FT : Saudi Arabia predicts budget deficit as it funnels money into gigaprojects

Saudi Arabia predicts budget deficit as it funnels money into gigaprojects
Preliminary budget statement pares growth forecast for this year to 0.03%

Saudi Arabia expects a budget deficit for this year and up to 2026 after revising earlier predictions of a surplus, as it funnels money into gigaprojects and expanding its non-oil economy.

In a preliminary budget statement for 2024 released at the weekend, the kingdom also pared its growth forecast for this year. It now predicts 0.03 per cent growth overall — with 5.9 per cent growth in the non-oil economy — after being among the world’s fastest-growing economies last year with almost 9 per cent GDP growth on the back of a petrodollar windfall.

The statement said total revenues this fiscal year, which runs from January to December, were expected to be SR1.18tn ($314bn), with expenditure estimated at SR1.26tn. Saudi Arabia is also expected to post a deficit next year and through 2026, revising past predictions of annual surpluses until then, while forecasting 4.4 per cent GDP growth next year.

Inflation and supply chain problems had hampered growth, the statement said, but “the government is working to expand government spending that has a transformative effect, while maintaining fiscal sustainability in the medium and long term”.

The world’s biggest oil exporter is undergoing reforms to diversify its economy beyond oil revenues, which are increasingly used to fund the sovereign Public Investment Fund as the country steers plans to expand sectors from tourism to electric vehicle manufacturing.

The plans remain reliant on petrodollars, which make up about 90 per cent of the kingdom’s revenues. Saudi Arabia led Opec+ into cutting production last year as oil prices dropped from highs of about $120 a barrel, sparked by Russia’s full-scale invasion of Ukraine last year and the post-pandemic global recovery. They are about $90 now, although prices have started to rise again.

Finance minister Mohammed al-Jadaan has previously said Riyadh would maintain fiscal discipline to break the oil-fuelled boom and bust cycles of the past.

“We need to make sure that we have predictable, sustainable expenditure that does not fluctuate with oil prices,” he told the Financial Times last year. “Otherwise we will go back to the previous [practices] when you have more revenues you spend more, and when you don’t have revenues you spend less, which is very difficult for the economy.”

In the past, high oil prices have led to heavy government spending, with surpluses deposited in the central bank. Spending shrank when prices fell, often resulting in halted projects and delayed payments to contractors.

The preliminary budget statement said the government “seeks to increase the pace of structural and economic reforms, reflected in the budget for fiscal year 2024”.

The plans include gigaprojects such as the planned futuristic city called Neom and tourism developments, although critics have questioned the feasibility of the proposals.

The government is also seeking to attract more foreign direct investment while positioning itself as a regional financial and logistics hub. It has given companies an end of the year deadline to shift their regional headquarters to the kingdom or lose out on government contracts.

The New Yorker : The Quiet Revolution of the Sabbath

The Quiet Revolution of the Sabbath
Requiring rest, rather than work, is still a radical idea.

Here is a story I wasn’t sure my sister would ever let me tell. I come from a churchgoing family, but one Sunday my sister did not go to worship, even though the rest of us did. She wasn’t sick. In fact, she was the opposite of sick: recently confirmed, she had simply decided to exercise one of the rights she understood to be hers through confirmation, namely staying home for no reason other than that she wanted to do so. I must have found this shocking—not only her decision but the willingness of our parents to abide—though I can’t really summon a memory of how I felt before worship because of what happened after.

Back then, the sanctuary of our little country church was divided from the fellowship hall by a single doorway. Pitched high on the left and low on the right, the door is uneven, a fact I’ve loved ever since someone told me an apocryphal story about Christ the carpenter helping his father, Joseph, correct a crooked doorframe. I looked at that door every week during worship. For a long time, it was right behind the pulpit, so I would watch it during the entire sermon, waiting expectantly for a similar miracle, for the right corner to rise to meet the left or for the left to fall to meet the right. Whenever I walked through, I dragged my fingers up and down its slanted frame; eventually, I was tall enough to touch its crooked corners.

Some of my earliest memories are of that doorway: stumbling through it with a me-size stuffed donkey for the pageant one Christmas Eve when I was seven; crying as I crossed its threshold toward my godmother’s casket that sat open before the altar; ducking through it as acolyte to light candles in the hopeful silence of the congregation. I rarely enter another sanctuary that I don’t first think of that door. A wonderful thing about the recent renovation of our more-than-hundred-year-old church is that they chose not to right the door, so that even today during worship, I find myself staring at it, although now the pulpit is on its lefthand side.

When you walk through that crooked doorway into the fellowship hall, you find a sacristy and bathrooms and a kitchen and Sunday-school rooms and a small office. When I was little, there were always two folding chairs in that office for the tellers who counted the offering and a tiny footstool for children like me who liked to sit while their parents sorted checks and stacked cash and added all the figures on an adding machine; if we were lucky, there were loose coins to be sorted into envelopes, or, if we were really lucky, enough for a paper roll. The church had the first photocopier I ever used, and a paper cutter that looked like a machete. Those three pieces of technology—the copier, the calculator, and the cutter—lived in the office beside a telephone, which my father used to call my sister the day that she stayed home.

My father was only checking on my sister, but, on hearing his side of their conversation, the pastor asked him for the telephone. I was there beside them and I could only imagine how she felt when she suddenly found herself talking not with our father but with our pastor. He had only one question for her: “Do you remember the third commandment?”

If you are not Catholic or Lutheran, then the commandment in question is actually the fourth. The tablet with the Ten Commandments wasn’t numbered, so the order is of some dispute; at any rate, our pastor was talking about the matter of the Sabbath and how to observe it. That is also the subject of a documentary by the American filmmaker Martin Doblmeier that, in the past few months, has been airing on public television stations and streaming online. Doblmeier has made more than a dozen documentaries about religion, including biographical films devoted to theologians such as Reinhold Niebuhr, Abraham Joshua Heschel, and Howard Thurman; a trilogy about Seventh-day Adventists; and interfaith explorations like “The Power of Forgiveness” and “Chaplains.” Those thematic films survey contemporary spirituality across traditions, looking at forgiveness in the Amish, Buddhist, Jewish, and Muslim faiths or interviewing chaplains of all kinds who work in prisons, meat-processing plants, and war zones.

In “Sabbath,” Doblmeier moves swiftly about the country, consulting with thoughtful sociologists and theologians, capturing the beauty and delight of summer camps and community gardens, talking with the clergy and parishioners at places such as life Adventist Church of Berkeley; the Stephen Wise Free Synagogue, in Manhattan; South Jackson Seventh-day Adventist Church, in Mississippi; the Islamic Center at New York University; and La Iglesia de Nuestra Señora la Reina, in Los Angeles. Viewers can compare b’nai mitzvah, baptisms, Jumuah prayers, congregational potlucks and Shabbat meals, while watching college students figure out their own Sabbath disciplines for the first time away from their families, and pastors with decades of experience change their views on sabbaticals.

The documentary can sometimes feel like a whirlwind tour, but whirlwinds have been known to produce wisdom. “Sabbath” begins by observing the hurried exhaustion and omnipresent stress of modern life—our digital addictions, our burnout culture, our depression—and then summons the scriptural roots of the film’s core idea, presenting the Sabbath as a possible remedy for our cultural distress. In Genesis, God rests after creating the world; in Exodus, God commands the Israelites to rest: “Six days you shall labor, and do all your work, but the seventh day is a Sabbath to the Lord your God. On it you shall not do any work.” Ammiel Hirsch, a reform rabbi who appears in the film, argues that the fourth commandment was “a revolutionary concept” that “changed human history,” because it is believed to be the first time a religious or political authority, instead of requiring work, had required rest.

Romans were contemptuous of the practice, maligning Jews as lazy, but even within Judaism interpretations of the commandment to rest varied in the ancient world, with people differing over not only what constituted appropriate worship but what constituted inappropriate work. Some of the most contentious arguments in the Gospels are between Jesus and religious leaders over what he was doing on the Sabbath, not only healing and performing miracles but one day simply gleaning grain with his hungry disciples. On that day, Christ appeals to the example of King David, who ate consecrated bread, telling the Pharisees: “The sabbath was made for man, not man for the sabbath.”

These were not trivial disagreements, and they persist into the present, even about fundamental issues, including which day is the one God intended for humanity to rest from labor. In Judaism, the Shabbat begins with sunset on Friday and ends after sundown on Saturday; Muslims observe Jumuah, coming together for congregational prayer on Fridays. We know from the Book of Acts that early followers of Jesus began gathering on Sundays, and in 321 A.D. Constantine formalized Sunday as the day of rest for the Roman Empire: “On the venerable day of the Sun let the magistrates and people residing in cities rest, and let all workshops be closed.” Christians today still mostly worship on Sundays, though Seventh-day Baptists and Adventists, for instance, observe their Sabbath on Saturdays.

Observance takes many forms even within the same faith, with those who keep the Sabbath engaging in different degrees of physical and spiritual rest, private meals or public worship, personal formation or collective service, silent prayer or active study. But a welcome corrective offered by the film is the insistence that, for the faithful, whatever happens on this consecrated day matters to all the other days of the week. “Sabbath isn’t simply a pious teaching,” the Duke University professor Norman Wirzba explains. “What’s at issue is the very meaning of life.”

That sense of the Sabbath’s profound importance is part of what brought the Puritans to America. Their strict Sabbatarian beliefs put them in conflict with the English authorities, especially after King James published “The Book of Sports,” in 1617, in which he encouraged his subjects to follow Sunday-morning worship with dancing, games, and recreation in the afternoon. For the Puritans, such encroachments clearly undermined the fourth commandment, and when they could, they passed Sabbatarian laws to protect the Lord’s Day—in Virginia, as early as 1610, it was decreed that “no man or woman shall dare to violate or break the Sabbath by any gaming, public or private abroad, or at home.”

Such prohibitions became known as “blue laws,” although no one now remembers why; perhaps because of the color of the paper on which they were printed or bound, or because of the pejorative meaning of the color in the colonial era, as in bluestockings or later variations like bluenoses—those who were prudish or proper. Laws like that proliferated and persisted for the next three centuries, regulating commerce, labor, and recreation on the Lord’s Day throughout the United States. The occasional exception, sparing certain industries or carving out certain activities, made its way through state legislatures here and there, but only during the Cold War, when school prayer and civic displays of religious iconography were challenged in the federal courts, did blue laws become a serious target, too.

Case after case argued that Sunday-closing laws violated the equal-protection clause and the establishment clause of the First Amendment. In 1961, the Supreme Court put the matter to rest, so to speak, when it found, in McGowan v. Maryland, that blue laws are not unconstitutional if they serve a secular purpose, and that choosing Sunday for a common day of rest is a practical choice, not preferential treatment of Christianity. “People of all religions and people with no religion regard Sunday as a time for family activity, for visiting friends and relatives, for late sleeping, for passive and active entertainments, for dining out, and the like,” Chief Justice Earl Warren wrote, in a decision representative of several others on the issue. “Sunday is a day apart from all others. The cause is irrelevant; the fact exists. It would seem unrealistic for enforcement purposes and perhaps detrimental to the general welfare to require a State to choose a common day of rest other than that which most persons would select of their own accord.”

Even with that legal protection secured, Sabbatarian laws were revised and repealed around the country in the decades that followed. In some states, business owners argued successfully that these laws were applied capriciously across the same industry (say, only to stores of a certain size) or unfairly to certain industries (say, car sales but not camper sales); in other states, regulators conceded that they were overwhelmed and unable to enforce the law; almost everywhere, economic pressures prevailed, with Sabbath-law critics arguing that revenue was being lost and tax dollars were being forgone. Nonetheless, blue laws did not disappear. Some states still restrict hunting, horse racing, or the sale of alcohol on Sundays, and one segment of “Sabbath” is devoted to the last county in the country to still restrict shopping more broadly.

That county isn’t Lancaster, in Pennsylvania, or Salt Lake, in Utah. It’s Bergen County, New Jersey, one of the wealthiest counties in one of the country’s wealthiest states, home to Paramus, which boasts more retail sales than any other Zip Code in the United States. Tens of millions of people shop every year in the city’s four large malls, which bring in some six billion dollars annually. New Jersey has had statewide blue laws on the books since 1693, and Bergen County specifically chose them in 1959, when small businesses banded together with clergy and other concerned residents to bolster the county’s local prohibitions; as recently as 1993, the residents voted to preserve their blue laws, continuing to ban the Sunday sale of all sorts of items, including appliances, building materials, cars, clothing, electronics, and furniture. For some retailers, such as Costco, that means welcoming customers but allowing them to purchase only certain goods, blocking off whole aisles; for many others, it means staying closed entirely.

The Bergen County blue-laws advocates interviewed in “Sabbath” offer various nonfinancial arguments for keeping their stores closed on Sundays, from humdrum reasons like less traffic to loftier ones like strengthening community and promoting wellness. Health and longevity are integral to the interviews Martin Doblmeier conducted with Seventh-Day Adventists, too, who observe their Sabbath on Saturdays, and link spiritual well-being to physical well-being. Mostly vegetarian, they exercise regularly and abstain from alcohol and drugs, and, on Saturdays, share communal meals and focus on scripture and service; studies have shown that they have reduced risks of diabetes, cancer, and high blood pressure.

Critics of blue laws have long argued that they benefit only those individuals who attend religious services on Sunday, not the community at large or creation more broadly. But secular labor unions fought for Sunday closures as a way of guaranteeing time off for weary workers, whether or not they avail themselves of religious services on that day or any other, reasoning partly that a day or set of days must be chosen, not as a means of promoting religion but to insure rest from work. Such activists did not see themselves as advocates for a particular religion or enemies of any other, only as protectors of workers from economic exploitation.

Concerns about exclusivism, although reasonable in a society that values pluralism, have made people afraid to champion a common day of rest, even though, originally, in Mosaic law, the Sabbath was intended to be shared by all, regardless of their religious practice. That day was set apart not only for the Jewish people; in Deuteronomy, it is written: “Six days you shall labor and do all your work; but the seventh day is a sabbath to the Lord your God; in it you shall not do any work, you, or your son, or your daughter, or your manservant, or your maidservant, or your ox, or your ass, or any of your cattle, or the sojourner who is within your gates, that your manservant and your maidservant may rest as well as you.”

This litany includes the usual suspects—you and your children—but also many more: your servants, your ox and your ass, even the strangers in your midst. Everyone is owed a Sabbath, not just those who worship your way; the Sabbath is not only for you and yours but for all. “There’s not a single instance that I can find anywhere in Scripture where God gives Sabbath to an individual,” Nathan Stucky, a professor at the Princeton Theological Seminary, says in the documentary. “It’s always to the community. It’s to the whole creation. It’s to the gathering of God’s people. Sabbath in all its fullness is an exercise of a community.”

We understand this necessity from our own experience: the only effective truce is a collective one. Thus unplugging works best if everyone in your household or office unplugs, and holidays are most holiday-ish when as much of our society as possible is allowed to observe them, when the markets and the banks and the post offices close and all the rest of the busy commercial world does its best to accept that most commerce can wait. Pluralistic commitments have provided cover for economic pressures, when, instead of arguing for a different day of rest, we more often accept there can be no rest, no forgoing revenue or losing business; opposition to the Sabbath is often cloaked in secularism but motivated by greed.


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That opposition is all the more understandable when we consider the radical origins of the Sabbath. Doblmeier’s documentary is most fascinating when it recovers some of how the idea of mandatory rest was integrated into larger ideas of justice in the Torah. He visits Abundance Farm, in Northampton, Massachusetts, where Congregation B’nai Israel took a single acre of urban land on the site of a former alms house and transformed it with methods inspired by Halachic law; the congregation later added another half acre of land nearby. A free community-harvest program reflects an expensive definition of Pe’ah, allowing neighbors and the needy to take peppers, tomatoes, berries, basil, garlic, herbs, potatoes, and many other crops during the harvest season, and Rabbi David Seidenberg explains how the farm observes the shmita, the so-called Sabbath of Sabbaths, which applied to the land itself.

The shmita commands that the earth be allowed to rest every seven years, and that, just as often, debt should be forgiven. Scholars disagree about the extent to which this sort of jubilee was ever practiced in ancient Israel, but in both Leviticus and Deuteronomy, the command is to forgive whatever debts exist between neighbors and to share whatever is needed: “Open your hand,” the scripture says of this sabbath year, “to the poor and needy neighbor in your land.” Such a forgiving and generous scheme is hardly palatable to corporate interests; neither is a weekly rehearsal that echoes and culminates in that grand Sabbath, whatever day you heed it.

If we regularly took an entire day off from the work and the worry of our lives, we might think about doing it more often; moreover, we might think about how much more others need time to rest, too. Rabbi Abraham Joshua Heschel once wrote that for Jews, whose sacred architecture isn’t only physical but temporal, “Sabbaths are our great cathedrals.” “Six days a week,” he observed, “we wrestle with the world, wringing profit from the earth; on the Sabbath we especially care for the seed of eternity planted in the soul.”

One need not be religious to find such language arresting, to be stopped by that metaphor and moved by the arc of human history, in all its glory and failures. My wife is a Jewish atheist who has lately taken to baking challah and lighting Shabbat candles on Fridays. I start my Sundays, as best as I am able, with worship, generally at that same church where I first learned the commandments; three generations of my family have worshipped in those home-town pews, and I confess a stubborn preference for being there, where even the headstones in the graveyard are carved with familiar names, and when babies are baptized, I generally know their parents and grandparents and sometimes even great-grandparents. Other times I find my way to some unfamiliar sanctuary, wherever I am for work or whatever has carried me away from home.

My sister isn’t really a churchgoer these days, and I assumed that she would be embarrassed by the story I wanted to share from our childhood when I told her about Doblmeier’s documentary. She wasn’t at all. Instead, she told me, I was wrong: our pastor’s question had never struck her as admonishing, only loving. She understood that someone who had devoted his life to the Sabbath was asking her to consider it anew, which she has never stopped doing, even if rarely in pews.

Challenges : Cosmétiques de luxe, parfums... Un secteur à la beauté tout sauf ép

Cosmétiques de luxe, parfums... Un secteur à la beauté tout sauf éphémère

Rachat d'Aesop par L'Oréal, création chez Kering d'un pôle dédié aux cosmétiques et aux parfums, projet de cotation de Coty à Paris… Les projets fourmillent sur un marché qui explose.

Kendall Jenner, Eva Longoria, Yseult… Les égéries de L'Oréal Paris défileront ce dimanche 1er octobre en robes de créateurs et surtout avec leurs maquillages sophistiqués sur le parvis de la tour Eiffel, en pleine Fashion Week parisienne. Une illustration de la place croissante occupée par la beauté à côté de la mode et du luxe, vedettes de la Bourse de Paris.

Avec la sixième édition de cet événement ouvert au grand public et abondamment relayé sur les réseaux sociaux, le groupe rappelle combien ces trois piliers de la réussite à la française sont devenus indissociables. En témoignent les grandes manœuvres engagées par Kering, Richemont, LVMH, L'Oréal. Et quelques autres


Kendall Jenner, Eva Longoria, Yseult… Les égéries de L'Oréal Paris défileront ce dimanche 1er octobre en robes de créateurs et surtout avec leurs maquillages sophistiqués sur le parvis de la tour Eiffel, en pleine Fashion Week parisienne. Une illustration de la place croissante occupée par la beauté à côté de la mode et du luxe, vedettes de la Bourse de Paris.

Avec la sixième édition de cet événement ouvert au grand public et abondamment relayé sur les réseaux sociaux, le groupe rappelle combien ces trois piliers de la réussite à la française sont devenus indissociables. En témoignent les grandes manœuvres engagées par Kering, Richemont, LVMH, L'Oréal. Et quelques autres.

Des fusions et acquisitions en pagaille
Le 30 août dernier, le numéro un mondial de la beauté a bouclé le rachat de l'australien Aesop pour 2,4 milliards de d'euros. Cette marque, qui revendique des pratiques éthiques, a investi le créneau des soins de beauté haut de gamme, avec des produits vendus entre 60 et 100 euros. Elle affichait un chiffre d'affaires de 537 millions en 2022. Mais Cyril Chapuy, le président de L'Oréal Luxe (Yves Saint Laurent, Lancôme, Kiehl's…), qui réalise l'opération, affirme qu'Aesop rejoindra rapidement le club "des marques milliardaires".

"La beauté est un marché en croissance qui aiguise les appétits, tout particulièrement dans les parfums", résume Loïc Morvan, analyste financier chez Bryan, Garnier & Co. Les chiffres publiés en mai par le cabinet McKinsey sur ce créneau (voir le graphique ci-dessous) le prouvent: le secteur, qui regroupe soins de la peau, soins capillaires, maquillage et parfums, restera encore longtemps très attractif.

"La beauté suscite un intérêt de plus en plus marqué des investisseurs", souligne Amaury Saint Olive, directeur associé au bureau de Paris, tant en raison des perspectives de croissance que des taux de marge. La bataille ne fait donc que commencer, avec à la clé de nouvelles fusions et acquisitions. "De nombreuses marques ont été créées avant la crise sanitaire, souligne Christine Durroux, consultante à The Arcane. Après l'énorme plongeon de 2020, beaucoup sont à vendre."

De 470 milliards de revenus générés en 2023 par l'industrie de la beauté, les ventes devraient bondir à 580 milliards d'ici à 2027, indique McKinsey, portées par un engouement pour les fragrances. "Dans le cas de la Chine, traditionnellement peu consommatrice de parfums, il y avait peu de produits adaptés, explique Flavie Nguyen, directrice associée chez McKinsey. Aujourd'hui, les marques proposent des parfums avec des notes plus florales et plus légères."

Une prime au superluxe
Au total, c'est une croissance moyenne de 6% par an que prévoit le cabinet de conseil, mais avec des nuances importantes: la beauté premium devrait progresser de 8% par an, alors que le marché de masse devrait se contenter de 5%. Les ventes de produits de beauté de luxe devraient doubler, de 20 à 40 milliards dans la période. Dans un secteur où les marques affichent des marges "de 15 à 25% en moyenne", selon le rapport, le super luxe crève ce plafond.

C'est le cas de Creed, la marque de "haute parfumerie" rachetée cet été par Kering, qui affiche 60% de bénéfice brut, pour un chiffre d'affaires de 250 millions, et des prix pouvant aller de 150 à 450 euros. Cette maison franco-anglaise créée en 1760 a été reprise à des fonds contrôlés par BlackRock Long Term Private Capital Europe, pour un montant qui se situerait entre 2,5 et 3,5 milliards. Un chèque trop élevé? "On ne sait que cinq ans après si une acquisition a été payée trop cher", relativise Loïc Morvan.

Avec cette acquisition, "la première initiative stratégique de Kering Beauté", a souligné le PDG François-Henri Pinault, son groupe prend pied directement dans le secteur de la beauté. Il a pris le virage à toute vitesse, après avoir créé en février la division Kering Beauty, visant "le segment le plus exclusif" du marché. Raffaella Cornaggia, une ancienne d'Estée Lauder, Tom Ford Beauty et Chanel, a été nommée à la tête de cette entité qui, pour l'instant, gère cinq marques: Balenciaga, Pomellato et Qeelin, ainsi que Bottega Veneta et Alexander McQueen, dont les licences ont pu être reprises à Coty. Si François-Henri Pinault a dans l'idée de procéder à l'identique avec Yves Saint Laurent, dont la licence est verrouillée par L'Oréal, c'est pour l'instant mission impossible. Mais il peut rêver à Gucci, dont les parfums sont produits chez Coty dans le cadre d'une licence arrivant à échéance dans cinq ans.

Même si LVMH (actionnaire de Challenges) affiche dans ce domaine quelques records, comme de posséder le numéro un mondial des ventes de parfum (Sauvage) ou des rouges à lèvres dont il se vend un exemplaire toutes les deux secondes dans le monde (chez Dior), pas question de rester inactif. Le groupe de Bernard Arnault vient de remanier sa division beauté, confiée à Stéphane Rinderknech, un ancien dirigeant de L'Oréal et excellent sinophone. Sa mission: "Faire rayonner la beauté de LVMH à travers le monde, alors que ce marché continue de croître partout", nous a-t-il expliqué le 21 septembre à l'issue d'une conférence organisée par Vogue Business, sa première intervention publique depuis sa nomination. Et surtout, rester vigilant aux risques et aux opportunités.

Les marchés valident
Car tous les acteurs du secteur cherchent à bouger. Ainsi, le géant du luxe suisse Richemont (Cartier, Dunhill…) a-t-il annoncé vouloir, à l'instar de Kering, reprendre les commandes des activités beauté de ses marques. Cette déclaration a déstabilisé Interparfums, spécialiste de la production et de la distribution de parfums sous licence (Mont-blanc, Van Cleef & Arpels de Richemont), dont le cours de Bourse a aussitôt chuté. Mais le groupe de Philippe Bénacin connaît les nouvelles ambitions des uns et des autres et affirme avoir dans ses cartons un projet de marque propre.

Last but not least, l'américain Coty envisage une deuxième cotation à Paris pour célébrer ses 120 ans. Créé en 1904 par François Coty, le groupe gère 50 marques, dont 35 licences (Lancaster, Hugo Boss, Marc Jacobs…) et les autres en propre (Rimmel, Max Factor, Bourjois…). Sa présidente, l'ancienne L'Oréalienne Sue Nabi, est venue rencontrer les analystes financiers, en juillet à Paris. De tous ces projets, reste à savoir combien verront le jour.

Challenges : Pour redorer ses comptes, le géant chinois Fosun mise sur la montée

Pour redorer ses comptes, le géant chinois Fosun mise sur la montée en gamme du Club Med
A cours de liquidités, le géant chinois Fosun serait prêt à céder 30% du groupe de loisirs, aujourd'hui devenu rentable. Il en demanderait le double de ce qu'il avait déboursé pour en acquérir la totalité il y a huit ans. De quoi relancer une nouvelle bataille autour du Club Med?

Va-t-on assister à une nouvelle bataille autour du Club Med, moins de dix ans après la guerre homérique que s'étaient livrée la Caisse des dépôts, Bernard Tapie, le fonds Ardian et Henri Giscard d'Estaing, rejoints ensuite par la famille Benetton et l'homme d'affaires italien Andrea Bonomi? A l'époque, Giscard était sorti gagnant de cette foire d'empoigne grâce à l'appui déterminant du chinois Fosun, désireux de s'inviter dans le secteur du tourisme en Europe et dont la fortune semblait alors inépuisable.

Entré au capital de l'entreprise, avec moins de 10% en 2010, le conglomérat avait ensuite lancé une OPA et retiré le titre de la Bourse. Fort de ce soutien, le Club Med a pu renouer avec les profits et réussir son repositionnement sur les vacances tout compris haut de gamme.

Le géant Fosun étranglé par les dettes
Mais si le redressement de l'entreprise est aujourd'hui accompli, c'est au tour de Fosun d'être dans la tourmente. Dans une économie chinoise qui tarde à redémarrer, l'actionnaire du Club Med, à cours de liquidités, doit absolument réduire la voilure sous peine d'être écrasé par un endettement trop lourd.

Il y a moins d'un an, le groupe avait promis de se défaire pour plus de 80 milliards de dollars d'activités et assurait qu'il resterait dans la pharmacie, l'assurance, la distribution et le tourisme. Depuis, la situation s'est encore dégradée et, pris à la gorge, Fosun n'a pas vendu aussi bien que prévu. Voilà pourquoi, il a fait savoir incidemment début septembre, par la bouche de son PDG, Henri Giscard d'Estaing, qu'il envisageait "une ouverture de capital (du Club) à des partenaires stratégiques minoritaires".

30% ou plus ?
A nouveau, le petit monde des "gentils investisseurs" est en ébullition. "Fosun aimerait récupérer 2 milliards d'euros contre 30%", assure un proche du dossier. L'actionnaire chinois avait payé moins d'1 milliard pour la totalité des parts il y a huit ans. Qui serait prêt à faire un tel chèque pour être minoritaire? "Bpifrance, c'est-à-dire l'Etat, va forcément regarder le dossier, car le Club a une forte présence en France, essentiellement à la montagne, où il joue un rôle important dans l'économie locale", souligne Didier Arino, du cabinet Protourisme.

Pour l'heure aucune banque d'affaires n'a encore été mandatée, mais plusieurs d'entre elles s'activent dans l'espoir de ficeler le plan qu'Henri Giscard d'Estaing ira soumettre à Fosun. "Les recherches ne se cantonnent pas aux acteurs français et européens, précise un proche du dossier. Ils regardent la carte du monde des marchés prometteurs: l'Asie, l'Amérique et le Moyen-Orient." Des zones où l'on trouve des investisseurs friands de marques françaises, y compris dans l'industrie touristique. Et bien que Fosun affirme qu'il souhaite conserver ses activités dans le secteur de loisirs, qui sait si une belle valorisation de l'entreprise ne pourrait pas le convaincre de vendre la totalité du capital? Le grand marchandage ne fait que commencer.

Apple insider : Apple considers $2B Apple TV+ streaming rights grab for Formula

Apple considers $2B Apple TV+ streaming rights grab for Formula 1

Apple is mulling over another potential sporting deal for Apple TV+, with claims it is thinking about offering $2 billion per year for the exclusive streaming rights to Formula 1 coverage.
Apple already offers a number services relating to sports on Apple TV+, including MLB "Friday Night Baseball" and the MLS Season Pass. In a new report, Apple is thinking about shifting into motorsport.

According to Business F1 Magazine, as covered by GPBlog, Apple is currently working on an offer that the Formula 1 Group "cannot refuse." The current proposed deal is thought to be valued at $2 billion per year, which is allegedly double what the Formula 1 Group receives for global TV rights.

Unusually, the deal would not provide Apple with full exclusivity from the start, but instead around 25% of the overall streaming rights package. As existing rights contracts expire, that percentage would go up, potentially hitting 100% within five years.

Even more so, Apple could be paying a fixed sum per year instead of seeing the price increase as the percentage increases. This fixed fee may also apply for a seven-year term.

Formula 1 is not an entirely new field for Apple, as it has produced content for Apple TV+ in the field, including a documentary about seven-time world champion Lewis Hamilton. Apple CEO Tim Cook has also waved the checkered flag during the US Grand Prix in October 2022.

9to5 : Apple considers huge bid for global Formula 1 streaming rights

Apple considers huge bid for global Formula 1 streaming rights

According to a report in the latest issue of the Business F1 magazine, Apple is eyeing Formula 1 as its next big sports investment. The company is reportedly considering an offer worth about $2 billion per year, which would eventually make Apple the exclusive streaming rights holder of Formula 1 racing.

The value of the Apple deal would be about double what the Formula 1 league currently gets from its global TV rights. The magazine says that Apple’s interest in clinching Formula 1 has increased following the success of MLS Season Pass. An Apple F1 pass would likely live alongside MLS and Apple TV+ in the Apple TV app, as a standalone subscription.

Even if the hypothetical deal was struck, Apple would not be able to secure global rights for a while due to existing contracts with various broadcasters around the world.

The magazine suggests Apple would agree the contract such that it would include increasingly more territories as rights became available in those markets. For reference, US rights are currently tied up with ESPN until 2025, which is when the Apple-F1 deal would likely begin. Apple would reportedly look to sign a seven year deal, with global rights becoming available about five years in (the F1’s current media deals expire on or before 2029).

The company’s Apple TV+ content arm already has several interests in F1. It is currently in the process of producing a big-budget F1 movie starring Brad Pitt, and a documentary on racing legend Lewis Hamilton. The F1 movie was filming on track at Silverstone in July, but further production has been on pause due to the ongoing actor’s strike.

Whether an F1 streaming deal comes to pass is another matter entirely. The company has been rumored to be considering many deals with various sports leagues, including the NBA, English Premier League, NFL Sunday Ticket, and more. To date, it has landed MLS Season Pass and MLB Friday Night Baseball.

Barrons : These 4 Stocks Will Thrive Even if There’s a Recession

These 4 Stocks Will Thrive Even if There’s a Recession

Ah, the mysterious U.S. economy. Is it heading for a soft landing, no landing, or a resounding splat? Your guess is as good as ours. But no matter the outcome, investors should feel confident that the construction sector will not just survive, but thrive.

Yes, even through a recession. There are several forces at work that should keep the cyclical industry booming in 2024 even if broader economic activity slumps. One is the lengthy march toward a lower-carbon energy system. Another is the movement by companies to bring manufacturing back to the U.S. from abroad after spending decades sending it overseas. And demand for energy-intensive artificial intelligence means more and larger data centers are needed.

Better yet, a trio of U.S. government programs—the Infrastructure Investment and Jobs Act, the Chips Act, and the Inflation Reduction Act—will help keep the money flowing, come economic rain or shine. Together, the three represent hundreds of billions of dollars in spending and subsidies targeted at upgrading the nation’s roads and bridges, expanding domestic manufacturing of semiconductors, and modernizing the electrical grid, among many other things.

“The massive spending on government programs will blunt the downturn compared with an average cycle,” says Graeme Forster, portfolio manager of the Orbis Global Equity Strategy.

That’s no secret, and many of the obvious beneficiaries have already seen their stocks surge in anticipation. Those include the construction and engineering contractors who will be doing a lot of the planning and construction work for the plethora of projects coming up.

Take Sterling Infrastructure STRL –0.31% (STRL), a 2023 Barron’s Roundtable pick in January when shares were around $32. The stock has climbed 126% this year, to a recent $74. Quanta Services PWR –0.94% (PWR), the 800-pound gorilla in the space, is up 33% this year and trades for 27 times forward earnings, versus its five-year average of around 16.5 times. Chasing these infrastructure and electrification winners now seems tough, and there may be a better entry point should markets pull back.

Some, though, might be worth considering despite big gains. Daniel Skubiz, a portfolio manager at Ziegler Capital Management, points to MYR Group MYRG –1.05% (MYRG), which sits in the sweet spot for the investments that the U.S. government, utilities, and companies are making—recession or not. The stock, up 47% year to date, has been no slouch, and shares trade at a premium multiple of 21 times forward earnings. But that’s well deserved for the builder of large-scale electrical infrastructure, including transmission and distribution power lines, substations, and for a variety of commercial and industrial applications.

“They’re involved in grid hardening, integration of renewables into the grid, and a lot of specialized electrical work for data centers, healthcare, manufacturing, and more,” Skubiz says.

Other stocks in the group appear cheaper, and many are small-caps, which as a group have had a tough 2023. Fluor FLR +0.22% (FLR) gets more than 40% of its revenue from its oil-and-gas construction segment. Management is working to diversify away from that field, and the company is bidding on contracts for U.S.-based semiconductor manufacturing that should receive Chips Act funding.

Fluor also has transportation infrastructure credentials: Current projects include the Gordie Howe International Bridge connecting Detroit and Windsor, Ont., plus the new LAX Automated People Mover. The stock has gained less than 6% this year and trades for 14 times forward earnings, a discount to its five-year average of 18 times.

MasTec MTZ –1.17% (MTZ) and Aecom (ACM) are other construction and engineering companies that have sat out the group’s 2023 rally and are trading at reasonable valuations.

Miss Tweed : Designer Alessandro Michele needs to make a tough decision

Designer Alessandro Michele needs to make a tough decision


Alessandro Michele, the designer behind Gucci’s spectacular revival, faces a difficult choice: take the helm of a big brand or bring back to life a fashion label that disappeared 40 years ago and which many have forgotten outside of Italy.

LVMH is offering him on a silver plate the creative directorship of Fendi, the group’s third-biggest fashion brand in terms of revenue. There is another proposition on the table that is closer to his heart but also riskier: resuscitating Walter Albini, considered the father of Italian ready-to-wear.

Albini was a brilliant dandy designer who shot to fame in the late 1960s and 1970s.But he did not live long enough for many people to remember him after his death. Albini died of AIDS in 1983, at the height of his stardom, at the age of 42. Albini’s work had as much impact on fashion as Karl Lagerfeld and Yves Saint Laurent at the time, fashion historians say. For industry insiders Albini is ripe for revival - and Michele is the ideal creative to do it.

The late Italian designer was copied by many of his contemporaries and later successors such as Gianni Versace. Albini was one of the first designers to make genderless a major trend in fashion, something Michele has also been known for. The long-haired and tattooed Italian stylist, who spent 20 years at Gucci and became creative director in 2015, admitted several times in interviews to being inspired by Albini’s legacy.

Fendi is power, Albini is adventure. Fendi is prestige, Albini has huge potential and Michele is the right person to exploit it. Not an easy decision.

The Walter Albini brand and its archives were acquired last year by Bidayat, an investment company founded two years ago by Rachid Mohamed Rachid who is also CEO of Mayhoola and chairman of fashion brands Balmain and Valentino.

A person close to Bidayat said Rachid and Michele were due to meet soon to discuss the project. “From what we understand, Michele has not taken a decision yet (regarding Albini or Fendi). It’s for him to decide.” The source confirmed that Michele told Rachid about LVMH’s offer but he did not mention Fendi concretely, respecting the group’s wish to keep the name under wraps.

Another Milan industry source said that the “deal was done” between Fendi and Michele but that could not be confirmed. LVMH, Rachid and Bidayat declined to comment for this report.

FENDI
If Michele became Fendi’s new creative director, he would certainly jazz it up and give the brand new relevance. One of many reasons why Michele would be a good fit for Fendi is that Rome is also his city. Michele feels profoundly Roman, a proud citizen of the city founded by Romulus and Remus more than 3,000 years ago. He understands what being Roman means in terms of attitude and fashion. Just like British designer Daniel Lee understands much better what Burberry’s Britishness is about than did Italian designer Riccardo Tisci before him. Fendi needs to reconnect with its Roman roots, fashion insiders argue.

Tapping into his vast knowledge of the city’s art and history, Michele could help Fendi build a strong Roman identity and celebrate in style its 100th anniversary in two years.

Fendi was founded in 1925 by Adele and Edoardo Fendi as a specialized bag and fur workshop. Lagerfeld joined the fashion house in 1965, where he would stay for five decades, a record in the history of fashion. LVMH acquired Fendi in 2000 when it had only a handful of boutiques.

In 2020, Kim Jones stepped into the big shoes of Lagerfeld a year after he passed away. With hindsight, many fashion critics say the British designer was perhaps not such a good choice. Jones is also the creative director of Dior’s menswear, a big job for which he is getting more praise than for his work at Fendi.

UNDERPERFORMING
In spite of Jones’ beautiful designs, Fendi has been underperforming luxury peers. “For me Kim Jones did not get Fendi,” one senior fashion critic told Miss Tweed. “What he does is impeccable, very elegant, very luxury, very timeless but it does not give you much emotion,” she said. Another fashion critic in Milan said: “Yes, I hear that Kim Jones is out of favor, so we’ll have to see what happens.”

To be fair, Fendi is not an easy brand to work for, particularly since its heritage is strongest in bags and fur - not in clothes. Some fashion critics argue that Karl Lagerfeld did not make such a strong imprint on Fendi either in terms of fashion persona. Lagerfeld had the genius idea of the interlocking Fs for the logo and produced memorable designs for fur but his work for ready-to-wear was not as strong as what he did for Chanel and before that for Chloé and other brands, fashion historians say.

Fendi matriarch Silvia Venturini Fendi, who worked many years alongside Lagerfeld, is still in charge of Fendi’s menswear and accessories. Her daughter Delfina Delettrez Fendi looks after the brand’s jewelry since 2020. She presented her first high jewelry collection in July. They are respectively the third and fourth generation of the Fendi family. After the show in September, Venturini said that for her, the Fendi woman was “proud, independent and chic.” That’s not enough to build a strong identity for a brand.

When you walk into a Fendi boutique, everything shines. It’s clinically clean, like many of Jones’s designs. There are lots of sparkly products to choose from, but the atmosphere lacks that warmth and personality a big luxury brand such as Fendi could have. Emotions -- not sparkles -- are what makes consumers pull out their credit card. This is particularly the case now that the industry is going through a slowdown and competition is as fierce as ever.

MAGIC
Michele could apply at Fendi the same magic he used at Gucci, particularly with handbags – a brand’s main source of profit. At Gucci, his revamp of the Dionysus bag was a huge success and helped power the brand’s growth from €4.5 billion to more than €10 billion.

Michele ornamented Dionysus bags with snakes, bees and flowers and other unexpected embroideries. He also gave Gucci shoes a new twist. His slip-on black loafers with beige fake fur sticking out were also a huge hit. And the brand’s jackets and coats embroidered with the designer’s eclectic array of images became must-haves. Eventually, customers grew tired of Michele’s baroque designs and demanded something new. He left the brand in November last year.

Fendi is first and foremost a provider of handbags and fur coats. Those are the areas on which its legitimacy as a luxury brand is based. But on the fur front, Fendi is playing it quiet in response to the industry’s anti-fur movement. On its website, there is no longer a fur section and it’s impossible to find any of the brand’s latest fur models online. These are only sold in boutiques.

On the handbag front, business is not impressive either. Fendi’s best-sellers include the Baguette bag, an elongated tote designed by Venturini and launched in 1997. It became a sensation thanks to the TV series Sex and the City. Then there’s the Peekaboo line, a trapezoidal shaped handbag with a round handle, also designed by Venturini and launched in 2008. Since these two bags, there’s not been a major hard-hitting new line. What occupies most space in boutiques are reiterations with new materials such as sequins. Kim Jones introduced a new bag called the Fendi First with an oversized metal F clasp but it’s rather for soirées and special events. That may explain why it’s not been a huge commercial success.

FASHION GROUP
As part of LVMH’s current reorganization, Fendi is due to join LVMH’s Fashion Group together with Loro Piana. The Fashion Group includes Celine, Loewe, Givenchy and Kenzo among other brands. Louis Vuitton former CEO Michael Burke is expected to formally replace soon Sidney Toledano as CEO of that entity, as Miss Tweed wrote earlier this year. Part of Burke’s mission is to put Fendi firmly back on the growth track. Burke became CEO of Fendi in 2003 and led the brand for nine years. He was replaced by Pietro Beccari who helped the brand reach the psychologically important €1 billion mark in sales. Burke was present at the Fendi show in Milan last month. Afterwards, he spent quite a bit of time backstage talking with the brand’s current CEO Serge Brunschwig as well as with other executives and country managers.

Fendi is not doing that well in terms of sales growth, industry sources say, especially when compared with sister brands Celine, Loewe and Loro Piana. The Italian house is estimated to generate around €2.7 billion, making it LVMH’s third in terms of revenue behind Louis Vuitton and Dior.

“Some people in Asia think that Kim Jones has not really understood Fendi. His work does not really fit the brand’s DNA,” one senior industry source told Miss Tweed during Milan Fashion Week. When Fendi did its collaboration with Versace last year called Fendace, Versace’s personality came out much more strongly than that of Fendi, fashion critics said at the time. Versace’s gold, medusa and other traditional attributes dominated Fendi’s double FF monogram.

“Michael is good at managing creatives and setting up the right CEO-designer tandem,” one person close to LVMH said. “He will know what to do to sort out Fendi.”

If it does not do something to boost sales, Fendi’s No. 3 position at LVMH will soon be challenged by smaller but fast-growing brands within the Fashion Group division. Starting with Loro Piana, then Celine and Loewe. Loro Piana is on fire, benefiting from consumers’ penchant for quiet luxury, industry sources say. LVMH CEO Bernard Arnault announced earlier this year that Celine was generating more than €2 billion in revenue. Arnault believes that Loro Piana, Celine and Loewe all have the potential to double in size in the medium to longer term and reach €4-5 billion.

Reviving Fendi would be a great challenge for Michele. However, bringing back to life Walter Albini would be dream come true. Will it be the heart or the mind who decides?

Albini was known for working closely with Italian fabric and clothes manufacturers. He helped industrialize and democratize fashion and contributed to the emergence of what would become known as Italian ready-to-wear. In common with Albini, Michele’s baroque and eclectic universe is not only about clothes - it’s also about lifestyle and decoration. “Michele loves this project and is very excited by it,” one source close to Bidayat said. “Let’s see what he decides.” If Michele chooses Fendi, Bidayat will have to hire another designer to lead the project. It already has several names in mind.

WSJ : A New Interest-Rate Regime Has Begun. These Are the Market’s Winners and L

A New Interest-Rate Regime Has Begun. These Are the Market’s Winners and Losers.
Bond prices, the Magnificent Seven and emerging markets are under pressure

Investors are struggling to make peace with a new reality: Interest rates are likely to remain higher for longer.

Stocks have tumbled, government-bond yields have risen and the U.S. dollar has climbed since Federal Reserve officials signaled two weeks ago that they might hold rates near current levels through 2024.

Entering the fourth quarter, the S&P 500 is hanging on to a 12% advance for the year, but much of the enthusiasm that characterized markets in the first half has largely disappeared.

“It’s a whole different mindset,” said Sandi Bragar, chief client officer at wealth-management firm Aspiriant. “Investors knew this was a possibility, but they were choosing to ignore it.”

In the coming days, investors will be looking at Monday’s manufacturing data and Friday’s monthly jobs report as they try to assess the strength of the economy and the market’s trajectory.

Here’s how the new interest-rate regime is forcing money managers to adjust their investing playbooks.

Bond prices are declining—again

Bonds had a historically terrible year in 2022. Those who bet 2023 would be better have been wrong thus far.

Government-bond yields, which move inversely to prices, started climbing again in July when a flurry of stronger-than-expected data persuaded investors that the Fed would have to keep interest rates elevated to cool the economy. Then in August, the government said it would sell many more Treasurys in coming months than investors expected, extending the summer losses and forcing traders to reassess their outlook for the market.

Expectations for higher interest rates drive down bond prices because investors worry that bonds issued in the future will pay larger coupons than current ones. That, in turn, pushes up yields, a measure of annualized expected returns that assumes bonds will be paid at their face value at maturity.

The yield on the 10-year U.S. Treasury note briefly climbed above 4.6%, its highest level since 2007, from 3.818% at the end of June. The iShares Core U.S. Aggregate Bond ETF—which largely holds U.S. Treasurys, highly rated corporate bonds and mortgage-backed securities—is on pace to fall 3% in 2023, which would mark an unprecedented third consecutive annual decline.

The Magnificent Seven are losing their shine
Big tech stocks were so dominant to start the year that they earned a new moniker: the “Magnificent Seven.” Apple, Microsoft, Alphabet, Amazon.com, Nvidia, Tesla and Meta Platforms were responsible for virtually all of the stock market’s advance at one point this spring.

That trade is now showing cracks, while investors look with renewed skepticism at the hefty valuations commanded by the market leaders. Shares of Nvidia fell 12% in September, Apple slid 8.9%, and Amazon dropped 7.9%. Only Meta notched a gain.

When interest rates are low or soon expected to fall, traders are willing to pay higher multiples of a company’s near-term earnings to share in its far-off growth.

The calculus changes once investors brace for a period of higher rates. They have less incentive to buy risky assets such as tech stocks when they can earn 5% in a money-market fund or high-yield savings account.

After this year’s rally, some of the stocks look pricey relative to history. Apple is trading at roughly 26 times its expected earnings over the next 12 months, while Microsoft’s multiple is about 27. Their 10-year averages are around 18 and 23, respectively.

“If you think about the tremendous outperformance of the Big Seven names in the first half of the year, it is just mathematically, extraordinarily unlikely that we see that happen again,” said Kara Murphy, chief investment officer at Kestra Investment Management. “Even if those names don’t go down, some of the leadership has to change.”

Shares of dividend payers are under pressure, too
Steady income from stocks doesn’t hold the same appeal it used to.

Fewer than 30 stocks in the S&P 500 have a dividend yield above that on the six-month Treasury bill, according to FactSet.

That is a shift from much of the past decade when interest rates were near zero and hundreds of stocks within the index offered higher yields. At the end of 2021, before rates began to rise, there were 379 index constituents that offered a better yield than the Treasury bill, according to Birinyi Associates.

Investors see little reason to own dividend-paying stocks when yields are rising on risk-free government bonds. Besides, the stocks aren’t offering enough extra yield to compensate for the risk of a slowdown in business activity.

Among the dividend-paying stocks slumping of late are Dollar General and Estée Lauder, down 37% and 25%, respectively, over the past three months.

Small-caps are falling faster than their larger counterparts
Shares of small-caps have been one of the biggest market laggards this year. Investors don’t expect that to change anytime soon.

The Russell 2000 has declined 11% from its July high, trailing the S&P 500, which has fallen 6.6%.

Investors worry that if interest rates stay higher for longer, it could kick off a recession in the U.S. That could further drag down shares of small, speculative companies since they tend to be sensitive to the health of the economy. They also typically generate most of their income domestically and have weaker balance sheets compared with large multinationals.

Shares of Rent the Runway declined 66% in the third quarter, while JetBlue Airways fell 48%.

Emerging markets are slumping while the dollar climbs
The U.S. dollar has risen more than 5% since mid-July, driven by surging Treasury yields and strong economic data. That has been particularly painful for emerging markets, making it more expensive for those countries to buy goods priced in dollars or service their dollar-denominated debts.

Interest rates have shot up in many developing countries as well, putting strain on the global financial system. Together with rising oil prices, higher rates and a soaring dollar are threatening growth around the world and raising worries of more financial fragility.

The Argentine peso dropped about 25% in the third quarter, while the Chilean peso fell roughly 10%. Meanwhile, MSCI’s benchmark index of emerging-markets stocks declined 4.4% over the same period.

The dollar has risen in eight of the past 10 weeks to its highest level since November.

FT : EU payment rules shake-up will prompt price rises, retailers warn

EU payment rules shake-up will prompt price rises, retailers warn
Brussels plan aimed at aiding SMEs will also lead businesses to source more goods from China, say industry groups

The EU’s plans to enforce 30-day payment terms for businesses in the bloc have dismayed retail groups, who say the proposals would inadvertently push up prices and encourage them to buy more from China.

The move is intended to support small businesses. But Kingfisher, the UK-listed owner of British home improvement store B&Q and European DIY stores Castorama and Brico Dépôt, said the 30-day limit proposed by the European Commission this month would lead the company to raise prices to generate enough cash in order to pay suppliers on time.

“It does not come for free. It puts the cost somewhere else in the value chain,” said Nick Lakin, head of corporate affairs at Kingfisher, which generates more than half its sales in the EU. “This would ultimately have consequences for consumers in terms of product availability, choice and price.”

Retailers in sectors such as clothing and furniture prefer to negotiate longer terms with suppliers, allowing them to spread payments over time.

While Lakin said Kingfisher preferred 30-day payment terms for small businesses to avoid putting “good suppliers under financial strain”, it has negotiated variable payment terms across Europe of up to 60 days, or up to 90 days for Asian suppliers.

Home improvement stores already source at least half of their goods from China, said Alisdair Gray, head of EU affairs at European DIY retail association EDRA. “Businesses are going to buy more from China because they will give you 90 days,” he said.

Christel Delberghe, director-general at Euro Commerce, the representative body for retailers and wholesalers, said: “We’re extremely worried. For example, if you’re a small clothing boutique, you buy your season in advance and usually pay your supplier over a certain period as you sell it. You don’t have the resources to buy the stock up front. That will no longer be possible.”

The proposals, which still have to be negotiated with the European parliament and member states, are part of a broader package of support measures for small and medium businesses announced by Paolo Gentiloni, EU economy commissioner, and Thierry Breton, commissioner for the internal market, earlier this month.

Late payments disproportionately hit small businesses, with a quarter of all bankruptcies for EU companies caused by invoices not being paid on time, according to the commission.

The commission “considers that big retailers currently use long payment terms as a way to transfer their business risk on to smaller suppliers”, an official said. “The new cap on payment terms is expected to provide for a fairer business environment across all sectors, particularly in transactions between larger and smaller market players.”

The Netherlands, Poland and Spain have already capped payment terms “without leading to a significant supply chain shift towards non-EU companies”, the official added.

Micky Adriaansens, the Dutch economic affairs minister, said she thought the wider measure was “a good thing”, adding: “It’s all about financial planning [for debtors]. It’s fair that the small enterprises have a stronger position.”

“Long payment terms have a negative effect on SMEs,” said Sophia Zakari, director of enterprise policy and legal affairs at SMEunited, a business lobby group. “Each side sees it from its own interest. Our interest is to make sure that SMEs don’t suffer late payments.”

But the anticipated change comes as inflation trims consumer spending across the EU and businesses adapt to comply with new sustainability and due diligence regulations introduced by Brussels.

Businesses buying fresh food must already pay suppliers within 30 days but can pay for other groceries within 60 days, under a 2019 EU directive.

Changing the 60-day limit “means moving a mountain of cash”, said Giuseppe Brambilla, vice-president of Federdistribuzione, a trade group for Italian distribution companies. “This will inevitably have an impact on inflation . . . we will have to increase pricing.”