News
JD Sports Fashion had big news on Friday as it revealed the name of its new Chair. Andy Higginson has been appointed to the role as of 11 July, following a long search.
The company said Higginson “is a highly experienced and proven retailer and Chair with over 28 years of continuous non-executive director experience on PLC boards, including senior leadership roles over nearly 15 years at Tesco”.
He replaces the man who built JD into the multinational retail powerhouse it is today, Peter Cowgill, who stepped down as Executive Chairman in May after shareholder pressure. But the search had begun some time before that with the company already bowing to pressure around its corporate governance. Best practice for UK-listed companies is seen as having the Chairman and CEO roles kept separate.
As mentioned, Higginson is hugely experienced and most recently held the same role at William Morrison Supermarkets from January 2015 until the takeover of the business by private equity firm CD&R last November. During this time he “oversaw a major turnaround of the business and significant value realisation for shareholders”.
JD’s Interim Chair Helen Ashton said: “The board was impressed with the high-quality candidates that we met throughout the recruitment process. Andy, however, stood out as the best candidate with his extensive board experience and his strong track record in the international retail sector.
“It is a testament to the quality and attractiveness of JD that we have recruited Andy to the important role. JD is a great business with a clear strategy, occupying a unique place in the market and we look forward to working with him on our global development opportunities.”
Soaring food prices pushed British consumer price inflation to a 40-year high of 9.1% last month, the highest rate out of the Group of Seven countries and underlining the severity of the cost-of-living crunch.
The reading, up from 9% in April, matched the consensus of a Reuters poll of economists. Historical records from the Office for National Statistics show May's inflation was the highest since March 1982 — and worse is likely to come.
Sterling, one of the worst performing currencies against the U.S. dollar this year, fell below $1.22, down 0.6% on the day.
Some investors judge Britain to be at risk of both persistently high inflation and recession, reflecting its large imported energy bill and continuous Brexit troubles which could further hurt trade ties with the European Union.
That could seriously dent discretionary spending on items such as fashion and beauty goods.
"With the economic outlook so unclear, no one knows how high inflation could go, and how long it will continue for - making fiscal and monetary policy judgements particularly tough," said Jack Leslie, senior economist at the Resolution Foundation think tank.
Earlier on Wednesday the Resolution Foundation said the cost-of-living hit for households had been compounded by Brexit, which had made Britain a more closed economy, with damaging long-term implications for productivity and wages.
Britain's headline inflation rate in May was higher than in the United States, France, Germany and Italy. While Japan and Canada have yet to report consumer price data for May, neither are likely to come close.
The Bank of England said last week that inflation was likely to remain above 9% over the coming months before peaking at slightly above 11% in October, when regulated household energy bills are due to rise again.
The British government was doing all it could to combat a surge in prices, finance minister Rishi Sunak said after the data.
Prices for food and non-alcoholic drinks rose by 8.7% in annual terms in May — the biggest jump since March 2009 and making this category the biggest driver of annual inflation last month.
Overall consumer prices rose by 0.7% in monthly terms in May, the ONS said, a little more than the 0.6% consensus.
British factory-gate prices — a key determinant of prices later paid by consumers in shops — were 22.1% higher in May than a year earlier, the biggest increase since these records began in 1985, the ONS said.
London-based buy now pay later (BNPL) platform Playter has raised $55m (£45m) in a funding round from the backers of fellow BNPL firm Klarna.
Playter is a platform that gives businesses access to BNPL purchases in the same way companies like Klarna provides instalment payments to consumers.
“BNPL for business is a completely different concept to B2C BNPL,” said Playter founder and CEO, Jamie Beaumont.
“Right now, there are very few B2B purchases happening online. We’ve created a platform that gives total control for businesses to dictate what payment terms they want to have.”
SMEs can use the service to spread the payments for business-related purchases, including software, agency fees, office rent, marketing, and more, over six months to a year.
“For SMEs, the ability to take advantage of annual discounts on software as well as smoothing out cashflow can be invaluable in tougher times,” Beaumont added.
“Playter doesn’t just help businesses with cash flow, it also helps redistribute liquidity, allowing businesses to invest in high-growth areas such as marketing, hiring and development.”
The new round, which follows a $1.7m seed round in March, was led by Klarna backers Adit Ventures, along with Fasanara Capital, with participation from Fin Capital, Act Venture Capital, and 1818 Ventures.
“[Playter is] a unique SME-focused BNPL platform that helps growing companies better manage their working capital,” said Jon Cholak, managing partner at Adit Ventures.
“We see a growing need for their services across the ecosystem, particularly as capital and credit conditions tighten because of broader macroeconomic trends.”
The latest cash injection will go towards the company’s UK growth, although it is also eyeing up the possibility of international expansion down the line.
BNPL has come under criticism recently from consumer protection groups and credit firms. The service is similar in principle to a loan, however, it is largely unregulated.
The government recently announced a proposal to regulate the BNPL industry, although it is focusing on consumer-facing BNPL products.
SumUp, a London-based fintech, has raised €590m (£507m) in a funding round that’s landed the firm an enterprise valuation of €8bn (£6.8bn).
Founded in 2012, SumUp provides payment solutions to small merchants. Its services include a free business account and card, access to an online store, and invoicing solutions.
“SumUp has received consistent support from the global investment community in our mission to help small merchants succeed,” said SumUp co-founder and CFO Marc-Alexander Christ.
“We stand by our merchants whatever the circumstance ‒ whether that be Covid or macroeconomic uncertainty. The funds we’ve raised will enable us to continue to build out our product ecosystem, expand into new markets, pursue value-adding acquisitions, and continue levelling the playing field for small merchants at a global scale.”
The latest investment brings the total amount of funding raised by the unicorn up to €1.5bn (£1.29bn). Its previous funding round came back in March 2021 when it raised £642m.
The round was led by Bain Capital Tech Opportunities, with participation from funds managed by BlackRock, btov Partners, Centerbridge, Crestline, Fin Capital, and Sentinel Dome Partners, among others.
“SumUp has continually evolved to empower a growing and diverse field of small businesses with payment solutions and tools to efficiently connect with their everyday consumers,” said Darren Abrahamson, a managing director at Bain Capital Tech Opportunities.
“SumUp’s leadership team have led the company to sustained and accelerated growth through expansion to more than 30 countries where they have had a direct and positive impact on the small business ecosystem.”
SumUp serves more than four million small businesses operating in 35 countries worldwide. Last year the firm acquired the Lithuanian fintech Paysolut, with the aim of creating stronger banking solutions and expanding the company’s international reach.
Weak results and news that a takeover wasn't going to be happening sent shares of ASOS, Boohoo and THG down sharply on Thursday. But it appears you can't quite keep a good company down and the share prices began to recover on the London Stock Exchange on Friday.
ASOS for instance, on Thursday had reported overall sales growth in the latest quarter but warned its profits would be crimped as it's been seeing a much higher rate of returns. This sent its share price plummeting, falling by nearly a third.
Yet a lot of investors clearly see the company as a bargain at its lower price and started to buy the shares on Friday, which means they were up 8% by mid morning. They clearly still have a long way to go to get back to where they were at the beginning of the week, however and the company will be under heavy investor pressure to improve its performance under its newly-appointed CEO.
As we write, the share price of around £8.40 a time gives the company a market capitalisation of £843 million. Around four years ago, the share traded at over £76 each.
Meanwhile, Boohoo also suffered on Thursday, partly due to the general anti-fast-fashion sentiment in the market, but also because it reported a rare occurrence of its own – a drop in its quarterly sales.
The share price fall wasn't as big as that for its online peer, but it still fell around 12%.
And its Friday climb was also more modest than that of ASOS with an almost-5% uplift. This means the company's shares are trading at a little over 60p each and it has a market capitalisation of £766.5 million. That’s well short of just two years ago when he shares fetched over £4 each.
Finally, THG shares also fell on Thursday as investors learned that a buyout of the company wouldn't be happening any time soon. THG issued a statement saying it had received various approaches but that they significantly undervalued it.
This caused the shares to fall by almost 20%. However again, Friday saw much more positive sentiment towards the firm and its share price began to rise again. By mid-morning it was up almost 10% at almost 82p a share.
This gives it a market capitalisation of just over £1 billion. And while that sounds impressive, we have to remember that the share price was around £8 a time when the company first listed on the stock exchange less than 18 months ago.
The UK has been ranked fourth in Europe for green tech innovation, according to a study of the European clean energy sector.
The research placed the UK behind Germany, which topped the list, followed by Sweden. France and the Netherlands were placed in joint third according to the model, which analysed investments and patents.
The study, conducted by sustainable consumer goods firm Bower Collective, found that just under four in 10 green startups in the UK are working towards affordable and clean energy.
It also noted that the UK has issued the third most green technology patents in Europe at 1,066.
Bower Collective reported an average of around €1.3bn per country having been invested into green tech startups since 2018.
However, the top nations for green tech investments were significantly higher. Sweden has seen the most funding, raising a total of €7.6bn.
“Overall, it is heartening to see significant capital coming in to support businesses focused on creating a more sustainable future,” said Nick Torday, co-founder of Bower Collective.
“The UK is in the top five and we certainly see lots of opportunity and innovation happening in our space, with increasing appetite from investors to prioritise impact as one of their key investment criteria.”
The UK has been working towards net-zero carbon emissions by 2050. The Department for Business, Energy, and Industrial Strategy published the plan last year, which included investments into non-carbon energy tech.
Since then, more and more startups in the UK have been working towards innovative methods of decarbonisation.
However, data shows that UK energy tech startups are struggling to scale and attract later-stage investment compared to other areas, such as fintech and AI.
Instanda, a company that provides no-code software tools for the insurance industry, has raised $45m (£36.7m) to fund expansion in Europe, the US, Japan and the UAE.
The London-headquartered company will also develop new capabilities for its platform, which lets insurance companies create products without specialist coding knowledge.
It does so with a combination of pre-built product libraries that can be adapted for specific insurance providers.
Instanda claims this means operators in the insurance space can take products to market “within days and weeks”.
The company’s cloud-based software is used by more than 70 businesses to build insurance products in areas including property, life and health.
Its clients include Atlanta, Standard Bank and Hamilton Fraser.
The insurtech’s Series B funding round was led by growth equity investment firm Toscafund, with additional funds coming from previous backer Dale Ventures.
It follows Instanda’s $19.5m Series A round in March 2020 and brings the company’s total funding to $72.5m.
“The funding from Toscafund is a significant milestone and will provide added impetus to aim higher in delivering exceptional client and user interactions,” said Tim Hardcastle, CEO and co-founder of Instanda. “Being able to digitise all aspects of the insurance value chain will allow insurance providers to transform the customer experience even further, whilst dramatically reducing processing costs, thus enabling them to bring a better insurance experience to more people and businesses around the world.”
George Koulouris, partner at Toscafund, said: “There is widespread belief that the insurance industry is ripe for change and disruption, yet very few companies prove they can really deliver significant improvements with a compelling value proposition. Instanda is one of those, so the potential is unlimited.”
Online UK retail continued to struggle last month as comparisons with the boom of the pandemic and immediate-post-pandemic period remained tough. But fashion stayed strong and was described as a category “making up for lost time”.
It’s interesting that the latest IMRG Capgemini Online Retail Index (which tracks the online sales performance of over 200 retailers) showed sales falling but some surprising results. As mentioned, fashion did well and the one price category we’d expect to benefit actually declined, with discounters dropping in double-digits. Luxury also dropped but by a smaller percentage, while the mid-market — which is seen as the most likely price level to suffer in tough economic times — actually saw growth.
Budget retailer sales plunged by 15% last month with luxury retailers down 3.6%. Mid-market retailers were up 0.5%.
Overall, e-tail sales fell 8.7% year-on-year and month-on-month, they were also down, albeit by only 0.6% against April. However, the longer-term trend is that May sales are usually higher than those in April.
The Average Basket Value (ABV) reached a new record high of £151, up £6 on April’s previous peak. It shows just how big an impact inflation is having, but could also be reflective of customers ordering multiple items at once in order to avoid repeat delivery fees, as well as a general preference for higher-quality items in order to avoid having to buy again in the near future. The report said website traffic was also up 8% on the year, though retailers reported “lengthy purchase cycles as consumers sit in the consideration stage for longer”.
The index showed that overall trading conditions continued to be very tough, and in the first week of the month, the performance was particularly bad with a 10.9% fall against May 2021. But spending improved as the month wore on, and in week three it almost reached positive territory at only a 0.3% drop.
This “may have been a Jubilee boost — with people purchasing patriotic clothing and other items in advance of the bank holiday — without that, performance might have been even worse”, the report said.
Of course, not everyone was buying clothing emblazoned with flags or pictures of the Queen, but the clothing category in general was strong with a 14% sales rise. This divided down into an 18% jump for womenswear and a 12% rise for menswear.
But health and beauty did much worse with a massive 28% drop. This is perhaps reflective of shoppers doing more of their spending in physical stores now. A year ago, shops may have been open but consumers remained nervous about going into potentially crowded retail locations.
Andy Mulcahy, Strategy and Insight Director, IMRG said: “There’s no dressing it up, May’s performance was pretty awful online. April’s results suggested growth might be flat, but it is clear now that the economic situation is having a deep impact on demand; if it wasn’t for the Jubilee, which produced a slightly better week than the others, the decline might have been double-digit against negative growth for the same month last year. The one bright area is clothing, where growth was strong this month against +13.5% in May 2021. It seems to be a category making up for lost time, following almost flat growth in 2020. [It] could be that it is now simply benefiting from the increased number of people shopping online, combined with a general sense among the UK public that the pandemic is over and they can go out as they please again.”
London-based VC firm Felix Capital has launched a $600m (£478m) fund to invest in 20 to 25 European and North American early-stage companies focusing on Web3 and sustainability.
Founded in 2015, Felix’s fourth fundraise brings its total funds under management to $1.2bn (£957m).
The oversubscribed raise, which exceeded its goal of $500m (£399m), will see the company make investments of $5m to $10m per startup.
As with its previous bets, which include crypto hardware wallet Ledger, Deliveroo, Oatly, Peloton and TravelPerk, Felix Capital is focusing on consumer-facing startups.
“Felix was established with the vision that the rapid transformation of consumers’ behaviour represented a massive opportunity and needed focus,” said Frederic Court, founder and managing partner, Felix Capital.
“Since then, we have built a portfolio in line with that strategy, backing emerging and culturally relevant consumer brands, as well as related enabling technologies that support them,” added Court.
David Marcus, previously Meta and Paypal co-founder and CEO, Lightspark said: “Felix Capital brings an innovative approach to capital investment, and for over a decade I have valued their focus, commitment, and partnership.”
Alongside the closing of the fund, Felix Capital is adding María Auersperg de Lera and Sophie Luck to its team of investors.
Depop CEO Maria Raga, senior marketeer Musa Tariq – who previously worked for the likes of Apple, Nike and Airbnb – and Nordeus founder and CEO Branko Milutinović will also join as advisors.
Felix Capital isn’t the only VC to raise a new fund recently. It joins the likes of All Iron Ventures, which this week launched its £26m European fund to invest in other funds, and fellow Web3 investment fund Fabric Ventures, which closed its £112m investment fund last week.
Multiverse, the apprenticeship startup founded by Euan Blair, son of former British prime minister Tony Blair, has become the UK’s first edtech unicorn after its latest funding round gave it a $1.7bn (£1.36bn) valuation.
London-based Multiverse said it will use the proceeds of its $220m (£175.9m) Series D round to “accelerate” its US expansion, where it already has a headquarters in New York.
Founded in 2016 and previously known as WhiteHat, Multiverse matches young people without degrees with salaried apprenticeship opportunities.
The company says it has trained over 8,000 apprentices through partnerships with 500 companies. It focuses on “skills of the future”, such as data science and software engineering.
“Mandating degrees, and making admissions officers the gatekeepers for great careers, means leaving out thousands of talented individuals,” said Euan Blair, CEO and founder of Multiverse.
“There has never been a more pressing time to create an alternative to university education that is equitable and inclusive and there is an incredible opportunity before us to change the status quo with apprenticeships.”
The $1.7bn post-money valuation gives Blair a paper fortune in the hundreds of millions.
Multiverse’s latest round was co-led by StepStone Group, and previous backers Lightspeed Venture Partners and General Catalyst.
In January 2021, Multiverse’s £32m Series B round became the largest UK edtech raise.
Its latest capital boost brings Multiverse’s total funding to date to over $400m.
“Apprenticeships can help thousands of companies better train workers for the jobs needed to thrive in the age of digital transformation,“ said Hunter Somerville, partner at StepStone Group. “Multiverse has a demonstrated track record of success, building an unparalleled global platform to find, train and develop talent.”
When Multiverse raised $130m in its previous round the company was nearing the billion-dollar unicorn milestone.
It also demonstrates the growing strength of the edtech sector, coming one year after Vienna-based GoStudent became Europe’s first edtech unicorn.
Away from edtech, Multiverse follows payments firm Paddle, game studio Tripledot and fintech GoCardless in becoming UK-based unicorns this year.
It follows a strong 2021 for UK tech valuations, with British firms making up 38% of the combined valuation of European unicorns – the highest percentage across the continent.