Charlotte Street Partners



The taming of the bull

Written by Katie Stanton, associate partner
Edited by David Gaffney, partner
29 October 2020

Good morning,

I wrote a few weeks ago that this pandemic is one of winners and losers: the hulking big firms with baked-in resilience; the plucky, adaptable, innovative minnows; and the rest.
It was reported this morning that more than half a million businesses in the UK are now in “significant distress”, a result of grim economic data and poor trading conditions, particularly in those most vulnerable of footfall reliant sectors – hospitality, tourism, high street retail. At the same time, a quarter of a million companies are at risk of collapsing under £35bn of unsustainable debt, according to financial sector trade body The City UK and professional services firm EY. The media is ripe with downbeat business commentary at the moment, and it is plain to see that some of the UK’s most vibrant, important sectors are in real need of further support.
Still, it’s comforting to remember that there are some reasons to be cheerful, a few scattered nuggets of positivity glinting amid the dog mess that is this current situation. Since those long, quiet months of lockdown drew to an end (what already feels like a lifetime ago), many firms have actually seen a big surge in work as the taps of consumer activity were turned back on. The cup of pent-up demand runneth over, if you will.
Samsung has reported its largest profit in more than 18 months, fuelled by a bounceback in smartphone sales; HSBC is considering restarting paying dividends after better than expected third-quarter results; and now fashion chain Next has boosted its profit guidance for the third time in as many months, lifting forecasts by £65m to £365m. Not bad for one of the worst effected sectors.
But how can these firms – the aforementioned winners (at least for now) – communicate this optimism and restore some confidence with investors, with one cautious eye on the future, and potential further lockdowns coming down the tracks? Should they hazard to do so, indeed, given the delicate and volatile nature of these times?
Dialling back on the pessimism with a bit of bullishness and chutzpah is really important and quite frankly refreshing at this gloomy juncture. At the same time, we are accelerating into the unknown, and no one quite knows what is coming around the corner. As ever, managing expectations with a bit of cautious corporate confidence is perhaps the right balance to strike, and the key to avoiding looking like a wally in three months’ time, having lead investors down a road to nowhere.
If you’re looking for a case study of best practice, Next’s third-quarter results messaging is pretty spot on, and backs-up a set of half-year results that were lauded by media commentators and business editors for providing a refreshingly honest and straightforward take on events. If you’re looking for more tailored advice, you know where to find us.


French president Emmanuel Macron has announced a second national lockdown will be in place until at least the end of November. Under the new measures, which start tomorrow, people will only be allowed to leave home for essential work or medical reasons.
In a joint alert, the FBI and two US federal agencies warned yesterday that the US healthcare system is facing an “increased and imminent” threat of cybercrime, and that cybercriminals are unleashing a wave of extortion attempts designed to lock up hospital information systems, which could impact patient care amid a second wave of Covid-19.
President Donald Trump has urged states not to lock down and to shun mask mandates, as coronavirus cases rise across the country. Meanwhile his rival, Democrat Joe Biden, said the pandemic could not be stopped by “flipping a switch” and accused Trump of insulting victims of the virus with his handling of the pandemic. (£)

Business and economy

The US has opposed the appointment of Nigeria’s ex-finance minister as leader of the World Trade Organisation. Ngozi Okonjo-Iweala was recommended by the WTO nominations committee and would be the first woman and first African to lead the organisation. The US instead favours South Korea’s Yoo Myung-hee, insisting that she could “reform the body”.
A German vaccine backed by Pfizer could be distributed before Christmas, according to its chief executive, Albert Bourla. The UK has already bought enough doses for 20 million people, with the first tranche earmarked for the elderly and vulnerable if the drug is shown to be successful. Senior government sources expect that a verdict on whether it works will be available before Oxford’s competing vaccine, which may not provide results until after Christmas. (£)
The boss of banking business Revolut has been revealed as Britain’s first technology start-up billionaire in The Telegraph’s new Tech Hot 100 ranking of the industry’s richest leaders. Nikolay Storonsky, who co-founded the business in 2014, has a net worth of £1.06bn, based on his holding in the company. (£)

Columns of note

The leading article in today’s Times examines the danger of mingling old fashioned political conjecture with social media, referencing in particular the case of Ross Thomson, the former Conservative MP for Aberdeen South. Thompson was accused of sexual harassment by another MP, Labour’s Paul Sweeney, and his political career was subsequently terminated. Now, the independent parliamentary standards commissioner has found no evidence to support Sweeney’s complaint, but the immediate trial – the social media trial – and associated publicity was enough to put Thomson off politics for life.
Oliver Darcy explores America’s increasingly distrustful relationship with polling and data on CNN Business. Models are spelling out bad news for Trump this year, much in the same way they did back in 2016. But if pollsters are wrong again, it risks undermining the credibility of data journalists and their forecasting models more generally.

Cartoon source: New Yorker


What happened yesterday?

Global stocks slid yesterday as coronavirus cases soared. The US benchmark S&P 500 fell 3.5% in its biggest one-day loss since June, while the tech-heavy Nasdaq Composite dropped 3.7%.
Energy stocks tracked the price of oil lower to become the market’s biggest fallers. Brent crude, the international benchmark, settled down five per cent at $39.12 a barrel — its lowest level since June — on the prospect of weakening fuel demand in a coronavirus-constrained economy.
Meanwhile, in Europe, the German and Italian markets were among the worst hit, each falling more than four per cent, while London’s FTSE 100 declined 2.8%. The general feeling amongst investors is that governments will soon enact tighter control measures to counter a second wave of infections, derailing the fragile recovery.
On the currency markets, the pound was up 0.08% against the dollar at $1.30 and up 0.05% against the euro at €1.18.
In company news:
Heathrow announced yesterday that is has been overtaken as Europe’s busiest airport for the first time by Paris Charles de Gaulle because of a slump in demand for air travel.
Ford has beaten Wall Street expectations for revenue and profit in the third quarter thanks to a focus on expensive trucks and sports utility vehicles.
US consumer spending is stagnating according to results from Visa and Mastercard released yesterday, casting doubt over whether American shoppers can pull the economy out of the Covid-19 recession.
Boeing has reported its fourth consecutive quarterly loss and announced plans to cut thousands more jobs, as the pandemic wreaks havoc on the airline industry.

What’s happening today?



Aberforth Spli.
Argos Resources
Fox Marble Holdings
Itm Power
JPMorgan Mid Cap
Rosslyn Data
Vela Tech.
Zoltav Res

Trading announcements
Smith & Nephew

UK economic announcements
(07:00) Nationwide House Price Index
(09:30) M4 Money Supply
(09:30) Mortgage Approvals
(09:30) Consumer Credit

Int. economic announcements
(08:55) Unemployment Rate (GER)
(10:00) Consumer Confidence (EU)
(10:00) Economic Sentiment Indicator (EU)
(10:00) Services Confidence (EU)
(10:00) Industrial Confidence (EU)
(10:00) Business Climate Indicator (EU)
(12:30) Continuing Claims (US)
(12:30) GDP (Preliminary) (US)
(12:30) Initial Jobless Claims (US)
(12:25) ECB Interest Rate (EU)
(14:00) Pending Homes Sales (US)

Source: Financial Times

did you know

In 2013, six people in the US named their child Mushroom. (Source: @qikipedia)

Parliamentary highlights

House of Commons

No business scheduled

House of Lords 

Oral questions
Amounts and beneficiaries of money given out from the Clean Growth Fund – Baroness Benjamin
Protection of those threatened with abuse line – Baroness Morgan of Cotes
Publication of government proposals for the reform of social care – Lord Young of Cookham
Ensuring charitably funded hospices have sufficient funding to continue to operate – Lord Addington
United Kingdom Internal Market Bill – committee stage (day 2) – Lord Callanan

Scottish Parliament 

First minister’s questions
Portfolio questions
Education and skills
Ministerial statement
An update on the impact of EU exit on Scotland’s further and higher education sectors
Stage one debate
UK withdrawal from the European Union (Continuity) (Scotland) Bill
Financial resolution
UK withdrawal from the European Union (Continuity) (Scotland) Bill

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