June 8, 2016

Pegler’s market report – 07.06.16: Further job losses on the high street

As published in the Brighton Argus (07.06.16) Business on page 21 under the title Pegler’s Market Report:

Further job losses on the high street

British department stores group BHS is to be wound down after administrators failed to find a buyer for the 88-year-old chain, threatening over 10,000 jobs and creating huge vacant sites in town centres struggling to cope with changing shopping habits.

Elsewhere on the high street, the majority of Austin Reed’s stores will also close with the loss of nearly 1,000 jobs after administrators to the collapsed menswear chain were only able to find a buyer for its famous brand and stock.

Sources familiar with the negotiations said Edinburgh Woollen Mill had refused to take the bulk of the shops as part of a deal, meaning administrators will now begin an orderly ‘wind down’ of the chain’s estate in the coming days. Although the survival of a brand that has been around for more than a century will be celebrated by the high street, its continuation will be over-shadowed by the loss of more retail jobs.

The Fed has made it painfully clear over recent weeks that they will raise rates over the summer if the US economy continues to improve, as they expect. There has been substantial strength in recent consumer and housing market data, but it will be key labour market and inflation readings which ultimately prompt the Fed to act.

In the UK, one of the most recent polls suggests that the referendum vote would be much closer than previously thought.

JD Wetherspoon has sought to ensure that the referendum on Britain’s membership of the European Union is debated by all its customers over a pint by printing 200,000 beer mats that criticise the International Monetary Fund’s intervention in the forthcoming vote. Weatherspoon’s founder, Tim Martin, is an ardent supporter of Britain leaving the EU. The IMF and its chief, Christine Lagarde, warned earlier this month that a Brexit would result in “pretty bad to very, very bad” consequences for the UK.

Gold is nursing a hefty loss of 6.3pc during the month of May. The precious metal rose steadily in the first quarter but has since buckled under the pressure of a more likely US interest rate rise.

Finally, shares in Brewin Dolphin regained some strength as analysts believed the wealth manager was now looking more vulnerable to a bid approach following their recent poor interim results and share price weakness.

By David Pegler, Brighton Capital Management