Garment makers unite for better contracts, SPACs boom and Deliveroo stocks dive again
"We tended to blindly trust our customers. If they said they want to buy 100,000 yards of fabric from us and they'll send the purchase order in three weeks, we'd just go ahead and do it. That faith has been lost," says Miran Ali, spokesman for the Star Network, an industry group representing Asian textile and garment associations.
Unsurprisingly, sales of clothing and fashion have been one of the worst-hit business sectors in the COVID-19 pandemic. Now garment manufacturers across the globe are speaking out, amid claims that some of the world's biggest retailers have been unscrupulously using poor market conditions to renegotiate contracts, to the detriment of suppliers and ultimately workers, most of whom are women on little more than a subsistence wage.
Elsewhere, perhaps in a nod to corporate responsibility, Next, one of the UK's biggest fashion stores, says it will stop sourcing goods in Myanmar, following the military takeover.
The boom in special purpose acquisition companies (SPACs) has boosted corporate deal-making to heights not seen since the great stock market deregulation of the 1980s, according to new data.
But that will be small comfort to backers of Deliveroo, after a second day of bumpy trading followed Wednesday's disastrous float, which wiped a third off the value of the food delivery firm. We ask one analyst what went wrong.
And New York has become the latest U.S. state to relax the laws on cannabis sales. With the fledgling industry valued at $61 billion, there are signs that the day traders behind the recent "Reddit Rally" may soon be moving back into commercial cannabis stocks.
Read on for more of the day's business news in full.
Campaign groups estimate that $18 billion out of $40 billion worth of payments are still outstanding on orders globally. Some of the world's biggest clothing sellers including Arcadia, Gap and Primark have reportedly canceled or paused orders worth almost $3.7 billion with factories in Bangladesh alone in March and April last year.
Thirteen associations representing garment suppliers in China, Bangladesh, Myanmar, Cambodia, Vietnam, Pakistan, Turkey, Morocco, and Indonesia have drafted new minimum terms for clients, including a maximum 90-day payment term and an end to forced discounts after orders have been placed. The document, due to be finalized and released in late April, is a joint initiative by Germany's international development agency GIZ and the International Apparel Federation.
It has been estimated that retailers lost $1.2 trillion in sales in 2020, a 3.9 percent drop on 2019 as lockdown conditions decimated demand and shuttered stores.
Meanwhile, Next,one of the UK's biggest clothing retailers says it is on course for better-than-expected sales in 2021 but won't pay a dividend until it is sure the outlook has improved. The group is estimating profits of $965 million in the current financial year, higher than previous estimates, with most sales now completed online, but Next says it will not currently declare a policy on a dividend or share buyback. Shares rose 2 percent on the news.
Next added that it has ceased placing new production orders in Myanmar in the wake of February's military takeover. CEO Simon Wolfson says Myanmar provides less than 5 percent of Next's total stock.
A rise in special purpose acquisition companies (SPACs) has pushed corporate deal-making to the highest level in four decades, according to new figures. The market in mergers and acquisitions, along with other deals, topped $1.3 trillion in the three months to the end of March. That is the highest of any first quarter since 1980. Figures from research group Refinitiv show U.S. stock market-based deals were up 160 percent on the same time last year, with analysts describing the boom as "unprecedented."
GFG Alliance, the metals and commodities group owned by magnate Sanjeev Gupta, has been hit with winding-up orders from investors following the collapse of its main lender, the failed Greensill Capital. The U.S. investment bank Citigroup has filed applications in London's insolvency court against the GFG, which has been seeking government support to avoid compulsory job losses in the UK steel industry. Citigroup is one of the main creditors to Gupta's holdings, having acted as a trustee on company bonds sold by Greensill Capital, which collapsed earlier this month.
Shares in banking giants Credit Suisse and Nomura have continued to fall in the wake of the collapse of the U.S. hedge fund Archegos Capital Management. The two banks are reported to have been slower to close their exposure to the fund than other lenders and analysts now warn that brokers acting for Archegos may have to write down a further $6 billion after the fund defaulted on margin calls earlier this month.
Meanwhile, Credit Suisse has told investors it will return more cash from its $10 billion supply chain finance fund linked to the troubled Greensill by early to mid-April. In a statement on its website, the bank says it expects "the majority part of the funds' investments to be recovered in the liquidation process," while it explores the possibility of legal action.
Shares in Deliveroo have fallen again on Thursday after closing their first day of trade down 26 percent, wiping almost $2.7 billion from the group's market value. While analysts have blamed the food delivery firm's business model for the dramatic fall in share prices on its market debut, despite high expectations, Deliveroo's backers are blaming short-sellers for the disappointing result.
Elsewhere, the Spanish groceries delivery app Glovo says it has raised an additional $528 million in investor backing to expand growth abroad. The group, based in Barcelona, now has 10 million users and plans to roll out its 30-minute delivery service across the 850 cities where the app operates.
Factories in the eurozone have reported their strongest growth in 24 years, with unprecedented delays to supplies, and ahead of economists expectations according to new data. IHS Markit's Purchasing Managers' Index was up to 62.5 in March, from February's 57.9 with record increases in output, new orders, and exports with the highest levels of activity ever recorded in Germany and the Netherlands. A reading above 50 indicates an overall increase compared with the previous month.
The world's fourth-largest car maker says it is looking to triple global sales of electric vehicles this year. Stellantis, formed in January by the merger of Italian-American Fiat Chrysler and France's PSA, says it is targeting global sales of 400,000 vehicles this year, up from 139,000 last year, with the launch of 11 additional models. Chairman John Elkann says the group plans to have fully electric or hybrid versions of all of its vehicles available in Europe by 2025, broadly in line with rivals such as Volkswagen and Renault-Nissan.
Shares in French IT firm Atos have fallen sharply after accounting errors were reported at two of the firm's U.S. units. The stock fell 18 percent in early trading in Paris after external auditors found evidence "leading to several accounting errors."
The Netherlands' largest telecoms group has filed a patent-infringement complaint against Sweden's Ericsson at a district court in Texas. KPN NV alleges infringement of five of its patents covering wireless network functions.
Smartphones, computers, and other smart devices bought in Russia must now come pre-installed with domestically produced software after legal changes. The legislation, known colloquially as "the law against Apple," means Russian software must be installed for iPhone setups. Other planned changes to digital regulations to boost domestic control of the market may compel foreign firms to open physical offices in Russian territories while offering tax breaks for Russian IT companies.
China's central bank has allowed a group of Hong Kong residents to use its virtual yuan in a trial of cross-border payments for the first time. In the one-day pilot program, sponsored by the People's Bank of China (PBOC), the group used the central bank-developed digital currency to pay for goods in the city of Shenzhen.
The Export-Import Bank of Korea has offered auto maker Hyundai a $2.7 billion support facility until 2023. The state bank says the financial offer will support Hyundai's domestic infrastructure investment as well as possible future projects including mergers and acquisitions, but has not specified what form the financial support will take.
The boss of one of the UK's top gambling firms has been awarded one of the biggest pay packets in British corporate history. Denise Coates, the founder of Bet365 Group, earned a salary of $645 million in the year to the end of March in pay and dividends. The award has been attacked by campaigners who call it an "appallingly inefficient" use of funds.
New York has become the latest state to relax the rules on the use of marijuana, as global lawmakers continue to shift position on the use of cannabis. The state has become the 16th in the U.S. to allow marijuana sales, after a deal was signed in legislature by Governor Andrew Cuomo. The bill effectively allows New Yorkers aged 21 and over the right to possess up to three ounces of marijuana for their personal use. It's hoped new production licenses could eventually contribute $350 million in annual tax revenue and create up to 60,000 jobs in the state.
WATCH: After being on the run since 2014, an Italian mafioso was picked up by Interpol and Italian authorities after posting cooking videos on YouTube. While he was careful to hide his face, it was his tattoos that gave him away.
Shares in Deliveroo have failed to rebound after losing nearly 30 percent of their value in Wednesday's stock market debut in London. The food delivery app's stock closed the day down 26 percent, before falling another 3.5 percent in early London trading, only later clawing back modest gains.
CGTN Europe spoke to Joshua Mahony, senior market analyst at IG. He says Deliveroo's disappointing debut shows the risky nature of investing in firms on the day of flotation.
A rapid decline on the first day really does highlight the difficulties of investing on IPO days, sometimes a market will rally significantly and they'll say that they've underpriced it. On this occasion, it feels like the banks are really overpriced it and, in actual fact, people not necessarily feeling all too confident about it despite the fact there had been a heavily touted, rare tech IPO, it hasn't necessarily gone to plan.
Is it concern over the Deliveroo business model or consumer conscience over the "gig" economy in general?
I don't think this is a good time. We've seen a massive run-up in terms of these sort of tech names, growth names and certainly, if we'd approached this three or four months ago, then it would have been a real sweet spot. Now we're staring down the barrel of a six-month period, a 12-month period where we're likely to see yields rise, we're likely to see economic data improve. And therefore, people aren't looking for those businesses that are not turning a profit and based upon what they could grow into in the future. Instead, people are thinking, what about these companies that have been hit hard? Now they're going to come back into strength with the fact that the economic picture is improving.
How do you think this flop will affect the UK government's ambitions to attract more tech companies in the future?
We have heard from the Kazoo CEO who surprisingly decided to list over in the U.S. and when quizzed about that, he said that it's because the UK doesn't really appreciate tech companies, doesn't know how to price tech companies as the U.S. does. It's a running theme that you see with companies listed here in the UK, where people say, 'what if they also listed over in the US?' Because of this perception that maybe U.S. investors are a little bit more optimistic, not as skeptical as some of the people here in the UK.
And finally, New York has become the latest U.S. state to relax the laws on use of marijuana. Nationwide, sales of cannabis and related products rose 67 percent in 2020 and the fledgling industry has been valued at $61 billion. Here is how the picture looks now.