9th July 2021
Good morning Three quick stories for you as we head into the weekend:
The good - fully vaccinated travellers will no longer need to quarantine when returning from amber list countries
The bad - the Tokyo Olympics has banned spectators
The ugly - UK is reportedly on the book to pay the EU €47.5bn in the Brexit divorce bill
Luxury watches boom
Cambridge eyes controversial deal with UAE
Yesterday's market moves
FTSE 100 -1.7% 7,031 FTSE 250 -1.4% 22,653
Concerns over the spread of the Delta variant of Covid-19 continued to plague the markets with investors fearing that this could derail the global economic recovery. Miners and other “cyclical” sectors more closely tied to the wider economy were among the hardest hit.
RETAILLuxury watch boom
What’s going on?The UK’s largest luxury watch retailer, Watches of Switzerland, reported record results with a 13% increase in revenue to £905m for the 12 months to May. That’s despite its UK stores being closed for half the year.The company also announced plans to take its dominance in the UK and US into the European market.
Why is this important?
Watches of Switzerland operates online and in stores across the UK and US, under brands such as, Mappin & Webb and Goldsmiths.Over the past 18 months millions of households have built up billions in savings. This has created a whole new level of demand for Rolex, Omega and TAG Heuer watches as consumers look for ways to spend their cash in lockdown.The retailer’s strong online presence meant that it could pivot to website sales when its stores closed during the pandemic.Luxury watches are a large and growing market. The company estimates that the UK, US and EU markets are worth $21bn with the UK alone growing by 8-10% a year.Another attractive feature is that it’s mainly supply driven with demand far outstripping availability for key brands and models. This means prices for luxury watches tend to grow at above inflation rates.The company plans to spend £300 - 340m to grow, with up to £200m of that to be spent on buying rivals in the US and EU.
TakeawayWhoever said the rise of the mobile phone would be the end of the watch was clearly wrong. Watches, or more precisely luxury watches, are more popular than ever. As restrictions continue to ease the company expects that consumers will keep spending their lockdown savings and predicts that this Christmas could be a bumper one.
EDUCATIONCambridge eyes controversial deal with UAE
The University of Cambridge is on the verge of signing a 10 year, £400m deal with the United Arab Emirates, that’s according to leaked documents seen by the Guardian.It would be largest financial contribution in the university’s history. The funds would go towards a range of research including education, fossil fuel alternatives and Islamic art. But the plans have drawn criticism given the UAE’s alleged poor human rights record that include restricting freedom of expression and detained prisoners of conscience. Cambridge is not only one of the most prestigious British universities but also one of the wealthiest with an endowment estimated at over £10bn. Critics argue that it doesn’t need the UAE funding.The university is aware that the potential collaboration could pose a risk to its reputation. The documents raise concerns that the UAE could restrict its “academic freedom and institutional autonomy”.The deal would be a huge win for the UAE as it's trying to improve its image on the world stage.
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Other stories to keep you in the loop
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Bill and Melinda Gates agree to two-year trial period working together at foundation