this week, leading to store closures, having suffered disappointing trading over Christmas and in early January.

The retail chain, which has more than 200 shops, was bought by the pan-European private equity investor Aurelius last November.

Administrators at FRP Advisory are likely to be appointed as soon as this week to handle an insolvency process, Sky News reported on Saturday, citing sources who said they expected the closure of a significant number of the stores.

The Body Shop’s international businesses have already been sold to an unknown family office, according to Retail Week.

The Body Shop, known for its ethical trading ethos, dates back almost 50 years, as my colleaue Rob Davies explains:

Roddick, an environmental campaigner, activist and entrepreneur, founded the Body Shop in Brighton in 1976. The company remained under her ownership for three decades, until she sold it in 2006. Roddick died the following year.

By then, The Body Shop had become synonymous with its ethical positions, including a refusal to stock products tested on animals and a sourcing of ingredients from natural products that are traded ethically.

It looks set to be another interesting week ahead for financial markets with a good mix of central bank speakers and data coming into play as the week progresses. Asian trading sessions will experience a drop in liquidity with several markets enjoying the Lunar New Year…

— IC Markets Global (@IC_Markets) February 11, 2024

…before the Bank of England’s Governor Andrew Bailey speaks at the UK’s premier university – Loughborough.

— IC Markets Global (@IC_Markets) February 11, 2024

The agenda

  • 10am GMT: European Commission winter forecasts

  • Noon GMT: India’s industrial production data for December & inflation for January

  • 1pm GMT: Russian balance of trade for December

  • 6pm GMT: Bank of England governor Andrew Bailey gives lecture at Loughborough University

Updated at 

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