Defying the retail gloom
There is something profoundly depressing about the way retailers blame everyone else but themselves for their woes. There are endless whinges about the weather, business rates, unfair competition from Silicon Valley and from Brexit.
Doubtless all of these are significant but they are rarely on the lips of Brexiteer Lord Wolfson, who for 18 years has ridden the volatility of the High Street with few setbacks.
Wolfson’s assertion that he has seen no evidence Brexit is affecting consumer behaviour could be dismissed as the ramblings of someone wanting out of the EU.
But his opinion is supported by the latest retail sales data from the Office for National Statistics. Sales volumes and the value of what was sold were up sharply and well ahead of forecasts. Weather possibly played a role with sports equipment and garden sales among the bright spots.
But more important is full employment and rising real wages which drive confidence and spending power.
Incidentally, the robust labour market is also among the reasons why the public finances again surprised on the upside with borrowing down to just £200m last month against £1.2bn in February 2018. The profit delivered by Next was very much in line with expectations at £722m.
The eye-catching figure is online turnover, which is now higher than store sales. Next benefited from a running start due to the popularity of its catalogue and using logistics experience to guide online drive. Conversion into an internet champion was never guaranteed and others have struggled.
A remarkable aspect of the Next model is that it still continues to expand its shop portfolio with 46pc more selling space than a decade ago. The contrast with rivals such as M&S and Arcadia could not be greater.
Next has the advantage of being a newer empire, with less onerous leases and the flexibility to open stores in ‘go-to’ venues rather than relying on traditional high streets. Online is less profitable than instore sales at present. But as digital sales bulk up and technology improves, there is no reason why there shouldn’t be a margin crossover with online catching up.
That, together with the policy of share buybacks, makes Next one of the standouts in a troubled sector.
Pensions scam
ALL manner of excuses will be found to justify why 54 of FTSE 100 companies are making cash-in-lieu pension payments to chief executives far in excess of guidelines and the contributions paid to staff.
The most common excuse is that the payments are a condition of employment inherited from a previous role.
The 51pc pension contribution received by Tui boss Friedrich Joussen is nothing short of outrageous. All the more so since Tui is a company which depends on a loyal workforce and caters to customers who count every pound when booking holidays.
It undermines relations with the workforce and ignites suspicion among travellers of price gouging to keep the boss in clover.
The onslaught from staff, unions and investors over the payments to Antonio Horta-Osorio at Lloyds has demonstrated over-generous pension deals can rapidly do reputational damage. It is not clear where this scam originated. But as someone who has watched executive pay skyrocket over the last several decades, I can only think that advisers to often meek pay committees are to blame. The pension cash was seen as less controversial than fattening basic salaries or share options.
There is absolutely no obligation for the recipient to salt the money away for retirement. Given the obscene salaries for most FTSE bosses, the cash in hand is useful pocket money. One adverse consequence of bringing pension allowances down to the level of the rest of the workforce is that base salaries will likely be increased.
That is not an ideal outcome but it will bring an end to a rewards loophole exploited by greedy executives.
Better homes
GOOD to see Persimmon chairman Roger Devlin working hard to repair the housebuilders’ tarnished reputation. The promise to hold back 1.5pc of purchase prices until snagging issues are resolved is laudable and shows sensitivity to wider societal responsibilities. Now it is time for the Persimmon three – former boss Jeff Fairburn, successor David Jenkinson and finance director Michael Killoran – to do their bit by donating their excess bonuses to good causes.