Market Loop - Starbucks weighs up UK sale

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19th July 2022

Bite-sized business news from the UK and beyond

Good morning Yesterday was the hottest day of the year with temperatures peaking at 38.1C, just shy of the record of 38.7C set in 2019 which is forecast to be broken today.

Climate change means that these sorts of temperatures are likely to become more frequent which could lead to a big rethink on the UK’s infrastructure. It’s estimated that less than 5% of British homes have fixed cooling systems, one of the lowest rates in Europe.

If you’re part of the 95% without air conditioning then here’s another list of tips to stay cool in the heatwave.

Today's stories

Starbucks weighs up UK sale
London fintech gets Branson backing

RETAIL
Starbucks weighs up UK sale

What happened?
According to reports the world’s biggest coffee chain Starbucks is considering selling its UK business as part of a drive to focus more on its domestic market.

How big could this be
The first UK Starbucks opened in 1998 and since then it’s grown to about 1,000 locations employing 4,000 people. 70% of the outlets are owned by franchisees and the rest owned by the company. Last year the division generated £328m in revenue and a £13m profit.

Starbucks is facing a series of challenges that making a UK offload more appealing

Pandemic: Like a lot of bricks-and-mortar retailers, Covid-19 hit Starbucks hard. Firstly with the prolonged closure of the high street and then with the move to remote working which has reduced the number of commuters who would ordinarily visit its stores. Despite the lifting of lockdown restrictions sales still haven’t returned to pre-pandemic levels.
Competition: Starbucks is facing more competition in the UK from British brands like Pret and Costa and newer international entrants like Canada’s Tim Horton’s.
Issues at home: Starbucks is trying to stem the growing calls for unionisation in its US locations. The company is also in the process of searching for a new permanent CEO.

Next steps: Starbucks has said it’s not “not in a formal sale process” of the UK arm but that it continues to "evaluate strategic options" for its international operations. Read that as a sale is potentially on the cards.

Other stories to keep you in the loop

Interest rates could top 2% in the next year, Bank of England policymaker says
Tory leadership race: Tom Tugendhat eliminated in third round
Petrol prices drop from record high
Amazon launches Tesco price-matching scheme
Goldman Sachs shares jump as banker pay cut by 40%
Deliveroo cuts UK sales forecast as cost of living crisis bites
H&M to start its exit from Russia

FINTECH
London fintech gets Branson backing

What happened?
Last week British investing app Lightyear announced it had raised £21m in a Series A funding with Virgin Group founder Sir Richard Branson among the backers.

At less than a year-old Lightyear is moving at lightning speed
The app offers commission-free share trading in over 3,000 global stocks and foreign currency accounts. It launched in the UK in September and then into 19 European countries last week including Germany, France and Spain.

As it doesn’t charge fees on any trades, it generates revenue from foreign exchange fees, charging 0.35% on conversions exceeding £3,000 per month. Lightyear isn’t yet profitable but says it plans to eventually diversify its revenue stream with additional features, including a paid subscription service that’s set to launch later this year.

The app is hoping to capitalise on the soaring popularity of DIY investing
The UK retail investor market has grown by a third since 2020 fuelled by the extra disposable income created by the pandemic along with the historically low interest rates which have made investing returns more appealing. There are now 8.6m DIY investors in the country.

But it’s becoming an increasingly crowded market
Lightyear faces stiff competition from both established trading platforms like Hargreaves Lansdown and AJ Bell and newer fintechs such as Revolut and Freetrade.

Stat of the day

Last week Amazon Prime sold more than 300m items on Prime Day

Interesting links from around the web

The dark side of being a social media influencer
What are your rights on going to work during heatwave?
Salary story: How to go from 35k to 75k in 3 years

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Market Loop - Starbucks weighs up UK sale

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