Daily business and finance update 10th February 2023
Deliveroo scales back
Good morning. It’s no secret that Beyoncé is a musical powerhouse. Her fans are clamouring for tickets to her world and this week she broke the record for the most Grammy award wins ever. However, it looks as if her fashion line is not doing so well by comparison. Sales in Ivy Park, her clothing line with Adidas, dropped by 50% to $40m last year, well short of the $250m projected.
Deliveroo scales back
Yesterday the British takeaway app announced it would make around 9% of its workforce redundant, taking out 350 roles to cut its costs. In a candid letter, CEO Will Shu noted that the "fixed cost base is too big for our business" and that the company needed to put a greater focus on profitability and cash generation, rather than revenue growth. Shu said that Deliveroo got caught up in a hiring spree in a fight for market share against rivals. But that the cost of living crisis means priorities have changed.
It's been a difficult time for Deliveroo since it listed on London Stock Exchange two years ago. It’s share price is down 70% during that period and it’s yet to turn a profit. Last year stiff competition forced it to exit the Netherlands and Australia. Now the slowdown in orders following the end of lockdowns has put extra pressure on the firm to reduce costs.
Unilever hikes prices
The British consumer giant – maker of dozens of brands including Marmite, Dove and Cornetto - announced that customers should expect more price increases this year as the firm battles rising cost inflation. The group raised prices by 13% in the final quarter of 2022 but said they were probably past peak inflation. Last year Unilever’s manufacturing costs soared in the wake of Russia’s invasion of Ukraine as energy, cocoa, wheat and sunflower oil prices rose steeply. Elsewhere the company has faced criticism for continuing its Russian business where it employs 3,000 people. But Unilever defended the decision saying leaving the country would result in the Russian government taking over operations and ultimately benefit Vladmir Putin.
Uber hits record
The taxi and food delivery app reported $8.6bn of revenue in the last three months of 2022, the company's strongest quarter ever. That record represents a 49% jump on the year and was made possible by 131m customers hailing 2.1bn rides — up from 1.7bn a year earlier. Despite an economic climate full of cash-strapped consumers, demand for rides remained strong as more people left the house post-lockdowns, while growth for Uber Eats cooled only slightly. In fact, Uber might actually benefit from this uncertain environment. As car ownership grows more expensive, ride-hailing has become more attractive. Uber has also addressed a driver shortage that plagued the company early last year, and is now boasting a record number of drivers thanks in part to more people taking up side hustles to make extra money.
Credit Suisse slumps
Yesterday Switzerland’s second largest bank reported its biggest loss since the 2008 global financial crisis after clients pulled billions out of the troubled firm. Credit Suisse said none of its executives, including the CEO, would get a bonus after the £6.6bn loss. The banking giant is undergoing a major restructuring, cutting 9,000 jobs and creating a separate business for its investment bank under the CS First Boston brand. It hopes the changes will revive its fortunes after years of scandals and regulator fines.
Price control: The telecoms regulator has launched an investigation into broadband and mobile contract price hikes of up to 17%.
Time for profits: Watches of Switzerland has seen its revenues soar in the past three months thanks to a resilient demand for luxury watches.
Open for business: The prime minister and chancellor will host 200 of the UK’s top industry leaders today to encourage more investment in the economy.
Seeing red: Private investors linked to the Qatari royal family are considering making a bid to buy Manchester United next week.
Top dollar: The Michael Jackson estate is in the process of selling half of its interests in the legendary singer’s music catalogue in a deal worth an estimated $800-$900m
Number Of The Day
The number of characters Twitter will allow paid subscribers to tweet versus the usual 280 for free users.