Burberry enjoys sales rise

Let us talk about fashion this week. Certainly many girls have some interest in fashion, buy Vogue or Marie Claire week by week or browse thought Selfridges, well I am no different. My sister and I have this unwritten rule of spending Sunday morning walking up and down Selfridges browsing from floor to floor even though rarely we buy anything. I think it is her escape from Canary Warf and my hour away from Regent's Park, well Regents' College precisely. Moving on, the story that caught my attention this week is the increase in Burberry sales.

I read the story in Telegraph.co.uk, Guardian.co.uk and Reuters.

The story is that 150-years-old British brand experienced increased revenues in Q2. They reported revenues of £343m, on the contrary to the analysts’ forecast of £320m-£335m. This upwards movement in revenues was mainly caused by increase in demand for Burberry handbags, leather good and their well know print scarves. Retail sales were mainly increasing in Europe and Asia whereas in markets like US and Spain Burberry experienced declines. Overall retail revenue was up 16% (£163m). Growth was the strongest in Britain and North Korea which might be because tourists are attracted by weaker currencies. I have to say maybe a month ago I went to Bicester Village which is a shopping outlet an hour way from London where Burberry has its shop as well. Literally the queue was going around the shop and people were just coming out with hands full of Burberry bags. Due to this positive outlook, Burberry is planning to open 15 new stores worldwide even though they currently have “122 outlet stores, 255 concessions, 90 franchise stores and an e-commerce business in over 25 countries”. In my opinion this is a bit rushed decision. Luxury goods firms were fit by recession very hard. People faced decreases in their salaries, job redundancies, and smaller disposable income consequently stopped buying luxury products. Even people who maintained their wealth or increased it during the recession stopped buying as well because of uncertainty what might happen tomorrow. Burberry did experience decrease in wholesale revenues by 21% but that was caused by 23% of customers cutting back on their orders to reduce unwanted stock.

Telegraph and Reuters have very similar headlines both suggesting that Burberry handbags are driving this increase in revenues whereas Guardian headline is more neutral saying “Burberry enjoys a sales rise”. Having read all three articles, I must say that Guardian ‘won me over’ again. The article focused mostly on the reasons for this rise in Burberry sales, used a lot of figures to support the story throughout keeping my attention all the way to the end. The language used is very clear, no need to have any financial / economic background in order to understand. The story is not ‘big sexy news’, but is still interesting to see how recession is affecting this market segment and how this luxury good brand is dealing with it. As I wrote in my previous blog, a lot of newspapers today are writing about our economies ‘healing’ from the recession and suggesting that financial crises might be over by the begging of 2010. I personally disagree; all these small improvements are still ‘too small’ to say that this ‘big economic downturn’ is over.

Telegraph story is very short, but gets strength to the point. Concentrates more on the share prices of Burberry; something that was not covered to great extend in Guardian. Again I must say Reuters is the one I liked the least. It might be just the stile and structure that does not appeal to me. They use a lot of figures and I think is it easy for the reader to get confused with all that numerical data. However the audience for Reuters might be financial analysts or investors in which case the structure and content of the article makes sense. One thing I noticed is that all three articles mentioned how hard luxury goods sector was fit by recession and that this slight improvement in Burberry performance might be a signal that ‘hard time’ is over and that ‘better time’ is about to come for luxury goods/services companies. Guardian decided to mention which celebrities were present at Burberry’s fashion show three weeks ago here in London; names like Victoria Beckham, Twiggy, Gwyneth Paltrow and Samantha Cameron. Does this really matter in the story? It certainly made me think. Can it be that company asked them to write this story and mention these names?

To sum up, I must say well done Burberry. All three articles covered the story very well, each concentrating on different things like, reason for increase in sales, share prices, competition performance etc. From the latest news we can also see that Burberry’s rivals such as Richemont, Swatch and LVMH are experiencing increase in their performance. It seems like confidence is coming back. Furthermore I believe that there will always be demand for luxury goods to some extent, more or less depending on where we find ourselves in economic cycle. However ‘Passion for fashion’ will always be there.

Sources:

Telegraph.co.uk “Burberry handbags drive rise in revenue” http://www.telegraph.co.uk/finance/newsbysector/epic/brby/6323776/Burberry-handbags-drive-rise-in-revenues.html

Guardian.co.uk “Burberry enjoys sales rise” http://www.guardian.co.uk/business/2009/oct/14/burberrygroup-londonfashionweek

Reuters “Handbags and snoods help Burberry top forecasts” http://www.reuters.com/article/rbsApparelAccessories/idUSLE11480720091014?pageNumber=2&virtualBrandChannel=11604&sp=true

AS

Two year high for services growth

Most of the headlines this week suggested that UK is recovering from the recession, which for me is still hard to believe. Story that caught my attention this week was the growth of service sector in the UK implying that recession might be UK’s past. Why this was so interesting to me is because my family owns a business in service sector in Serbia which is not doing that well in fighting the impact of economic crises.

The stories I read are from BBC News, Times Online and Telegraph. They are all very straight forward with the message they are want to get across and for the first time since I started writing this blog, I can say that all three sources I used seem to be objective and unbiased.

The story is that UK service sector “grew at its fastest rate for two years during September” from 54.1 in August to 55.3 in September. According to the Chartered Institute of Purchasing and Supply (CIPS) it is the fifth month above the 50 level and this is enough to indicate expansion in the sector. All three articles agree that particularly strong businesses within the sector are hotels, restaurants and companies offering services to other businesses (B2B). However as in the most cases in the economy there are winners and losers; “activity fell in transport, storage, communication and personal services”. Although further redundancies are expected which will increase the level of unemployment and it will be hard to predict if this growth in service sector is going to increase further or not. What I really liked about all three articles is that they all concluded the story by saying that one needs to be aware that even though service sector is doing great at the moment it does not give enough evidence that the overall economy will be doing the same. And that is exactly why I do not like to see so many headlines in the news suggestion that the recession is over when we still stand on ‘shaky’ grounds. I do agree that service sector play a big role in the economy, but all this upward movement has to be well examined and taken with caution. In my opinion all three sources did a very good job in term of getting the news across to the audience and they still gave few facts and quotations by experts in field that this news does not mean we are out of recession; it might imply that we are on a good path.

All three sources use a few numerical facts to back up their argument which also gives stories more certainty and weight. Colin Ellis at Daiwa Securities noted that “Even if the economy does not return to growth in the third quarter, joblessness is likely to rise for several months to come”. Both BBC News and Telegraph used the same quotation to explain that that are still weaknesses in the economy despite the significant rise in services sector. On the other hand Telegraph and Times Online use the same quote by Howard Archer, chief UK economist at HIS Global Insight. He gave the figures ‘cautious welcome and said “given the dominant role of the services sector in the UK economy, this strongly endorses belief that the economy returned to growth in the third quarter”. The language used is formal and clear; all articles explain the story really well so that even someone who is not from business/ economics or finance field can understand what is happening. I think that these stories were written because they are of the importance for UK’s economy and this increase in the performance of the sector has the impact on many businesses. In my own view it is not world breaking news, but it is still worthwhile communicating because service sector plays a big role in UK’s economy and therefore is likely to affect it to the great extend. BBC News and Times Online have very similar headlines both saying that there is a growth UK’s services sector. On the other hand, Telegraph chose to write a headline which states that there is service industry growth and implies that this reinforces belief that the recession is over.

This time it was hard to pick my favorite article because all three of them communicated the news clearly and objectively just as I like it. I still do think it is early to say what this increase will bring to UK’s economy since nowadays it is harder and harder to predict anything. UK out of recession certainly sounds good but the question remains: when?

Sources:

BBC News (2009). Two-year high for services growth

URL: http://news.bbc.co.uk/1/hi/business/8290336.stm

Times Online (2009). Growth of UK services hits two-year high

URL: http://business.timesonline.co.uk/tol/business/economics/article6861482.ece

Telegraph (2009). Services industry growth reinforces belief that the recession is over

URL : http://www.telegraph.co.uk/finance/economics/6261418/Service-industry-growth-reinforces-belief-that-the-recession-is-over.html

Retail sector enjoys unexpected sales growth in September

One of the stories that caught my attention this week was about the improvement of retail sales in September according to Confederation of British Industry (CBI). I read the same story from three different sources, Guardian.co.uk, Reuters UK and Bloomberg.com. Despite my expectations, these three sources each delivered the story differently.

The story is about an unexpected growth in retail sector for the month of September. Retail sales rose +3% from -14% in August. Since April 2009 retail revenues have been going downwards which makes it 5 month of continues decrease. The credit crunch and its effects were said to be the main reason behind this downward movement in retail sales. However this sudden increase might be seen as a path to stabilization of the sector. Many analysts still remain suspicious because there are still obstacles consumers are facing in terms of their disposable income and buying power. A record low interest rate of 0.5% enables lower mortgage costs which can imply that consumers should start to experience more disposable income. The survey by CBI reveals that “mortgage approvals are staying close to the highest level in more than a year last month”. CBI data indicates that UK economy might be recovering but the strength of the recovery is still questionable.

Reuters UK
The story is very short and gives a reader very brief overview of the current situation in retail sector. There is no information that would give weight to the story which is very different from both Bloomberg and Guardian. All the information in the story could be said in two to three sentences. It does not give enough information to the reader. In the sentence “CBI’s distributive trades survey reported sales balance rose to +3 in September from -16 in August, matching April’s high” it expected from the reader to know what CBI stands for and what does +3 represent. This is not the case in the stories from Bloomberg and Guardian. Story is very much neutral, but gives an impression that it was written to fill out the space or that the writer was ‘one story short’. The language used is simple and clear but it is the content of the story that makes an article a good one.

Guardian and Bloomberg
These two stories are very similar in the way they deliver the news. The content of the stories is almost the same. Both stories have a positive attitude towards the topic. Bloomberg story is more narrative whereas Guardian uses a lot of quotations by the experts in the field. Both are very straight forward to the point, but Guardian uses much more numerical figures to justify what is written. Two exactly the same sentences by Andy Clarke, chairman of the CBI Distributes Trades Panel, where both used at the beginning of the each article. Bloomberg chose to mention the program by The Bank of England which is planning to “buy £175 billion of bonds with newly created money to bolster the economy” which was not mentioned in Guardian. This might be because of their certainty of what their readers are interested in and what information might be important or not to them. Bloomberg’s story is shorter, easier to read, has very straight forward information and is clearly not taking sides or being bias. It is exactly what Bloomberg’s readers need as they are in the office, online, scanning all the new information and news that might affect the market. Guardian language is more formal, easy to read and understand even though it uses quite a lot of economic terms.

The article I liked the most was from Guardian because I believe it provided me with useful and clearly written information. The article I was really disappointed with was the one from Reuters UK. It just failed to deliver the clear message and in depth information; it was very basic and unclear; compared with these other two sources Reuters is very much behind in my opinion.

Sources:

1) Christina Fincher (2009) “Retail sales show surprise gain in Sept-CBI”. Reuters.com
URL: http://uk.reuters.com/articlePrint?articleId=UKTRE58S1N420090929

2) Graeme Wearden (2009) “Retail sector enjoys unexpected sales growth in September” Guardian.co.uk
URL: http://www.guardian.co.uk/business/2009/sep/29/retail-sales-rise-september/print

3) Brian Swint (2009) “U.K. Retail Sales Index Rises to Highest Since April, CBI Says”
Bloomberg.com
URL: http://www.bloomberg.com/apps/news?pid=20670001&sid=aerl.JkzGacE

Dell to acquire Perot for $3.9bn

The story I chose to comment on this week is about takeover of IT services provider Perot Systems by computer giant Dell. The story was covered by BBC News as well as CNN Money. Both articles cover the story of Dell’s takeover and benefits this will have for both parties, Dell and Perot Systems. Two companies are from Texas and are considered very successful. Dell specializes in personal computers whereas Perot Systems specializes in IT support for hospitals, government departments, and banks. Both stories seem to agree on the benefits this will bring to both companies. BBC News chose to add a statement by Mr. Dell to emphasize Dell’s attitude towards this acquisition “The acquisition makes such great sense because of the obvious ways our businesses complement each other”. On the other hand, CNN Money emphasizes the opinion of Gartner analyst John Enck who states that “we’ve seen this coming, but I’m surprised it took as long as it did”. Both headings are very similar if not the same; “Dell to acquire Perot for $3.9bn” by BBC News and “Dell to buy Perot Systems for $3.9 billion”. Both articles use the $3.9bn in their title suggesting that this information is very important for the reader. The way in which these to stories are different is how they approach the story. BBC News provided the reader with very straight forward information about Dell’s takeover and positive aspects of this acquisition. There is very little numerical information apart from 23% fall in Dell’s profit from the last year’s 12.8bn. BBC News article focuses more on qualitative part of this takeover, stating opinions of Mr Dell and Mr Perot. Overall the story is very positive and there is room for the reader to make his/her own opinion about it. The language used is very easy to read and understand, formal and everything in the article is backed up quoting Mr Dell and Mr Perot. Looking at CNN Money we can see that they go much deeper in the story, giving lots of quotations and numerical data. Unlike BBC News, CNN Money critiques Dell for not doing this sooner. This article keeps on stating that this should have been done earlier and that such a move is crucial for diversification of Dell especially now when their sales are going downwards. There are a few lines where the article compares Dell to its rivals Hewlett-Packard(HP) and IBM; “The move marks a strategic shift for Dell, which has stuck with its personal computer and server sales even as its rivals like HP and IBM continue to diversity amid slumping hardware sales.” There is a certain dose of critique in this sentence. This continues later on in the story by saying “Dell was likely ‘gun shy’ about making any deals, despite the fact that its rivals have been diversifying, because of a late 1990s storage networking acquisition that ‘didn’t go anywhere’”. It can be said that this article is a bit bias because it is mostly based on the opinion of one man, analyst John Enck. One part of this CNN Money story can be interpreted as ironic, “The Perot acquisition will “absolutely” broaden Dell’s market share, Enck said, adding that the company will likely wait to digest this acquisition before it plans to make any more additions.”
The article by CNN Money was much more interesting to read in my opinion because of the language used and the stile in which it was written. It gave more information, but understanding how to interpret this information is crucial. If someone only read the story by CNN Money, they could easily get impression that Dell is having hard time diversifying and catching up its competitors IBM and HP. To sum up, these to articles are a very good example of how a same story can be presented in different way by different News sites.

Sources:
1) Story from BBC News:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/8267054.stm 2009/09/21

2) Story from CNN Money:
http://money.cnn.com/2009/09/21/technology/dell_acquires_perot_systems
2009/09/21