Nightmare Central for Center Parcs
Center Parcs, usually known for its woodland lodges, spas, pools and half-term premium price tag, delivered a masterclass this week in to how to alienate customers and generate a slew of bad headlines. In a series of PR moves that would have made Gerald Ratner blush, it first announced that it would close on the day of the Queen’s state funeral, forcing guests halfway through a week long break to return home for the night, before resuming their holiday a day later. After howls of protest and considerable online ridicule, it made a rapid u-turn: there would still be no check-in Monday, but those already there could stay on. However, these guests would have to remain in their lodges during the day — leading pundits to ask how a hospitality business had managed to turn a funeral into a house arrest situation. This was followed a further turn: holidaymakers will now be able to walk outside but restaurants, swimming pools and other activities will still be closed. It is refunding affected customers, but the bill for the damage it has done to its reputation may be far, far higher.
Respect has its Limits
Other companies and organisations also ran into difficulties this week when it came to determining how to appropriately mark the Queen’s death. Morrisons was lambasted for turning down the volume of the ‘bleeps’ on its self-scan check out machines as a mark of respect. The Met Office was criticised for a tweet which indicated it would only put out one forecast a day during a period of national mourning. One local council closed a bike rack, while British Cycling was forced to apologise after initially telling people not to ride their bikes at all on the day the State Funeral. If that wasn’t enough, ‘Guinea Pig Awareness Week’ was postponed for seven days. All this has left many people scratching their head and wondering if corporate Britain has lost all sense of proportion — particularly as the Queen was from that wartime generation famed for “keeping calm and carrying on”.
Does King Charles III like Marmite?
Hundreds of companies will be asking similar questions following the change of reigning sovereign. Around 600 brands display the Queen’s coat of arms on their packaging and stores, showing that they supply the royal household with their products. This includes many well-known products, such as HP Sauce, Twinning’s tea, Cadbury’s chocolates, Crown Paints, Bollinger champagne and shops such as Fortum & Mason and Waitrose. However, following the death of the Queen these companies will all have to reapply for this Royal Warrant, and it will only be granted if the new King continues to favour their product.
Link Defies FCA over Woodford
When companies get their knuckles rapped by the FCA they usually express regret for previous wrongdoings, put in place better compliance checks and hope a bit of humble pie will get them a reduced fine. Australian-based fund administrator Link Group is taking a different approach. It has said that it does not agree with the regulator’s finding of misconduct over the role of its London-based subsidiary in the collapse of the Woodford Equity Fund, and might challenge any FCA penalties through the courts. Moreover, it hinted that it would rather walk away from its UK business (the largest independent administrator in the UK) than have the parent company shoulder the cost. The FCA confirmed it would ‘likely’ have to force Link to pay a penalty. Meanwhile, Woodford’s former army of smaller investors are still waiting to see if there is any hope of compensation for the estimated £1 billion they lost when this fund collapsed.
Ocado Sales Set to Fall
The cost-of-living squeeze is being felt across middle-class households, and now, Ocado braced for its first annual fall in sales. The online supermarket says the value of its average ‘shop’ has fallen from £123 to £116, with customers switching from premium to cheaper brands, and buying less overall. Ocado (OCDO) used to deliver Waitrose goods but now partners with M&S (MKS) and has expanded its range of lower-cost own-label goods. This trend also explains why Aldi overtook Morrisons this week to become the UK’s fourth largest supermarket, growing its market share by 9.3%. Hot on its heels though is the other German discount chain Lidl, which saw its market share increase by 20% over the same period. Analysts predict that with inflation continuing to stretch shoppers, Lidl is unlikely to remain the sixth largest supermarket for long and will continue to gain ground on its rivals in the months ahead.
Naked Wines Exposed
It’s been more ‘bottoms up’ than ‘cheers’ at Naked Wines (WINE) this week, which saw its share price slide, amid questions about its financial position and the sudden departure of one of its non-executive directors, after less than three weeks in the role. The online wine retailer said it was reviewing its financial plans with a focus on “increased profitability, cost restraint and improved payback [for shareholders]”. The company had issued a profit warning in June and shareholders might now be alarmed at mention of “active discussions” to address the company’s credit facility. Further details are expected next month. Until then, I guess they’ll do fewer £75-off-a-crate-of-wine vouchers in every other Amazon parcel.
Cap on Bankers’ Bonuses Could be Scrapped
Just as we all began to worry about how hedge fund managers and FX traders were going to survive this winter, news that the new chancellor, Kwasi Kwarteng, will remove the cap on bankers’ bonuses, was leaked. The idea has been revealed ahead of next week’s proposed tax-cutting ‘mini Budget’. Kwarteng will argue that this will enable London to compete with jurisdictions that don’t impose a cap and attract overseas banks and investment companies to the UK. Critics complain that this is likely to encourage the sort of risky behaviour that helped cause the financial crash in the first place – the cap was after all introduced across the EU after the crisis. We wait to see whether this becomes one of the new government’s ‘Brexit bonuses’ or whether it is quietly dropped amid complaints that allowing bankers to quadruple already generous bonuses appears tone deaf in a cost-of-living crisis.
Fundmith Closes Underperforming Fund
Fundsmith has taken the rare move to liquidate an underperforming trust and return money to shareholders. Its Emerging Equities Trust is up 22% since its launch in 2014 but has lagged both its peer group and the MSCI Emerging Markets benchmark in recent years. Advisers say this move reflects Terry Smith’s (who is NOT the manager) “no nonsense” approach, and should benefit investors, who will be getting the net assets in the trust back, rather than the discounted share price they’d receive if they sold their shares on the open market. They are then free to invest these proceeds in a better performing vehicle. Of course, Fundsmith will lose their annual fees for running this money, which may explain why this happens so infrequently.
Guns Offered as Raffle Prize
Last week, daytime TV shows were offering to pay your gas bill as a ‘star’ prize. This week, we learnt that a cache of guns was being offered as a prize in a raffle organised to raise funds for a girls’ softball league in Texas. In previous years, prizes had included premium parking spots at games or free registration for the next season. Not surprisingly, some parents were a little shocked to now see a Smith & Wesson 15T II semi-automatic rifle and a Glock pistol among this year’s prizes, all donated by a local gun shop. But despite protests the raffle is thought to be going ahead. As one resigned parent put it: “it’s Texas.”
The Queue Goes On (and On, and On)
So the national stereotype is correct: we excel at queuing. At the time of writing the orderly and very British queue to view the Queen lying-in-state stood has hit capacity at around 5 miles – with estimated wait time of more than 11 hours. To put this in some context this queue is the length of 25 Eiffel Towers laid end-to-end, or four Golden Gate bridges linked together, or walking the full length of the two main runways at Heathrow. If this is all making it sound like a long way to shuffle at a very slow pace – albeit it with the camaraderie of fellow queuers – then it’s worth remembering this epic queue is just a fraction of the 13,171 miles of the Great Wall of China. A while yet before even a queue of this magnitude can be (allegedly) seen from space. Though who knows by Sunday?
