12th October 2021
Good morning Yesterday the final Nobel prize for this year was awarded to a trio of economists for work that led to the introduction of the minimum wage. The economics prize is not technically an official Nobel award but was established by Sweden's central bank and is awarded in memory of Alfred Nobel.
The three economists will share a £840,000 prize fund. One of the winners, David Card, was so surprised by the award that he thought was the victim of a practical joke.
- Going out of fashion – Asos boss shock exit
- Gassed – Gov strikes deal with industry to supply CO2
Asos boss shock exit
What’s going on?
Online fashion giant Asos surprised investors yesterday when it announced that CEO Nick Beighton would be leaving immediately. The company also announced that it expects profits to be 40% lower in the next financial year.
Why is this important?
It was a move no one saw coming - Nick Beighton has led Asos for six years and worked there for 12. During that period the company has gone from fewer than 200 people and annual sales of around £220m to 3,000 employees and almost £4bn in sales.
News of Beighton’s resignation came on the day the company announced strong financial results for the 12 months to August. Revenue increased 22% to £3.9bn and profits rose 36% to £194m on the back of strong demand for online clothes during the pandemic. The company was also helped by the lower number of returns during lockdown which reduced costs.
But looking ahead Asos warned that it would be impacted by the widespread supply chain problems hurting retailers. The company expects the cost of freight, staff, as well as Brexit duty would hit profits. As a result it expects profits for the next year will be in the range of £110m - £140m or up to 40% lower.
An unexpected CEO departure can be a red flag to investors. That coupled with a warning that profits will drop significantly in the future is worse news. As a result Asos’ shares took a beating, finishing down 13% at £24.08.
Gov strikes deal with industry to supply CO2
CF Industries, producer of 60% of UK carbon dioxide, has struck a deal with the government to continue supplying the gas.
CO2 is a crucial input in many areas of the food and drink industry from creating fizzy drinks to preserving the shelf of food. CF has large fertiliser plants in the UK that produce carbon dioxide as a by-product of production.
Last month CF shutdown production at two sites after rising gas prices meant it became too expensive. The government then stepped in with tens of millions of taxpayer cash to ensure CF could continue production.
The government will no longer subsidise the company but has agreed that CF can increase its CO2 prices to cover rising costs. But the deal only goes until January. Thereafter CF says that customers would have to find other sources for the gas.
Food and drink manufacturers have welcomed the deal as it will ensure consistent supply in the run-up to Christmas but said the increased cost represented "yet another burden" as it already faced "enormous stresses"
It’s not clear how much CF will hike prices but end consumers could bare the brunt of the increase.
Stat of the day
Melbourne is suffering the world's longest lockdown, reaching 253 days
Other stories to keep you in the loop
- Business Secretary requests Treasury support for industries hit by energy price hike
- EU unity faces fresh test in Northern Ireland Brexit row
- Private equity salaries swell by 52% to £152k as war for talent with banks intensifies
- Brent crude oil prices top $84 a barrel in energy crisis
- China bans British beef again over mad cow disease
- Professional black women paid less as careers stagnate, says UK survey
Interesting links from around the web