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Good morning. Today we're talking about Netflix’s record-breaking quarter, supermarket cuts and WH Smith’s sale idea.

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Big Stories

Netflix reaches new heights

Netflix reported a record-breaking quarter, adding 19m new subscribers, bringing its total to over 300m in the final three months of 2024. Revenue surpassed expectations at $10.25bn, driven by strong subscriber growth and the successful launch of live sports streaming, including NFL games and the Tyson-Paul boxing match. This success has prompted Netflix to shift its focus from subscriber growth to profitability. The company will no longer publicly disclose subscriber numbers, instead emphasising revenue growth and other key performance indicators. This strategic shift reflects Netflix's commitment to diversifying its revenue streams. By focusing on live sports and attracting advertisers, the company aims to generate sustainable revenue growth while minimising the need for continued subscriber acquisition.

Supermarket cuts

The UK supermarket sector is facing increasing pressure to cut costs, with Morrisons becoming the latest to announce job reductions. The Bradford-based grocer plans to eliminate over 200 roles within its retail people team, including positions like regional people managers and store people managers. This decision comes amidst a challenging economic environment, exacerbated by the government's October Budget, which significantly increased employer national insurance contributions. Morrisons' move follows a similar trend among major UK supermarkets. Sainsbury's recently announced plans to cut 3,000 jobs, including the closure of all remaining in-store cafes, as part of a wider strategy to simplify its operations and address rising costs. Asda also announced job cuts and a return-to-office mandate for corporate workers last year. These cost-cutting measures reflect the increasing pressure on supermarkets to maintain profitability in the face of rising inflation, increased competition, and changing consumer demands.

WH Smith eyes sale

WH Smith is exploring the sale of its entire high street business. This strategic move comes as the 230 year-old retailer increasingly focuses on its rapidly growing travel retail division, which now accounts for 75% of its revenue and 85% of its profits. The high street arm, comprising approximately 500 stores and employing around 5,000 people, has faced increasing challenges in recent years amid changing consumer habits and growing competition. The company's travel retail business, which operates from airports, train stations and hospitals with over 1,200 locations globally, has demonstrated significant growth and profitability, making it a more attractive area for future investment. This decision reflects the evolving retail landscape and WH Smith's strategic pivot towards higher-growth and more profitable segments.

Elsewhere...

Poor numbers: Primark's owner has slashed forecasts for the retailer's sales this year after a disappointing performance over the crucial Christmas trading period.

Cutting back: CNN will lay off about 6% of its workforce as the TV news outlet continues to shift its focus toward a more digital-centric strategy.

Trust issues: Google has agreed to implement new rules to clamp down on fake reviews after the UK’s competition watchdog launched an investigation into the tech giant on the issue.

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