Angela Ahrendts dismisses idea as way of boosting number of women as firm reports closed to a 30% drop in first-half profits
Burberry boss Angela Ahrendts has dismissed the idea of quotas to boost the number of women in the boardroom as “dangerous”, despite growing evidence of discrimination in the business world and the prospect of just two female chief executives in the FTSE 100 next year.
Asked if she was in favour of the imposition of quotas, Ahrendts said on Wednesday: “I’m not. I think it’s dangerous … Whether it’s countries or companies, it’s about putting the best person in the job who can unite people and create value. A man could do this job just as well as I can.”
The American, who took the helm at the British fashion brand six years ago, added that it was not an issue that she fretted about: “I don’t spend a lot of time thinking about this, what with three kids, running the company and being flat out busy.”
The recent resignations of Pearson boss Dame Marjorie Scardino and Cynthia Carroll, the chief executive of mining firm Anglo American, have reignited the debate about why there is a dearth of women at the top of Britain’s biggest companies. Their departures will leave just Ahrendts and Imperial Tobacco’s Alison Cooper fronting FTSE 100 companies in 2013.
Pointing to the growing number of female university graduates, Ahrendts suggested it was just a matter of time before the gender balance improved.
Announcing her decision to leave the media and publishing group Pearson after 15 years in charge, Scardino – who also rejected quotas – sounded a less optimistic note, saying: “I thought, in 1997, that by the time I left Pearson, things would be different in terms of the number of chief executives and board members who are women. It’s not really too different and, for that, I’m sorry.”
Royal Mail’s chief executive, Moya Greene, has also waded into the debate and is one of the few top female bosses to support the introduction of quotas to boost the number of women ion the boardroom. She has described the current pace of change as “glacial”.
Despite a flurry of female appointments in the wake of last year’s government inquiry led by Lord Davies of Abersoch, which set a target of 25% female representation on FTSE boards by 2015, women still occupy fewer than one-in-five FTSE 100 boardroom seats, with new hires strongly biased towards part-time, non-executive roles rather than promoting full-time employees into the most senior jobs.
A report published earlier this week by the Chartered Management Institute also made grim reading. It found that female executives earn £400,000 less over the course of their working lives than male colleagues with identical careers – and are far more likely to be made redundant.
Ahrendts’ comments came as Burberry reported almost a 30% drop in first-half profits to £112m on sales of £883m. The decline reflected the company’s decision to start producing its own perfume and makeup.
In keeping with an industry-wide trend, the 156-year-old firm is buying back licences and has agreed to pay the French group Interparfums €181m (£145m) to sever its agreement, booking a £74m accounting charge. The fashion firm said the decision would not have an impact on profits in the short term, but Investec analyst Bethany Hocking predicted it would create a £71m boost by 2017.
The firm, best known for its raincoats lined with a distinctive camel, red and black check design, spooked investors with a profit warning in September that whipped £1bn off its stock market value. At that time it said growth had stalled in July and August, particularly in China, which has fuelled a near three-year boom in demand for luxury goods.
Burberry also revealed that the spending power of its more “aspirational” consumers – a term used to describe middle-class consumers who spend a large proportion of their disposable income on designer labels but cannot stretch to the most expensive items – had been hit by the faltering global economy.
It was able to make up some of the lost ground, with profit margins up in the six months to 30 September, as it sold a higher proportion of goods from its top-end lines to its wealthiest customers.
The growing divide between Burberry’s wealthy shoppers and its middle-class customers has been reflected in the fortunes of its various brands. Its most expensive ranges, such as Prorsum, which it shows on the catwalk, and London, are doing well, while sales of the cheaper casualwear line, Brit, which includes jeans and polo shirts, have slumped.
Last month Burberry said sales had steadied in the final weeks of its second quarter and on Wednesday there was no change to its profit outlook for the second half. Shares closed down more than 4% at £11.99.
Fashion house Burberry tells the BBC it is sticking to its global expansion plans, despite concerns about the impact of the global downturn on luxury retailers.
Read the original here: Burberry sticks to growth targets
FTSE 100 finished upbeat week on a down note as Wall Street takes the shine off shares
A day after Google suffered the biggest share price drop in history, there was little respite for the search engine’s investors.
Some £15bn was wiped off Google’s value on Thursday after the accidental release of its third quarter results ahead of time. Google – which had recently overtaken Microsoft to become the second largest US technology company after Apple – blamed financial printing firm R.R. Donnelley for the mistake.
More to the point, the figures showed a 20% fall in quarterly net income to $2.18bn and missed analysts’ expectations. Part of the problem is that Google has been struggling to turn around loss-making mobile phone group Motorola Mobility which it bought for $12.5bn.
In early trading on Friday, the company’s shares had lost another 2% to $681.
Google was one of a number of major US companies to report disappointing results, with others including Microsoft, General Electric and Intel. So Wall Street celebrated the 25th anniversary of the October 1987 crash with an early decline of more than 130 points, as the corporate news outweighed earlier positive US economic data such as retail sales and industrial production.
Leading shares in London followed Wall Street’s lead, with the FTSE 100 finishing 20.90 points lower at 5896.15. But over the week it added 103 points and touched a seven month high on Thursday. Investors had been cautiously optimistic in the run-up to the latest two day EU summit which ended on Friday afternoon, encouraged by news that Moody’s had decided not to cut its credit rating on Spain. But despite late night meetings, the summit failed to produce any real breakthroughs.
Banks came under pressure following one EU agreement, a compromise deal on banking supervision. More immediately, investors in the sector were nervous about increases in the compensation bill for mis-selling payment protection insurance, after Barclays raised its provision by another £700m to £2bn on Thursday. The total cost could now reach £15bn, said analysts.
Barclays shares had been buoyed recently after strong performances from US investment banks. It said despite the increase in the PPI bill it still expected to meet market expectations for third quarter profits, but analysts said merely meeting forecasts would be seen as disappointing. Nomura, which has a reduce rating on the bank, said:
Looking at the strength of the results at US peers, meeting what we think of as semi-stale consensus is as good as a miss. The results are bound to underwhelm the market which would have expected some relative strength.
Barclays fell 6.85p to 233.85p, Lloyds Banking Group lost 1.38p to 40.49p after its Bank of Scotland division was fined £4.2m for holding inaccurate mortgage records, while Royal Bank of Scotland dipped 6p to 281p.
Elsewhere Burberry was 8p better at £11.88 after Investec lifted its recommendation from hold to buy. Analyst Bethany Hocking said:
We return to our bullish stance, after a brief period at hold post the profit warning. The first half pre-close reported two key pieces of news in our view -”a modest improvement” at the period end and a continued elevation in the ‘luxury’ nature of product sales. We have tweaked some assumptions, with the net effect of marginal increases in 2013 to 2015 pretax profit estimates. The Burberry brand is far from broken, operational leverage should come through, and, whilst volatility will remain, we see long-term value here.
Property group Hammerson moved 7.3p higher to 483.4p after paying £254m for four retail parks, including the Thurrock shopping park and Bristol’s Imperial retail park.
Among the mid-caps Redrow crumbled 6.1p to 156.4p after an attempt to buy the housebuilder by its founder collapsed after the market closed on Thursday.
Steve Morgan and a consortium including Redrow’s second largest shareholder Toscafund had offered 152p a share for the business, valuing it at £562m. Other investors believed the price was two low, and there was talk a new offer of between 165p and 170p was being considered. But after the takeover panel extended the original bid deadline twice, no agreement could be reached and the discussions were terminated.
Traders had been looking for the next industrial group to warn on earnings after downbeat statements from the likes of Cookson and Morgan Crucible.
Spectris, the testing and controls equipment group, was expected to join the club, but instead it issued an upbeat statement and its shares soared nearly 12% to £17.79. It said sales had increased by 12% during the last quarter, including a contribution from recent acquisitions which was offset by a negative currency effect. At constant currency rates sales were up 2%, albeit this was a slowdown on the first half. It said:
Spectris remains well positioned to deliver on its expectations for the year as it realises both the benefits of its recent acquisitions, especially Omega, and the increase in the proportion of resilient revenues generated in the business.
Andy Douglas at Jefferies said:
This is a resilient performance and better than many will have feared, with slower growth versus the first half of 2012, reflecting the macro-economic environment – this has been anticipated by the market. The outlook statement is ‘in-line’ for the full year, and whilst the top-end of consensus may be trimmed, we firmly reiterate our buy recommendation.
But Drax, the coal-fired power station company, dropped 17.5p to 532.5p after HSBC downgraded its recommendation from overweight to neutral and cut its target price from 600p to 580p. The bank said:
We are comfortable about biomass feedstock availability for the first phase of the company’s coal-to-biomass transition plans. The CO2 price floor may boost the profitability of biomass but as it stands will lead to electricity demand destruction.
Man continued its recent poor run, falling 2.4p to 81p. The hedge fund manager admitted on Thursday more client cash had been withdrawn than came in for the fifth quarter in a row, and warned there were few signs of improvement. Numis issued a sell note, saying:
Whilst there are some tentative signs that investor sentiment and flows have improved in the asset management industry generally (especially in Europe), Man does not seem to be benefiting from this. We continue to consider Man uninvestable, unless the share price were to fall below its liquidation value (all else equal), which we estimate as being worth 50p to 75p a share.
Finally Pathfinder Minerals put on 14% to 1.875p after the mining company won a UK high court judgement confirming it was the rightful owner of its Mozambique subsidiary, CMDN, which holds two titanium licences. Pathfinder discovered last December that its mining licences had been transferred to an unaffiliated company in Mozambique called Pathfinder Mozambique, belonging to its former local partner, General Veloso. The company now has to have the UK ruling enforced in Mozambique.
Burberry confirms sharply slower demand growth in China, although stronger sale results elsewhere lift the fashion house’s shares.
Read the original: Burberry confirms weak Asia sales
VisitBritain embarks on Beijing trip to lure wealthy Chinese by promoting high-end consumer brands
Chinese tourists must spend, spend, spend, during trips to the UK to help lift the country out of recession, according to a report by the British tourist board.
VisitBritain says the luxury clothing brand Burberry has played an almost lone hand at wooing high-spending Chinese tourists to the UK.
France and Italy have aspirational consumer brands such as Chanel, Louis Vuitton, Hermès, Christian Dior and Prada, the report says, while Germany’s reputation is enhanced by its cars and consumer electronics. However, the only British brand with any profile in China is the 156-year-old fashion house founded by Thomas Burberry.
VisitBritain’s strategy to boost tourism from China focuses on promoting high-end consumer culture while dispelling the myth that the UK is home to unwelcoming monolinguists whose goods are poor value for money. It also repeats concerns that the UK’s tough visa policy deters potential visitors from China, Russia, India and the United Arab Emirates.
A Best-of-British delegation of retailers, tourist attractions and sports organisations including Harrods, Selfridges, the Historic Royal Palaces and the Wimbledon Lawn Tennis museum will fly to Beijing next month in the Olympics afterglow, while setting a new tone that contrasts sharply with the Cool Britannia of the Blair era, which promoted Britpop, art and edgy fashion.
Also in attendance will be Value Retail, owner of Bicester Village, the designer shopping outlet in Oxfordshire, which hopes to lure wealthy visitors out of London and into the countryside. Most tourists visit only the capital.
VisitBritain has set a target of 40 million foreign visitors by 2020, 9 million more than today. Tourism accounts for about 9% of GDP and jobs and is the third-largest foreign-exchange earner, behind chemicals and financial services, its report says.
“Seen from a Chinese tour bus, the continent of Europe is not so much an ancient collection of cities and nations as a glittering emporium stocked with brands,” the report adds. “However, Britain’s retail and consumer brands fare poorly relative to their competitors.”
Language barriers are also a competitive issue, says VisitBritain. “In France, shop assistants at the Galeries Lafayette department store speak Mandarin, while hotels with many Chinese guests provide television channels in their native language and teapots (in addition to coffee makers) in their rooms,” the report says.
“In Britain, while some of the leading players such as the West End stores and Hilton hotels have started programmes to welcome Chinese visitors, there is still much to be done to ensure tourism businesses around the country understand the expectations of international markets.”
The highest-spending foreign holidaymakers in Britain are the Qataris, the report says, who spend an average of £215 a night over 15 nights. Kuwaitis spend about £215 a night too, but over 12 days, while Saudis spend £207 a night over 13 nights. The Chinese spend £112 a night over 13 nights; Americans stay for a week and spend £104 a night.
Despite the global recession and European debt crisis, the shrinking economies of France, Germany, Spain and the US account for a third of the money spent by tourists in the UK. The number of visitors from Australia, Norway, Denmark, Sweden and the UAE has increased.
On the agenda this week: global problems shake society, but at least stationery sales are holding up well
Five years ago, nobody was accusing the International Monetary Fund of being even remotely relevant, but it’s amazing how a good old-fashioned crisis can justify one’s existence.
The fund (it’s a bank really) is coining it in now countries are again paying for emergency loans. Meanwhile, the group’s annual bash, taking place in Tokyo this week, is no longer associated with dry communiqués obediently delivered by the world’s financial leaders. Instead, delegates will concentrate on the more amusing diversion of appearing polite about rivals in public, while viciously kicking their shins when an opening presents.
That’s because the real issue is another old theme back in vogue – protectionism – and the list of likely spats is lengthy. They include a German-American attack on China for dumping solar panels on their domestic markets, plus a potential US bill allowing higher tariffs on imports from countries gaining an edge through currency manipulation (that’s China, again).
Meanwhile, Beijing will argue that quantitative easing in the west distorts the financial system, while also continuing its tiff with Japan, which accuses China of effectively allowing Japanese factories to be trashed in recent riots.
And then there’s the eurozone. IMF boss Christine Lagarde will need all her charm just to keep the boys in line.
Goodwill ambassador Merkel heads to Greece
The last time German chancellor Angela Merkel visited Athens, Europe was still in awe of all the Greek mythical figures that made up the country’s finances. The financial system was then at the apex of the credit boom and Gordon Brown was a popular chap, having just wrested the keys to Number 10. So the world provides a far more cynical backdrop for her visit on Tuesday.
Merkel will arrive just after Greek prime minister Antonis Samaras has warned that his country will run out of cash next month without €31bn of aid. Some wags, by the way, reckon the trip could boost the Greek economy, with retailers doing a brisk trade in lighter fuel for burning German flags and black marker pens for defacing Merkel’s image.
Still, the visit represents a considerable turnaround for Samaras’s reputation: he was once the butt of rampant disapproval in the eurozone’s corridors of power. Merkel will be in Athens not to perform her usual trick of slamming the Greeks, but to soothe them, claiming that “we’re all in it together”. This could still be an incendiary line – especially if she then fails to resist adding: “But you’re in it more than us.”
Swann still paddling profitably at WH Smith
Nine years ago, when Kate Swann took over as boss of WH Smith, anybody foreseeing the retail backdrop she was to inherit would surely have sold their shares. Amazon had just started transforming the way we buy books, Apple was in the process of making the CD seem rather quaint, and supermarkets were competing on non-food items.
We all know what that did to HMV and Waterstones (not to mention dear old Woolies), yet this seemingly unattractive retailer has produced steady growth in both profits and share price.
And it goes on. This week Swann is expected to unveil pre-tax profits of £100m – the first time under her reign that they have broken that barrier – and a 20% bump in the dividend to around 27p a share.
That news will coincide with next week’s “Super Thursday” marketing fest – the day the book industry releases titles expected to be the most popular Christmas gifts. This should provide a positive narrative alongside inevitable questions about how long Swann’s good luck can last.
Her secret thus far has been diligent cost-cutting, though this has often resulted in grubby stores and long queues. Her decision to cut her stake by £3m in the past year should be a sell sign – except the shares have since gained another 18%.
Burberry feels the chill
Roald Amundsen conquered the South Pole wearing Burberry. Sir John Alcock and Arthur Whitten Brown piloted the first non-stop transatlantic flight modelling its clobber. Actress-cum-model Rosie Huntington-Whiteley sported one of the label’s frocks at the Transformers: Dark Of The Moon premiere last year. You can debate which was the most courageous exploit, but the point is that Burberry has been churning out more than the odd trench coat for some time.
Still, after years of being considered a City success story, the company must face investors this week with news of its recent trading – the first time it’s gone public since last month’s profits warning. Despite clues that the rich aren’t buying expensive threads, the shares slumped by 19%, suggesting the news shocked investors. Perhaps not as much as it stunned Burberry staff, who’ve been told to curtail travel and publicity shindigs. Poor darlings.
Workers at factory in Guangdong Province have complained about low pay and aggressive and verbally abusive behaviour
British-owned luxury goods manufacturer Burberry has pulled production of its bags from a factory in the Guangdong Province of China.
The move follows concerns that working hours and conditions at the factory, operated by the Korean company Simone Accessories Collection, were in possible violation of Burberry’s ethical guidelines.
The China-based factory makes handbags for several western clothing and accessory brands. As well as Burberry, previous clients include Michael Koors and Coach.
It has been the centre of worker grievances. In June 2011 employees staged a four-day strike. They complained about low pay and aggressive and verbally abusive behaviour by the factory’s new Korean management.
During the strike large numbers of police arrived to maintain order, and some strikers were arrested.
In June 2010 Burberry joined the Ethical Trading Initiative and the company has put the ETI Code into its own Ethical Trading Code of Conduct.
One section of the code states that “workers shall not on a regular basis be required to work in excess of 48 hours per week and shall be provided with at least one day off for every 7-day period on average”.
According to the Bureau of Investigative Journalism, however, workers at the Simone factory have been working up to 11 hours a day on a six-day working week.
The fashion firm confirmed that it “had been made aware of work hours exceeding 60 hours per week”.
The company said it had advised Simone that it considered this to be non-compliance with its code of conduct.
Prior to pulling out of the Chinese factory, Pamela Batty, Director of Corporate Responsibility, stated “we do recognise that more needs to be done and we thank the Bureau of Investigative Journalism for bringing these issues to our attention”. The company received its last consignment of Simone-made products in July.
Last week Burberry was in the headlines after warning its profits would be at the bottom end of expectations.