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Primark’s business models are threatened by inflation and energy costs – Commerce

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Primark's business models are threatened by inflation and energy costs - Commerce

The concept and business model of one of the most popular clothing chains in Europe is largely based on offering clothes at low prices. This reality may not be compatible with the unstoppable escalation of inflation and energy prices.

According to the message “EconomistAssociated British Foods (ABF), the group that owns Primark, has warned profits will fall next fiscal year due to higher production costs and a stronger dollar, the currency in which it buys most of its clothing. in which the brand presents its results, is at its lowest level since 1985. Last week, the group’s shares already fell 8% after this announcement.

The newspaper adds that the chain, recovering from the pandemic (no online stores) and blaming cost collisions, is experiencing “unprecedented volatility,” outgoing ABF chief financial officer John Bason told Bloomberg.

Its operating margin is expected to fall next year, and some lines, such as the back-to-school line, are already on hold. UK consumption is also expected to decline in the coming months, which could exacerbate the situation.

In an effort to update its digital strategy, the company will begin testing a click-to-collect service for children’s products later in the year, but only in the UK market and not on an online sales platform.

Lately the chain announced also partnered with Vintage Wholesale Company to sell vintage clothing with their own space in select stores.

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Economy

Red tide in Europe. Eurozone interest rates worsen – markets in a minute

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Red tide in Europe.  Eurozone interest rates worsen – markets in a minute

Natural gas extends losses after Gazprom’s supplies to Italy resume. Oil maintains uptrend

Oil has benefited from a price rally as investors anticipated the biggest cut in oil production adopted by OPEC+ since 2020.

The group will cut capacity by two million barrels a day, more than double what was originally envisaged, and the cut will help balance oil prices at a time when the global economy is expected to slow down.

“A cut of two million barrels a day shows how aggressive they want to be on prices,” said Vishnu Varatan, Asia head of economics and strategy at Mizuho Bank.

In response, West Texas Intermediate (WTI), traded in New York, has risen 9% over the past two sessions to break $86 a barrel. By 08:00 Lisbon time, WTI was at the waterline, adding a very small 0.03% to $86.55.

Brent crude, traded in London and a benchmark for the European market, rose 0.17% to $91.96 per barrel.

In turn, natural gas (TTF) prices, which reached July lows yesterday in the Amsterdam market, continued to decline this morning, falling by 1.2% to 160 euros per megawatt-hour.

Raw materials continued to fall after Gazprom announced this Wednesday that it would resume gas supplies to Italy. The Russian company “together with Italian buyers managed to find a solution” after the September regulatory changes in Austria, which made it difficult to supply gas to Italy, Gazprom said in Telegram.

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TAP orders dozens of BMWs for CEOs and top directors – Observer

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TAP orders dozens of BMWs for CEOs and top directors - Observer

TAP has ordered dozens of BMW vehicles for its executives and top directors, plugin hybrids and with a market value of 52 to 65 thousand euros. The vehicles, which will begin arriving early next year, will replace the airline’s current fleet of mostly Peugeot vehicles. promoted Tuesday on CNN Portugal.

TAP justifies the purchase of “plug-in hybrid vehicles instead of current diesel ones” on “environmental reasons”, as well as “tax incentives associated with these less polluting vehicles.”

At a time when TAP is pursuing a rescue program that amounts to 3.2 billion euros from taxpayers, CNN Portugal asked the airline why it is not considering lower cost vehicles. The company responded that “the options available to directors have also begun to include the brand. premiumas it has a higher rent compared to other brands thanks to a better residual value at the end of the contract.”

CNN Portugal reports that it had access to an initial order for 79 BMW Series 5, X2 and X3 vehicles. OUR the airline guarantees the availability of 50 “units” and that “a tender was held in the market in accordance with the TAP procurement guidelines and six companies in the Portuguese market were invited to participate” whose names were not released.

TAP also said it would spend less money on rent (monthly lease payments) of new fleet vehicles compared to the old one. However, he did not say what the monthly cost of the new fleet is.

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TAP orders dozens of BMWs, receiving government money

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TAP orders dozens of BMWs, receiving government money

TAP ordered a new fleet of BMW vehicles from its managers to replace the old fleet of Peugeot vehicles. The carrier guarantees that it even saves money. The company is implementing a rescue program that amounts to 3.2 billion euros from taxpayers.

TAP has ordered dozens of BMWs from its general managers, improving the profile of its current fleet of mostly Peugeot vehicles. The new cars have a market value of between 52,000 and 65,000 euros, are plug-in hybrids, and will start arriving early next year.

According to TVI/CNN Portugal internal documentation and portal away – the bodies of the Media Capital group – had access, we are talking about an initial order for 79 cars from the 5, X3 and X2 series of the German brand. TAP, when confronted, guarantees that there are only 50 vehicles. The real number is not indifferent: if there are 79, TAP not only improves its fleet, but also increases it.

These cars are intended for executive directors and top directors of the airline. And they are concluded with the company through “lease” agreements, that is, monthly lease payments for each vehicle. TAP guarantees it will spend less money on the new fleet compared to the old one, but it’s unclear why it hasn’t considered cheaper brands.

cars

The new TAP fleet consists exclusively of plug-in hybrid models, which are more environmentally friendly and have lower CO2 emissions, as well as the ability to drive only in electric mode.

At the top of the park are the sporty BMW 530e and the BMW X3 xDrive 30e SUV, both with 292 hp engines, claimed fuel consumption of 1.8 to 2.6 liters per 100 km and an estimated range in electric mode of 61 or 50 kilometers. , respectively. Retail prices for these models start at €65,120 for the 530e and €65,870 for the X3.

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Most of this new fleet is made up of the BMW X2 xDrive 25e, with a 220 horsepower engine capable of consuming 1.8 liters per 100 km. The cost of PVP starts at 52,409 euros.

When contacting TAP, they did not answer about the monthly cost of a new park. Based on market modeling (without negotiating a discount that will be managed by TAP), the provision of these cars can range from €608.94 + VAT (for a BMW X2 xDrive 25e with 15,000 kilometers per year and 72 months) to €857.72 + VAT (for BMW X3 xDrive 30e Pack M for the same 15,000 kilometers per year for 48 months).

Meet the new BMW X2 xDrive 25e in this video.

The company guarantees that it saves money

“The current rental fleet is mainly from 2017 and the maximum number of renewals possible in the contract will be reached in 2023,” explains TAP, which justifies the purchase of “plug-in hybrid vehicles instead of the current diesel one for environmental reasons, but also for tax benefits associated with these less polluting vehicles.”

“This option represents a savings of more than 20% monthly rent and taxes on new leasing contracts for vehicles with similar characteristics to the current (diesel), which is in line with the restructuring plan, as it represents the lowest possible cost in a tendered market.”

Asked by CNN/TVI/Away why TAP isn’t considering lower cost new vehicles given they’re under a government salvage program, the company replied that “the options available to directors also include a premium brand because it has higher rent compared to other brands due to better residual value at the end of the contract.” In addition, “this option also provides better vehicle delivery times, given the manufacturing crisis that the automotive market is experiencing.”

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TAP reiterates that “there are 50 units and not the 79 mentioned” and guarantees that “the market was tendered in accordance with the TAP procurement manual and six organizations were invited to participate in the Portuguese market”. The company did not distinguish which companies they were.

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