October 23, 2018

Pegler’s market report – 23.10.18: Amazon backs the UK

by David Pegler

in Insights Press Releases

As published in the Brighton Argus (23.10.18) Business section under the title Pegler’s Market Report:

Amazon backs the UK

Amazon’s decision to create hundreds of highly skilled jobs in Manchester, Edinburgh and Cambridge is an enormous vote of confidence in the UK and a signal to the world that Britain is very much open for business.

The world’s largest online retailer is due to have 27,500 staff in Britain by the end of this year. It has 17 big warehouses, or fulfilment centres, as well as 50 delivery stations. Last year it opened a new UK head office in Shoreditch, east London.

The company has been criticised for the working conditions at its warehouses and the amount of tax it has paid in Britain, but Amazon insists that it pays all the tax it is legally obliged to pay. In August it was revealed that despite Amazon’s profits nearly trebling to £73 million in the UK last year, the company had a tax bill of only £4.5 million.

Uber is planning to launch a division that would hire out temporary workers such as waiters and security guards for corporate functions and parties.

The ride-hailing app is looking to diversify its business before an expected stock market debut next year that Wall Street investment banks think may value Uber at as much as $120 billion.

Following successful spin-offs such as Uber Eats, which delivers food, and Uber Freight, which connects shippers with lorry drivers. Uber Works would be pitched as a business-to-business service and would make the most of its large database of contractors to provide a temporary workforce for events.

Brexit woes were mixed with largely welcomed UK economic news over the last week. Wages were reported as rising at their fastest pace in nearly 10 years – a welcome boost for household finances. The Office for National Statistics (ONS) said that earnings excluding bonuses rose by 3.1pc in the three months to August compared to 12 months earlier, beating expectations and outstripping the 2.9pc rise in the three months to July. Economists said that low unemployment was at last pushing up wages, as has historically been the case.

The data came alongside figures showing that unemployment held steady at 4pc, although the number of people in work dropped by 5,000, against expectations of a rise. Previously the ONS reported inflation falling sharply in September, from 2.7pc in August to 2.4pc in September. The news means that, on average, UK earnings are at last outstripping inflation.

Superdry issued a warning about its full-year financial results, citing unusually warm weather and the effect of foreign exchange costs as reasons for its dampened outlook.

The clothing maker expects profit for the 2019 financial year to be hurt by about £10m, in part as unseasonably hot weather in the UK, continental Europe and on the east coast of the US, which has cut into demand for its autumn and winter products, particularly sweats and jackets.

By David Pegler, Brighton Capital Management