The Times - UK (2021-11-10)

the times | Wednesday November 10 2021 35

Business

530

stores including

60 new

US stores

Expanding to

Sales

2021

2020

£5.59bn

(down 5%)

£5.89bn

Adjusted operating profit

2021

2020

£321m

(down 11%)

£362m

70,000

employees

398

stores in 14

countries

Gove’s Grenfell focus

is well targeted

I

t’s taken four years. But at last

Britain has a housing secretary

who’s grasped a key principle

arising from the Grenfell

tragedy that killed 72 people:

leaseholders should not have to pay

anything towards the cost of

replacing fire-risk cladding and

other defects to make their

buildings safe.

Who, then, should foot the

£15 billion-plus bill? As Michael

Gove has rightly spotted, the real

culprits: the companies that caused

the scandal. It’s a refreshing change

to the “caveat emptor” nonsense of

his predecessor Robert Jenrick.

After Grenfell, a million

homeowners have been left with

bills averaging £40,000 each, with

some up to £115,000: a millstone

that’s stopped them selling or

remortgaging their flats. Many are

young people who’d stretched

themselves financially to get on the

housing ladder. Jenrick’s proposal?

Low-interest loans for people in

blocks of fewer than six storeys —

or 18 metres — to fix the problems.

Why should they be saddled with a

loan? They weren’t at fault.

Luckily, Gove has seen through all

that, telling MPs on the housing

committee that leaseholders were

“innocent parties”. As he put it: “I’m

still unhappy with the principle of

leaseholders having to pay at all.”

Instead, he pointed the finger at

“individuals in business who are

guilty men and women”. He spoke

of how the continuing Grenfell

inquiry had exposed “one particular

company which is hiding behind the

law [in] its own country... to avoid

answering questions here” and also

uncovered “examples of tests of the

safety of a product in particular

circumstances being manipulated”.

True, he didn’t mention any

names. But he’s put the likes of the

US cladding maker Arconic and two

insulation suppliers — the Celotex

wing of France’s Saint-Gobain and

Ireland’s Kingspan — in the frame.

Rightly, too. All three are embroiled

in the inquiry and related legal

cases brought by victims’ families.

And none have yet paid any redress.

So far, the taxpayer has coughed

up — correctly, too, since some

buildings were procured by the

public sector. And in the budget

housebuilders with annual profits of

more than £25 million a year were

hit with a 4 per cent tax, expected to

raise more than £200 million a year.

That’s on top of the cladding

provisions some have already made,

such as the £75 million set aside by

Persimmon whose boss Dean Finch

says: “We guarantee no leaseholder

is going to pick up the cost.”

Yet what about other companies

involved in the cladding supply

chain? And not least the likes of

Arconic, which prior to last year’s

split from Howmet Aerospace was

part of a group that would now be

worth $17 billion. Or Saint-Gobain

valued at €32 billion; or Kingspan,

which says its products were only

5 per cent of Grenfell’s insulation

and used “without its knowledge”,

but is still valued at €18 billion?

The inquiry heard Arconic

executive Claude Schmidt admit the

construction sector had been misled

by the claimed fire certification for

some cladding panels. It also heard

how Celotex had added a fire-

resisting magnesium oxide board to

one of its products to pass a fire test.

And that Kingspan had sold its

Kooltherm K15 kit for “almost 15

years” before admitting that fire test

reports in its marketing were “not

representative” of the product.

Making leaseholders pay for this

was always a travesty. Gove knows

who he should be going after.

Wave to the waiver

I

t was only on Monday that

British Airways and Virgin

Atlantic were burying the hatchet

to “celebrate” the reopening of UK-

US flights: the latest symbol of post-

Covid aviation recovery. So no

doubt they’ll agree with Gatwick

airport that it’s also time to end the

pandemic waiver on the “80-20”

rules for take-off and landing slots.

What, you ask, are they? The old

“use it or lose it” rules that stated

that an airline must be using their

slots at least 80 per cent of the time

to hang on to them for the next

season. It prevents carriers hogging

slots to stop rivals from muscling in

on their patch. Who’s up to that sort

of caper at Gatwick? Well, Virgin, of

course, which has pulled out of the

airport but refused to give up its

slots. Possibly BA, too, which is still

in febrile talks with crew over a new

low-cost operation likely to involve

fewer planes and routes. Plus

Norwegian, which went bust but is

still holding on to its Gatwick slots.

Hence, the letter from Gatwick

boss Stewart Wingate to transport

secretary Grant Shapps: a missive

backed by Edinburgh and Belfast

airports and the low-fare carrier

Wizz Air, which is after more slots at

Gatwick. Wingate rightly wants the

old rules reinstated for next summer

to prevent carriers “deliberately

hoarding slots to protect their

market position”. As the airport

points out, it has maximum capacity

for 210,000 slots but airline demand

for next summer is already up to

265,000. Thanks to slot-hoggers, too,

it operated “only 58 per cent of pre-

pandemic routes” in August, so

reducing consumer choice. It’s time

Shapps brought back the old rules.

GE’s forced split

M

ore proof that only private

equity firms are allowed to

be conglomerates. Even the

$120 billion industrial leviathan GE

has been forced to split into three —

healthcare, aviation and energy. It’s

the biggest unravelling yet of the

sprawling 129-year-old group built

by the late Jack Welch: a man who

lifted GE’s market value ten times

before leaving in 2001 with a

$417 million retirement present.

“Don’t manage — lead change

before you have to,” was one of

Neutron Jack’s rallying cries. But his

successors have struggled with his

legacy, forced by investors to

streamline the group. Yes, the shares

ticked up on the boldest move yet

by the latest boss Larry Culp. But

where did that leave them? A third

of the price of when Welch left.

[email protected]

business commentary Alistair Osborne

Rivian revs up for New York’s

biggest float since Facebook

Callum Jones

New York is braced for the largest

initial public offering by an American

company in almost a decade today as

Rivian Automotive prepares to drive on

to the stock market.

The electric truck start-up hopes to

raise as much as $10 billion from its

listing, which could value it at up to

$70 billion — a striking achievement

for a company that has only just started

making its vehicles. It has been deemed

a leading player in the electric auto-

motive revolution and is backed by

investors including Ford and Amazon.

Those working on the flotation have

significantly raised their aspirations in

recent days. A week ago Rivian’s sights

were set on a valuation of $53 billion at

a price of $62 per share. Now it is target-

ing $74 a share, according to its most

recent securities filing.

Its highly anticipated arrival on the

New York stock market could be the

biggest since May 2012, when Facebook

raised more than $18 billion at a valua-

tion north of $100 billion.

Founded in 2009 by Robert “RJ”

Scaringe, 38, and based on the west

coast, Rivian is making electric vehicles

at a huge factory in Normal, Illinois. It

is selling the R1T pick-up truck from

$67,500 and the R1S sports utility

vehicle, which starts at $70,000.

Amazon recently disclosed a 20 per

cent stake in the business and has

ordered 100,000 electric vehicles, to be

delivered by the end of the decade.

Ten thousand are due to hit the road as

soon as next year.

6 Tesla’s stock continued to slide last

night after Elon Musk, its chief execu-

tive, pledged to sell a tenth of his stake

in the company. Shares in the electric

carmaker closed down a further

$139.44, or 12 per cent, at $1,023.50.

Musk’s plans ended a surge in demand

for Tesla shares, which remain almost a

third higher than a month ago.

going to be putting prices up.” The com-
pany would benefit from between
£50 million and £100 million of foreign
exchange tailwinds caused by a
stronger pound and euro and would
mitigate other inflationary pressures
from store cost savings, he said.
Primark said it was prioritising the
products that were most in demand and
had built enough stock in its ware-
houses to cover the “majority of lines”
for the Christmas trading period. ABF
has expanded its range of homewares,
including champagne flutes and

matching family pyjamas. It expected

to increase its store estate from 398

shops to 530 over the next five years.

After shops were allowed to reopen,

Primark’s like-for-like sales were 12 per

cent lower than pre-pandemic levels,

with city centre stores struggling the

most. As stores reopened in the third

quarter, sales were 3 per cent higher

than two years ago, reflecting pent-up

demand, but fell back by 17 per cent in

the fourth quarter on the back of “ping-

demic” restrictions.

Tempus, page 42

Retailer gets

basics right

in low-key

expansion

Behind the story

O

nly a few months after

Gap, the American

fashion chain, called it

quits in Britain, shutting

its shops in favour of

selling online, Primark is boosting

its presence in the United States

without a website that shoppers can

buy from (Ashley Armstrong writes).

Primark has 398 shops in 14

countries, employing more than

70,000 people. The low-cost retailer

reckons there is more to go after and

yesterday announced plans to

expand to 530 stores, opening 60

new ones in the US alone over the

next five years. It is a bold move,

considering that America has been a

graveyard for many British retail

dreams, with Tesco, Sainsbury’s and

Marks & Spencer failing to make

headway there.

Primark’s latest opening in

Philadelphia comes six years after

the retailer launched its first

American store in Boston six years

ago. According to Paul Marchant,

Primark’s boss, all the stores are

“trading really well, it feels like

we’ve established a strong

foundation from which to accelerate

our expansion in the US market. The

future for Primark in the US is

looking very bright.” Rather than

hubristic flag-planting and confetti-

strewing ceremonies, its openings

have been relatively low-key — it

opted for sites in Brooklyn and

Staten Island, rather than

Manhattan, for example.

George Weston, chief executive of

Associated British Foods, its parent

company, said the retailer had drawn

a “dividing line” for its new openings

to remain “east of the Mississippi” so

that they were within a two-day

drive from its warehouse in

Pennsylvania. While the US has very

different weather patterns between

Florida and Washington, Weston

reckons the group has learnt what

US shoppers want. They flock to its

stores for cheap basics like jeans and

underwear — the same items that

Gap used to be so good at selling.

same because Cook said that its share-
holders were not interested in using
their investment to gain direct expo-
sure to such digital coins. “I wouldn’t go
invest in crypto, not because I wouldn’t
invest my own money but because I
don’t think people buy Apple stock to
get exposure to crypto,” he said.
While Cook said that the company
was scrutinising ways it could use
cryptocurrency technology, this was
“not something we have immediate
plans to do”.
Cook, 61, has led Apple for a decade
and was chief operating officer under
Steve Jobs. The company, based in
Cupertino, California, sells iPhones,
iPad tablets and Mac computers, as well
as services, such as music and television
streaming platforms. It has a market
value of almost $2.5 trillion.
Cook defended privacy changes in-
troduced this year, which have knocked
the revenues of companies such as
Snapchat, Facebook, Twitter and You-
Tube by an estimated $9.9 billion. Users
were deciding where they wanted to be
tracked, he said: “We’re not making the
decision. We’re just simply prompting
them to be asked if they want to be
tracked across apps or not.”