Ťhe case for offering help to hospitality companies during the Omicron flare-up is overwhelming. Through no fault of their own, businesses have been left “in no man’s land”, as Simon Emeny, chief executive of London pub chain Fuller, 史密斯 & Turner, puts it.
Pubs, restaurantsand theatres haven’t been ordered to close, which presumably would automatically trigger a support package from the Treasury, as it did last year. Yet trade is suffering anyway because the public, sensibly, is taking notice of the chief medical officer’s advice to tone down the socialising. 里希·苏纳克, even before he made his way back from several days in California, must have noticed reports of mass cancellations of restaurant bookings and pantomimes playing to mostly empty theatres.
The chancellor will also know what comes next if nothing changes. Once companies have salvaged the dregs from the holiday season, job losses will follow. If the revenue line isn’t moving, that’s what happens. When it comes to offering support, it shouldn’t matter if the process is driven by instruction from Westminster or by consumers’ behaviour. The effect on employees and employers is the same.
Since the Treasury, thankfully, seems to be edging towards accepting that argument, the question is what form of support is best. The easiest method is a furlough scheme tied solely to the hospitality industry, argued the Resolution Foundation persuasively this week.
第一的, the furlough structure was established last year and is well understood. 第二, it’s not hard to make it sector-specific; 如果有必要, test the fall in a company’s revenues, which can be measured through VAT returns. Third, it’s no use pointing to the 1.2m vacancies in the economy as an excuse for doing nothing; some of those vacancies may be about to disappear anyway.
The cost of a hospitality-only furlough scheme would be £1.4bn a month, the Resolution Foundation calculates, if it were pitched at the original level of 80% of wage support. Sunak might worry that the bill could balloon if the commitment were open-ended but, at the moment, there are reasons to believe the booster programme will work and that the Omicron wave, plus the economically damaging surge in workers isolating, will be over by spring.
If a January to March sector-specific scheme were to cost £5bn, the figure needs to be seen in the context of £46bn spent on furlough so far. In purely economic terms, it looks justifiable, just as it did last time: the aim is ensure hospitality companies survive to pay taxes and employ people.
It would be a jolt for Sunak to find himself making 2020-style arguments about protecting livelihoods and businesses. His recent messaging has been about restoring the public finances to the virtuous path of discipline. But the course of the pandemic has changed. A short detour is required.
It’s time to forget the idea that Boohoo and the online-only fast fashion brigade were winners from the pandemic. That was the tale of the first wave, when locked-down punters loaded up with “athleisure” wear and weren’t bothered if the kit didn’t fit perfectly.
The latest variation is different. The revival of going out (while it lasted) meant demand switched to smarter gear, and dresses definitely get sent back if they’re ill-fitting. Pre-pandemic, Boohoo used to reckon its return rate was in the low 30s, percentage-wise. Now it’s in the high 30s. Such differences matter in online logistics.
Worse still for Boohoo, it’s trying to sell into the US out of warehouses in Sheffield and Burnley. Air freight rates have soared and timetables have extended to 10 天, which is not ideal when half your pitch to the punters is about speed of delivery.
The net result was a thumping profits warning to go with the milder one in September. Investors had once expected top-line profits of £200m-ish from Boohoo this financial year; now the company expects £117m to £139m. Trading profits margins, which used to be 10%-ish pre-pandemic, will land at 6% 到 7%.
Whistling cheerfully, Boohoo reckons its problems are “transient in nature”. 出色地, 或许. Rather like the central bankers who have learned that “transitory” inflation can hang around, Boohoo would be unwise to bet the farm on the idea.
What it really needs in the US is a warehouse, but it’s only just choosing a location; it probably also needs one in continental Europe. 同时, Covid’s next effect on trading patterns is anyone’s guess.
Boohoo shares, 连国际队友都没有 23% 星期四, have fallen by two-thirds this year and stand at a five-year low. It’s hard to quibble with the market’s judgment that the current problems could be slower to clear than management expects. Rival Primark’s blanket refusal to join the online game looks smarter by the month.