26th July 2021
Good morning Crocs, the “ugly” foam clog brand, has experienced a renaissance during the pandemic reporting record revenues. The shoes have become so popular that the maker is suing 21 companies, including Walmart, for copying its distinctive style.
Covid costs for decades to come
The rise of Shein
Friday's market moves
FTSE 100 +0.7% 7,019 FTSE 250 +0.7% 22,840
Markets closed the week on a high as investors digested positive macro headlines and company earnings reports. Euro 2020 euphoria helped UK retail sales continue their post-lockdown recovery rising 0.5% in June compared to May. FTSE 100 companies Natwest and Vodafone also posted encouraging results for the first six months of the year.
ECONOMYCovid costs for decades to come
What’s going on?A group of MPs have warned that taxpayers will be facing the costs of the pandemic for decades to come.The estimated lifetime cost of the government’s measures reached an eye-watering £372bn in May, with £172bn already spent.
Why is this important?
The Public Accounts Committee (PAC) is made of a group of MPs from all the major political parties. It’s responsible for scrutinising government spending.Yesterday it published a report heavily criticising the government for its handling of public finances during the pandemic. The PAC said that the government had achieved poor value for money with its spending as it relaxed the usual procurement rules in order to respond to the pandemic.The PAC said that the government’s pandemic response will expose taxpayers to significant financial risks for decades to come.It pointed to a catalogue of mistakes including:
The 10,000 shipping containers of personal protective equipment ordered last year which have yet to be unpacked.
The total value of loans guaranteed by government was estimated to be £92bn but £26bn could be written off as bad loans. Although the exact scale of loss is not going to be known for some time.
Government debt is now over £2trn, equivalent to the size of the UK economy. A level not seen since the 1960s.
TakeawayThere have been accounts of the shocking levels of waste and mismanagement incurred by the government during the pandemic. The PAC report even says that the full cost is still TBC as completeness and accuracy of government spending data varies by department. A public inquiry into the financial and political management of the pandemic is not expected until next year. It should make for some very interesting reading.
RETAILThe rise of Shein
Shein (pronounced SHE-in) may or may not be a familiar name to you, depending on how old you are and how frequently to buy clothes. For the uninitiated Shein is a Chinese fast fashion online retailer. It sells own brand, on trend fashion at discounted prices mostly for females aged 15-30 years old. The average selling price of its dresses is less than £20 and its website ranks number 1 in the world for fashion traffic. In the US it's beaten Amazon to become the number 1 downloaded shopping app.Since launching in 2008 it’s grown into a global fashion giant with sales of $10bn – only H&M and Zara owner Inditex are bigger in the sector.It’s astronomical rise has been fuelled by:
The data-driven, highly efficient supply chain. It relies on a model called real-time fashion, which cuts the time from design to production to as little as a few days. Its deeply integrated and vast supply network in China means it can onboard a 1,000 new products every day.
The prolific social media presence. Despite its corporate persona being tightly behind closed doors, Shein’s brand advertising can be seen across platforms like Instagram and YouTube. But it’s dominance on Gen Z’s favourite app TikTok has been a gamechanger. It was the most talked about brand on TikTok in 2020 and its presence there is only rivalled by Nike.
So what does the future hold for Shein? It will continue to pose Stiff competition for physical retailers like H&M and Primark also other purely online names like Boohoo and Pretty Little Thing. Sales have doubled for eight consecutive years and it’s reportedly planning to overtake Zara's sales by 2022.
Stat of the day
The Morrisons £6.3bn takeover battle is generating £300m in fees for bankers and advisers
Other stories to keep you in the loop
Covid 'pingdemic' and Brexit mean food and gas shortages in parts of UK
Charity, dating and pet spending booms, says Nationwide
Tobacco firm Philip Morris calls for ban on cigarettes within decade