Margareta Pagano: Stop blaming the weather and get your thermals on
The winners and losers on the high street
Sunday 09 January 2011
There's no such thing as bad weather, only bad clothing, according to an old Norwegian saying.
It's one of my favourites and one that our high street retail bosses should bear in mind as they blame the recent blizzards for their poor trading figures and profit warnings. I can just about understand Mothercare's excuse that the bad weather kept pregnant women with their bumps and prams from venturing out in the snow, or Alexon's that the ladies of a certain age were prevented from going out for their fashion. But do we really believe shoppers stayed away from Next, HMV, Clinton Cards, Majestic Wines and now Halfords because of the snow?
December had only two really bad weeks when the weather was so severe people had to stay away from the shops, but each was followed by a week of more clement conditions, certainly the one before Christmas. At least HMV and Clinton Cards had the honesty to admit that changing habits had affected their businesses along with the weather – in HMV's case the rise of people downloading music from the web and the growth of the ebook hitting its Waterstone's shops, while Clinton conceded that the rise of email Christmas greetings hit card sales.
The reason I'm not buying the weather blame-game is that across the high street, at John Lewis, a totally different story is being told; the staff-owned group recorded knock-out sales of £545m for the five weeks before Christmas, up 8.9 per cent on the same period last year. Some of its best-selling items were electricals, up a whopping 14.4 per cent, and fashion, up nearly 9 per cent. So the idea that ice stopped people from shopping is not good enough. For John Lewis's astounding results showed once again that some people are trading up and some are trading down, while those in the middle just keep going to this mecca of "never knowingly undersold" quality.
And Marks & Spencer's Marc Bolland is due to give a trading update on Tuesday which I'm told will also tell of a merry Christmas, particularly for food and men's clothes (Analysts say the snow will knock only 2 per cent off its sales). There will be much more for investors to chew on, as Morrisons, Debenhams, Ocado, Supergroup, Tesco, Home Retail and Dixons are also reporting. My hunch is that high-fashion chains like Supergroup will have had a great time over the more prosaic ranges such as Next, while Tesco will also have had a good time. Even Sir Philip Green's Top Shop is finding the going tough.
What the white stuff really did was sort the winners and losers on the high street; showing up retailers such as HMV, Clinton and Mothercare which have structural problems: HMV looks ripe for a break-up, with the sale of Waterstone's bound to be on the cards, Clinton has its debt pile to sort out and Mothercare has just never got its products quite right. No doubt this year is going to be rough for all retailers, with consumer spending cut back by the VAT hike, higher raw prices and higher unemployment. But the good ones will survive. And if the poor performers want to protect themselves from the bad weather, the place to go for toasty thermal underwear is still John Lewis and M&S. If only John Lewis sold shares in itself....
Operation Martini: No, not the drink...but a new golden age
Gold bug Ross Norman is so convinced that gold is still a buy that he's bought the 200-year-old Sharps Pixley name with which to sell the yellow metal to the public. Sharps Pixley was one of the original London gold and silver fixing members and Norman has turned the brand into a new online site to provide real time prices and market news to help investors decide when to buy. Eventually, he hopes to get banks to give out gold from cash machines. But can gold keep storming ahead? Norman thinks it can and his record is good; he got the price right last year with $1,236 per ounce and is forecasting an average of $1,513 and a high of $1,850 for this year. All he has to do now is make sure his project, code-named Operation Martini, really does get the physical stuff to anyone who wants it "anytime, anyplace, anywhere".
With 1.5 million people who have never worked, the Government must act
The news that Britain is the Neet – not in employment, education, or training – capital of Western Europe is devastating, not just for the young themselves, but for the long-term health of the nation. The facts are stark: the UK has more young people without work or education than Romania and Bulgaria, countries we would traditionally consider among the poorest and least developed in Europe. And, according to Eurostat, the number of 20- to 24-year-old Neets has actually been rising over the past decade.
In 2003, this group made up about 12 per cent of the population, but by 2008 this had risen to 17 per cent. To put this into context, there are about 1.5 million people in the UK who have never worked, about 600,000 of them aged between 20 and 24.
The politicians have started to tackle the issue, partly by reforming welfare benefits and how they are paid so there is more incentive to work than not. But this is not going to be enough, and it's not going to be quick enough to save this generation. What is needed is for schools and the business community to step up to the challenge and work more closely together.
First, schools and colleges need to improve the literacy and numeracy levels of their pupils, and fast. Then they need to put a bomb under their careers advisory services – which, in the main, are abominable – by getting more business leaders in to talk to teenagers about what's on offer, particularly in technical subjects. Second, the Government should give companies tax-breaks to encourage them to take on even more school-leavers and the unemployed.
Later this month, the Business, Innovation and Skills Department is hosting an Advanced Manufacturing Growth Summit, to be chaired by Mark Prisk, the Business and Enterprise minister, with Nick Clegg and Vince Cable attending, along with many of the UK's top industrialists where this will be on the agenda.
Cable has already done a huge amount to put apprenticeships and other training issues at the heart of the coalition's push to improve skills, upping the Budget again this year. It should go further and double it, now.
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