38 Wednesday April 13 2022 | the times
Business
1
Prices continued to rise at their
fastest pace in a generation in
the United States last month
after the cost of petrol surged in
the wake of Russia’s invasion of
Ukraine. America’s consumer price
index rose 8.5 per cent in March
compared with a year ago, an
annual rate not recorded since
December 1981. Rent and food
costs also drove it higher. Page 372
US regulators have banned
Imperial Brands’ myblu
vaping devices after a review
found there was a lack of evidence
they would protect public health,
in a blow for the tobacco industry’s
transition from cigarettes. Page 373
Rising shipping costs, higher
wages and a slowdown in
online shopping pushed the
fashion retailer Asos into the red.
The company posted a
£15.8 million loss before tax for the
six months to the end of February.
That compared with profits of
£106.4 million a year earlier.4
Apple’s plan to add a blood-
pressure monitor to its
smartwatch is understood to
have hit snags which mean the
technology will not be ready for
two years. The feature has been in
the works for several years as the
world’s largest public company
seeks to strengthen its presence in
the “digital wellbeing sector”.5
Glencore funded two Russian
refinery businesses whose
owners are close associates of
President Putin, documents show.
The FTSE 100 commodities giant
has sought to play down its links
to Russia since the invasion of
Ukraine, saying its trading
exposure to Russia is “not
material”. Page 406
The boss of easyJet hailed a
“strong and sustained”
recovery in trading since the
relaxation of travel restrictions as
the budget airline beat first-half
forecasts. Johan Lundgren said
that the recovery presaged “a
positive outlook for Easter and
beyond” with daily booking
volumes ahead of pre-pandemic
levels. Page 427
The new markets business of
Rolls-Royce, focusing on
electrical power for small
aircraft and small modular nuclear
reactors, could be lossmaking into
the 2030s, a broker has warned,
pushing the engineering group’s
share price lower. Page 428
Deloitte is under investigation
for its audits of Go-Ahead
Group, the bus and train
operator found to have hidden and
then failed to pay back more than
£25 million owed to the taxpayer.
The Financial Reporting Council
is looking at audits for the years
between 2016 and 2021. Page 439
Renault is considering moving
production of its Alpine sports
cars from France to the UK’s
Lotus. Luca de Meo, the French
carmaker’s boss, confirmed the
possibility but said no decision had
been made. Page 4410
BlackRock, the world’s
biggest money manager,
has dismissed three senior
executives from its private equity
business after discovering their
plans to leave for jobs at Apollo
Global Management. Page 45Need to know
Apple blood-pressure test suffers blip
Apple’s plan to add a blood-pressure
monitor to its smartwatch is under-
stood to have encountered hurdles
which mean the technology will not be
ready for another two years.
The feature has been in the works for
several years as the world’s largest
public company seeks to strengthen its
presence in the “digital wellbeing
sector”.
Teams working on an update to the
Apple Watch that would measure users’
blood pressure have encountered chal-
lenges around accuracy, according to
Bloomberg News, which cited sources
with knowledge of the matter. Such a
feature may not be added to Apple’s
smartwatches until 2024, it said, and
the timeline could slip to 2025.
A spokeswoman for the company
declined to comment. Shares in Apple
rose 1.2 per cent, or $1.91, to close at
$167.66 in New York last night. Apple,valued at $2.7 trillion, is based in Cuper-
tino, California. It makes iPhones,
which typically generate half its overall
sales, as well as iPad tablets and Mac
computers. It also sells software
through the Apple Store and storage
space via iCloud, and provides music,
television and fitness subscriptions
services.
The technology group has focused in
recent years on building tools for health
and wellbeing.
Last autumn it was said to be devel-
oping a feature on the iPhone that
could help to diagnose depression and
cognitive decline. This year the com-
pany was linked with a potential bid for
Peloton Interactive, the exercise
equipment maker that enjoyed a surge
in interest early in the pandemic but
later endured a sharp fall in demand.
Wearable technology products have
provided Apple with another revenue
stream in recent years. It launched its
smartwatch seven years ago and has
since released half a dozen updated ver-sions. Sales generated by its wearables
and accessories division rose 13 per cent
to $14.7 billion in the last quarter of 2021,
more than its sales of Mac computers.
Rival smartwatch manufacturers are
working on their own blood pressure
features. Fitbit, owned by Alphabet,
announced last April that it was
launching a study.
“While the ability to easily measure
and monitor blood pressure in a weara-
ble, non-cuff application has been of
great interest, it has been rather elusive
to date,” Fitbit said at the time, “and the
ability to capture blood pressure
readings in a non-cuff wrist-wearable
has not yet been achieved.”
6 A key assembler of iPhones suspend-
ed production in Shanghai and the
nearby city of Kunshan as local author-
ities in China impose stringent meas-
ures to curb the spread of Covid-19
cases. The Taiwanese company Pega-
tron said the resumption of work at its
two plants required clearance from the
Chinese government.Callum Jones
US Business Correspondentrun. With used auto prices still nearly
50 per cent above pre-pandemic levels,
a continued decline could become a
significant drag on core inflation soon.”
The energy basket for inflation rose
almost a third on an annual basis last
month, its fastest rate since May 1981.
The White House has sought to pin the
blame of rising pump prices on to
Russia. Jen Psaki, President Biden’s
press secretary, said on Monday that
the latest inflation reading would be
“extraordinarily elevated” due to
“Putin’s price hike”.
Kathy Bostjancic, chief US financial
economist at Oxford Economics, said:
“The Russia-Ukraine war has added
further fuel to the blazing rate of
inflation via higher energy, food and
commodity prices that are turbo-
charged by a worsening in supply chain
problems. This will lead to a higher
near-term peak in inflation and a slow
descent through 2022. We look for
overall consumer prices’ rise to peak
near 9 per cent in May but end the year
still over 5 per cent.”continued from page 37
US inflation at 40-year highHigher costs and
late arrivals send
Asos into the red
Ashley Armstrong Retail EditorRising shipping costs, higher wages and
a slowdown in online shopping pushed
the fashion retailer Asos into the red.
The company posted a £15.8 million
loss before tax for the six months to the
end of February. That compared with
profits of £106.4 million a year earlier,
when shoppers had flocked to its web-
site while the high street was shut by
Covid-19 restrictions. Adjusted pre-tax
profits fell by 87 per cent from £112.9
million to £14.8 million.
Shares in Asos closed up 4.8 per cent
at £16.12 after it left its guidance un-
changed for the year and said sales
should accelerate in the second half as
customers start buying holiday outfits.
In the first half, Asos sales grew by
just 1 per cent from £1.97 billion to £2 bil-
lion, or 4 per cent on a constant curren-
cy basis. The slowdown is stark as the
online fashion retailer has historically
grown revenues by a quarter and set out
its intention to grow by 15 to 20 per cent
over the next three years at a capital
markets day in November.
It warned investors yesterday that
“an increasingly challenging environ-
ment introduces a greater degree of risk
than normal”, particularly due to the
inflationary pressures from higher fuel
and energy bills. It said the decision to
shut down its Russian business would
reduce full-year revenue growth by ap-
proximately 2 per cent, meaning a low-
ering of sales growth to between 8 and
13 per cent this year while adjusted
profits will be hit by £14 million.
Asos was originally started as As
Seen On Screen in 2000 by Nick
Robertson and Andrew Regan. It now
has 26.7 million active customers who
buy its own label and branded goods.
It said that as well as the dent from
shoppers drifting back to the high
street, its profits faced a hit from elevat-
ed freight costs, higher wage bills and
shipping delays, which meant that its
trend-led fashion arrived a month late
and then had to be discounted. Returnsrates, lower during lockdowns as shop-
pers bought casual wear, have picked
up as customers are again buying multi-
ple sizes or versions of dresses to try.
Asos also incurred £8 million of costs
relating to its new strategy, £5.5 million
relating to its long-awaited transition
from Aim to a main market listing, and
other charges relating to leasing space
in its offices and its £330 million take-
over of Topshop. The brand grew sales
by 193 per cent year-on-year via Asos
and had a higher purchase frequency.
In the UK, Asos sales grew by 8 per
cent to £895.5 million during the period;
in the US they grew by 11 per cent to
£252.7 million as demand for new out-
fits for the Super Bowl and Presidents’
Day drove demand despite supply
chain challenges. In Europe sales grew
by just 1 per cent due to availability con-
straints. Rest of the world sales fell by
10 per cent to £278.5 million because of
long delivery lead times and Australia’s
coronavirus restrictions easing, mean-
ing more shoppers returned to stores.
While the business saved £50 million
through operational efficiencies during
the period, it also spent £86.5 million on
automation at its Lichfield and Atlanta
warehouses and other technology.
Asos is still searching for a chief exec-
utive after the exit of Nick Beighton last
October. Mat Dunn is running the
business day-to-day as chief operating
officer and chief financial officer.
Dunn said the business had worked
hard to improve its availability levels
and that while running a global busi-
ness was “harder than it needs to be” at
the moment because of supply chain
issues, most of those pressures would
be unwinding and wage bills would re-
duce as it invested in automation. It has
put in place a “strategy board” which
Dunn said made the business more
“consumer centric”, although it has re-
sulted in the departure of a trio of senior
staff including Patrik Silen, chief strate-
gy officer, Jo Butler, chief people officer,
and Robert Birge, chief growth officer.
Tempus, page 46Behind the story
A
short while ago having
the top job at Asos was
one of the best gigs in
retail. It had a young
workforce, potential
for international growth and an
online buzzy brand rather than a
tired bricks and mortar business
on its way to going bust (Ashley
Armstrong writes). Now it seems
a job that’s proving hard to fill.
The abrupt departure of Nick
Beighton six months ago came
after disagreements with Adam
Crozier, then chairman, about
deal opportunities and difficulties
over its international business.
Beighton demanded support but
failed to get it. Just a month later,
Crozier left for a job at BT.
Ian Dyson was promoted from
senior independent director to
chairman but in December said
he would also be leaving once a
new chief executive is found.
Asos is far from a steady ship
at a time when there are
extremely choppy waters ahead.
The business has to manage
slowing growth, supply chain
challenges and rising cost
pressures that will not only erode
its margins but also dent the
spending power of its young
shoppers. Mat Dunn has come up
with a plan that does not leave
much room for a new arrival to
make their mark on it.
Dunn described the decisions
he had taken as “no regret”
operational changes, but he has
also overseen an overhaul of its
entire management structure.
The business will have pleased
investors by not cutting
expectations but some are
already sceptical that it can meet
its targets.
With smart fashions taking over from70%
Asos share price fall
over the past year£2bn
Revenues for the six
months to February26m
Active customers