It was the best of times, it was the worst of times ... and that was just week one! The tale of two economies continues. The third lock down is imposed into the first quarter of 2021.
This week, the SMMT reported car sales down by 30% in the past year. Showroom sales were hindered behind lock doors. Marstons, the brewer of Pedigree and Hobgoblin, called for more help for the pubs and restaurant sector.
Mitchell and Butlers, owner of All Bar One and Harvester, is to tap shareholders for funds, to offset the slump in revenue. Chief Executive, Phil Urban called on the government for new support measures, to help hospitality businesses.
Ryanair announced cuts in flights and services, as traffic levels are expected to fall by 80% once again. Restructuring is expected at Paperchase, as PwC are appointed as administrators. The retail chain may claim the title, of the first, but not the last, high street victim of 2021.
Marks & Spencer boss, Steve Rowe, talked of "near impossible" conditions, resulting in clothing sales down 25% in the final quarter of the year. M&S non food retail stores sales were down by almost 50%, offset by 50% growth in online sales. Revenues from food, online and Ocado were able to offset some of the high street damage.
Therein lies the reality of the "Tale of Two Economies". Sector losers during the pandemic have been clothing and retail, travel and tourism, food and accommodation, leisure and entertainment. Sector winners have been, food, online retail and logistics. Online food sales have doubled. The share of online sales overall has increased to over 30%. Digital acceleration online and into cloud, has become the "modus operandi" for all
This week ASOS announced a £90 million investment in a new 450,000 distribution warehouse. Joules and Next reported record sales online. Moonpig is planning a £1 billion flotation within the month. DIY sales, gardening and pets have been additional beneficiaries. Pets at Home, reported a surge in profits as home owners added pets to ease the pain and isolation of lock down.
Streaming has provided exceptional online growth for music and movies. Streaming accounted for 80% of music consumption over the past year. Netflix and Disney have enjoyed a surge in share price as a result of the home entertainment boom. The top seven digital stocks have surged in value by $3.5 trillion over the past year.
Barratt Developments reported record home sales in the second half of the year. New mortgages hit a record high in December. House prices ended the year up over 7% higher. Businesses like Rentokil were able to clean up, as hygiene demands increased.
Then of course there is Brexit. Finally after four years of confusion, the oven ready deal emerges slightly overcooked from the heated negotiations. A free trade deal, outside of the customs union, with a border down the Irish Sea and a bigger catch for UK trawlers, is the result. More catches to come for UK exporters in the future, no doubt.
Next week we will take a closer look at growth forecasts for the year in prospect ... an act of foolishness in the epoch of incredulity ... perhaps, don't miss that!
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The Saturday Economist
John Ashcroft publishes the Saturday Economist. Join the mailing list for updates on the UK and World Economy.
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