What’s been happening in the commercial world this week? Read on to find out!
This week the UK arm of Victoria’s Secret, entered administration, putting 800 jobs at risk. The firm had already furloughed 785 people. Administrator Deloitte has announced its work with the American lingerie, clothing and beauty retailer will see no immediate redundancies. The plan is to find a buyer and re-negotiate rents on High Street stores. Online business remains worldwide.
However, Victoria’s Secret has long been suffering after UK operations made a loss of £170m from Feb 2018-19. The company’s controversial fashion show was cancelled in 2019 after 2018 saw the lowest ratings ever.
Marketing experts have warned that Victoria’s Secret needs a serious overhaul if it is to recover. The brand does not reflect the values of gender equality and diversity, which have become increasingly important to consumers.
Talking point: How big are threats of reputational risks to companies? What can organisations do to promote corporate social responsibility?
In the wake of the pandemic and the looming end of the government’s furlough scheme, speculation remains rife over the extent of the UK’s unemployment levels. These are just a few of the many high-profile companies that have announced cuts this week.
BP has announced a 15% cut of its workforce, amounting to around 10,000 jobs. It is estimated that 2000 of these will be in the UK, particularly of group leaders and managers, which will hit the company’s London Headquarters the hardest. CEO Bernard Looney has blamed the huge drop in oil price early this year, catalysed by the Russia-Saudi Arabia price war, as contributing to a net debt rise of $6bn in the first quarter. He has publicly stated that the company is spending millions per day and that revenue comes nowhere close.
The luxury fashion company has announced plans to cut 25% of its worldwide workforce. Of 1,400 staff, 1,440 work in the UK, meaning the vast majority of those affected will be British. Despite maintaining online sales and looking forward to the opening of their UK stores on 15th June, the company remains pessimistic that this will offset previous losses.
It should be noted that Mulberry was one of the leading fashion brands who have spent the last few months manufacturing gowns for NHS workers.
Bentley has announced it will cut 1000 jobs in the UK, by offering staff the chance to take voluntary redundancy. This amounts to one quarter of the British luxury car manufacturer’s workforce.
As part of the short-term financial outlook for the company is significantly reducing its size, these may become compulsory redundancies in due course.
Bentley had a difficult start to the 2010s whereby it struggled to remain profitable but had been making a good recovery since its overhaul in mid-2018. The successes of 2019 and 2020, with an increase of 5% in worldwide sales and a record performance in the first quarter respectively, have therefore been short-lived. For its 101st birthday, Bentley had been planning to announce a huge restructuring programme, set to revamp the brand for the next 100 years but this was delayed due to the virus. It is anticipated that Bentley will use a promise of electrification with every model as its marketing strategy once the new plan is revealed.
Talking point: To what extent do you think the government’s furlough scheme is hiding unemployment levels, especially in relation to the retail sector?
The French multinational luxury goods conglomerate, LVMH, had previously planned to takeover Tiffany & Co. in a £12.5bn acquisition. However, due to the pandemic and subsequent collapse of the luxury goods market, LVMH appears to be re-assessing the purchase. CEO Bernard Arnault has assured that he will not buy Tiffany & Co. shares on the open market to take advantage of their sharp drop in value. However, it has reported but unconfirmed that Arnault would like to pressure the American luxury jewellery retailer into lowering the share price of $135 which he had previously agreed to.
Talking point: Do you think it is fair or ethical for Arnault to be asking for a lower purchase price given the huge slash to Tiffany & Co.’s value?
Words: Holly Porter
Missed last week’s update? Read it here!
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