FT : Windfall tax on UK electricity generators would curb investment, Labour war

Windfall tax on UK electricity generators would curb investment, Labour warns
Opposition critical of chancellor’s ‘haphazard, last minute’ plan for additional levy

The Labour party has accused Rishi Sunak of causing uncertainty and damaging investment plans with his “haphazard, last minute” threat to impose a windfall tax on British electricity generators, a move that wiped £3bn off their share price.

The UK chancellor last month warned he would consider hitting power generators with a levy later this year when he announced a 25 per cent tax on the “extraordinary profits” made by North Sea oil and gas companies. The move is designed to raise billions of pounds to provide financial support for households struggling with soaring energy bills.

The chancellor said “certain parts of the electricity generation sector [were] also making extraordinary profits” and he was “urgently evaluating” their scale and what next steps to take.

Government insiders said Sunak wanted to “determine any course of action swiftly”, with internal Whitehall estimates suggesting he could seek to raise £3bn to £4bn from power generators.

Labour, which initially championed a windfall tax on oil and gas producers, claims that Sunak is damaging the investment environment for new energy projects by threatening to extend the levy.

The main UK opposition party highlighted falls in the share price of the companies likely to be affected by such a move, including Drax, Centrica and SSE. “In just one week, almost £3bn was wiped off the value of these companies,” Labour said.

“It’s the hallmark of this chaotic, out of touch, out of ideas government that their hastily cobbled together plan is having this sort of impact on British businesses. They must provide urgent clarity immediately,” said Rachel Reeves, shadow chancellor.

Sunak held back from announcing the windfall tax on generators last week because it required further technical work, but Whitehall insiders said he wanted to end the uncertainty within weeks.

The Treasury declined to comment on a report in the Sunday Telegraph newspaper that it was looking at whether a windfall tax would exclude electricity generated by renewables and nuclear power and instead focus on operators of gas and coal-fired power stations.

Generators privately admit they face an uphill battle as Sunak is determined to enforce a windfall tax and are trying to ensure that investments in low carbon infrastructure could be offset against the tax.

Electricity generators were caught completely off guard when the Financial Times revealed last month that the chancellor planned to expand the windfall tax to their sector. They have since warned the chancellor that their industry is far more complicated and diverse than upstream oil and gas.

Many power station and wind farm owners insist they sell their output far in advance so have not benefited from recent high power prices.

But analysts have pointed out that many companies providing “flexibility services” — generating power to fill gaps in supply when renewable sources such as wind and solar aren’t generating — will probably have received a windfall.

Generators that still hold some of the earliest contracts for renewable power generation — which award a subsidy on top of wholesale prices — are also thought to have benefited.

However, energy groups insist that even if generators have profited, many are reinvesting billions back into UK infrastructure such as new offshore wind farms or by expanding the electricity grid to support the UK’s low carbon ambitions.

The UK government is also relying on energy companies including SSE, Spain’s Iberdrola and EDF Energy to forge ahead with new clean energy projects such as offshore wind farms and nuclear plants to bolster domestic energy sources following Russia’s invasion of Ukraine.

FT : From somebody to nobody: TSMC faces uphill battle in US talent war

From somebody to nobody: TSMC faces uphill battle in US talent war
Taiwan’s tech titan faces off with Intel in Arizona’s tight labour market

On a quiet April morning, cranes, bulldozers, trucks and construction workers bustled down streets in two places lying in opposite directions from Phoenix: those to its north building TSMC’s $12bn chip fabrication plant, and those to the south working on a $20bn expansion of Intel’s 42-year-old campus.

Only 80km apart in Arizona, both projects broke ground in 2021, and both are racing to begin production by 2024. While it may be a while before the factories come online, the two chip giants are already battling with each other for labour — and the road ahead may be far rockier for TSMC.

The Arizona fabrication facility will be the Taiwanese chip titan’s most advanced manufacturing facility outside its home market and one of the biggest investments the company has made in years. It announced plans for the desert project in 2020 to address Washington’s growing geopolitical concerns, despite the significantly higher cost to manufacture in the US than in Asia.

Simply finding enough workers to build the facilities has already proved a challenge. The US is in the midst of the tightest labour market in decades, and Arizona — where summer temperatures average 38C — has always struggled to recruit construction workers in sufficient numbers.

TSMC originally planned to start moving chip production equipment into its facility by about September this year but has told suppliers this will be pushed back to the first quarter of 2023 owing to construction delays, Nikkei Asia previously reported.

The company is working with both American and Taiwanese construction contractors to build the Arizona fab. More than 6,000 people are working on the Phoenix site every day, TSMC told Nikkei Asia, adding that the 2024 production timeline was unchanged.


TSMC is building a chip plant in the desert of Arizona. The project faces a number of challenges, from staffing the massive facility to building up a semiconductor supply ecosystem © Yifan Yu
But finding construction workers is only a taste of the next challenge that awaits: recruiting highly skilled technicians and engineers to staff the massive chip plant.

Semiconductor manufacturing in general is not the most glamorous of tech industries in the US, particularly compared to consumer-facing companies such as Apple, Facebook or Google. And with chip manufacturing having been outsourced for decades to Asia, it is a career path that many Americans have not even heard of.

“You say ‘semiconductor manufacturing’ [to potential recruits], people look at you like you have two heads. It’s just unfamiliar,” said Kweilin Waller, deputy human services director at the Phoenix Business and Workforce Development Board.

Daniel Barajas, a careers director at the Maricopa County Community Colleges District, echoed that sentiment. “I think those students that we are trying to recruit to ultimately become employees don’t know what they don’t know. So even before we give consideration to the seven semiconductor manufacturers that they could work with, they need to understand, what is a semiconductor technician?”

That lack of familiarity means that even Intel — a domestic heavyweight with a long history in Arizona — has to work hard to attract applicants. One way it has done this is by building close ties to local universities, particularly Arizona State University. ASU has supplied more students to Intel than any other university, and the US chip giant is the top employer of the engineering school’s students.

The Schools of Engineering at ASU is the largest of its kind in the US, with nearly 27,000 students enrolled. The question is whether TSMC can tap that resource, too.

“Indeed, it’s more of a challenge [for TSMC to attract students],” said Kyle Squires, the school’s dean. Because of the longstanding history between the school and Intel, and the large number of students and alumni working at the American chip giant, “the informal networking [among students] starts to really grab on”.

TSMC, by contrast, is just starting to build those kinds of relationships with students.

And there are no shortcuts on that front, according to Squires. If a company only comes in and tries to recruit students in their senior year, “then it’s too late. It’s stunning how competitive the market is.”

There are signs that TSMC is already braced for that competition. The company’s original plan for staffing the Arizona fab was to hire primarily in the US and send those recruits to Taiwan for about a year of training, sources told Nikkei Asia. But after realising how difficult it is to find enough qualified employees in the US, the company has decided to start recruiting in Taiwan as well, the sources said.

“TSMC is focused on hiring employees, including technicians, locally in the US for our Arizona fab,” TSMC said. The chipmaker did plan to send a limited number of technicians from Taiwan to the new US site for the first two or three years during a transition period, the company added, which was “a common practice for us, not something new.”

For now, TSMC’s human resource team is in constant talks with university and local community colleges to explore more partnerships to build its talent pipeline in the region.

“TSMC recruiters have been very heavily present on campus,” said Zachary Holman, an associate professor at ASU’s engineering school. “TSMC is presently negotiating with the university for some extended collaborations, both in research and in workforce development, and broader training programmes.”

In addition to wooing engineers, semiconductor makers in Arizona are even more desperate for the technicians needed to staff the plants around the clock in order to ensure production runs smoothly. This work is physically demanding, including lifting heavy tools and walking long distances in clean-room suits.

“For every engineering degree they have on staff . . . they probably need four to six technicians to come along,” Squires said.

TSMC participated in the Semiconductor Technician Bootcamp, a two-week, 40-hour programme to rapidly train individuals in the skills necessary for such a career that was launched in March by the Maricopa County Community Colleges District together with industry partners.

“I think TSMC is really trying to get their name known in the market, and they’re actually doing a really good job of trying to connect with different education partners,” said Jennifer Mellor, chief innovation officer at the Greater Phoenix Chamber.

While not directly a consumer-facing business, TSMC said its name was still well-recognised in the semiconductor industry.

“We received lots of resumes from first-tier university engineering graduates and we are confident that the strength and diversity of the engineering talent pipeline from colleges and universities across the US will provide us with outstanding recruits,” TSMC said.

In its home market, where TSMC is a household name, such outreach efforts are far less necessary.

The world’s biggest contract chipmaker is Taiwan’s largest company by market capitalisation, as well as its most profitable and the biggest taxpayer. Perhaps the most telling statistic: it alone accounts for more than 7 per cent of Taiwan’s gross domestic product.

TSMC also offers competitive salaries for its market. New engineers from top local schools can expect a starting salary of about NT$2mn ($67,700), according to Nikkei Asia’s interviews with human resources agencies.

And that is another problem for the company: in the US, $67,000 is hardly an eye-popping figure.

The engineers that TSMC has already hired in America make about $118,000 a year on average, according to the recruitment platform Glassdoor. Intel’s salaries are even higher: engineers can expect to earn more than $128,000 on average, Glassdoor data show.

Making matters worse, many Silicon Valley companies are aiming for the same graduates — and offering far higher pay. The average US annual salary for software engineers in 2021 was $156,000, according to a recent report by Hired, an online recruiting platform.

“In the US there are massive and significant staffing shortages for engineers and technicians. Our customers are also suffering such labour shortages,” Roger Liang, chair of BizLink, a US-based key connector and cable supplier for Tesla, Dell and Siemens, told Nikkei Asia.

“Why are Qualcomm, Nvidia, Intel and AMD all looking to enlarge their engineering teams in Taiwan and India? Because they also struggled to find enough qualified staff in the US,” an executive at a Taiwanese chip developer told Nikkei Asia.

TSMC said it benchmarked its salary offering against similar technology companies in the US and since the Arizona fab is new with a lot of growth potential, it also provides incoming engineers an opportunity to “fast-track” their careers in the semiconductor industry.

Another hurdle facing TSMC is cultural. The company is notorious for its long working hours, strict management and emphasis on discipline and hierarchy, according to Nikkei Asia’s interviews with suppliers and current and former employees, plus an analysis of reviews on job recruitment platforms.

Many employees have stories of being called into work at all hours, even on holidays, to deal with unexpected issues such as earthquakes, blackouts or any other disruption to production.

“You could receive an urgent call at any time . . . and if there is a major incident, you would have to go back to the chip plant right away,” one employee said. “Most employees and suppliers [in Taiwan] think it will be very challenging to duplicate that agility and quick response time in the US.”

A manager with a chip equipment supplier told Nikkei Asia that TSMC’s tough conditions were already turning off some hires.

“Over the years, I’ve been stationed at Intel, Micron, UMC and TSMC’s plants, and I can say TSMC has the strictest, most disciplined corporate culture of all of them,” the manager said. “My colleagues and I met and chatted with some of the trainees from the US at TSMC’s plant in Taiwan last year . . . Many of them had culture shock and asked how TSMC employees could survive such a strict, militarylike culture. A few actually dropped out of the programme.”

Holman at ASU acknowledged that work-life balance was important to potential hires.

“There’s always things like, what’s the salary? What are the benefits? What are the working hours? Those are the sorts of things that I think students are thinking about as they’re looking at these two companies,” Holman said of TSMC and Intel.

TSMC said the company offered cross-cultural communication and collaboration training as well as related management courses, in order to create an “open, diversified and inclusive” working environment.

“We also encourage employees to nurture and enjoy a well-balanced life while pursuing their career goals, offering a wealth of amenities, including state of the art facilities, on-site conveniences, custom fitness and health centres, and a warm ambience,” the group said.

If TSMC faces an uphill battle in the Arizona talent war, the suppliers looking to follow it are in for an even tougher fight.

After the company announced its Arizona fab, many of its suppliers started to consider expanding in the desert state. Phoenix even rezoned an area close to TSMC’s fab specifically to help the company’s suppliers set up factories there.

With even less name recognition and smaller salaries on offer, however, these suppliers may find it even more difficult to staff new facilities in Arizona. And if suppliers struggle to get things up and running, that could further hamper TSMC’s already costly bid to expand operations in the US.

“I think some of those more established companies that have a well-known presence in the market, like the Intels, have an easier time recruiting and hiring than other organisations, which becomes a real challenge for some of the suppliers in that space,” said Mellor at the Greater Phoenix Chamber.

To keep costs as low as possible, chipmakers need to be surrounded by a big ecosystem. This includes equipment suppliers, who are needed to update and perform maintenance on chipmaking machines, and companies providing chemicals and other materials needed in making chips.

Over the past three decades, TSMC has built up a complete cluster of suppliers around its massive production campuses in western Taiwan. The company has also repeatedly said that its ability to mobilise engineers from its multiple manufacturing sites located within just hours of each other helps its operational efficiency. But in Arizona, it is making a brand-new start.

“Not all are on a level playing field there,” said Maricopa’s Barajas.

WWD : On Billionaires’ Row, A Flourish of Louis Vuitton Furnishings

The Louis Vuitton Objets Nomades exhibit at 111 West 57th Street. Photo by Adrian Gaut.



It’s the world of Louis Vuitton — showcased in a setting that feels like you’re on top of the world.
The breadth of the Louis Vuitton collection, in particular the Objets Nomades furnishings, fill a 4,492-square-foot condominium occupying the entire 42nd floor of 111 West 57th Street in Manhattan. That’s the soaring, sylphlike residential tower boasting sweeping views of Central Park and upper Manhattan, and a preserved Steinway Hall, once the site of the Steinway piano store which years ago relocated to 43rd Street.
Meticulously complementing the furnishings are Louis Vuitton’s exotic travel trunks and luggage and decorative items, placed alongside premium Hennessy Cognac and Moët & Chandon Imperial bottles and accessories, as well as the brand’s ready-to-wear, shoes, jewelry, bags and accessories, all products from the LVMH Moët Hennessy Louis Vuitton luxury conglomerate.

“This is the first time that the Louis Vuitton Objets Nomade collection is being exhibited in a real estate project,” said interior designer Rita Chraibi. She’s curated the condo, in collaboration with Louis Vuitton, and with a mission to bring greater awareness to the furnishings, and elevate them in a way that “extracts a project’s natural potential…My goal was to show that these objects are not simply objects.” Collectively, said the French-Moroccan designer, “they create a very harmonious and cozy ambiance” amid a grand residential space. “There’s no other furniture from any other brand here.”
For the residence, Chraibi veered away from the flashier side of the Vuitton color palate. “I wanted something light and softer — whites, beiges and caramels.” Yet there are pops of color and elements of whimsy in several of the pieces, i.e. the lime — yellow swaying leather “cocoon” seat connected by rope to the ceiling, and the red spiral lamps.
Also displayed are Vuitton’s undulating leather lounge chairs, a scallop-shaped, ivory-colored armchair, sheepback dining chairs, and the leather champagne and tea cases. Right off the elevator, you’re confronted by a screen created in a matrix of Vuitton brown leather straps.
Rita Chraibi in the swaying “cocoon” Louis Vuitton seat. Photo by Adrian Gaut.
The Louis Vuitton collection incorporates the talents of several renowned names in design, among them India Mahdavi, Marcel Wanders Studio, Patricia Urquiola, Campana Brothers and Atelier Oï. It’s part of the heritage of Louis Vuitton to open its doors to architects, artists and designers to evolve the various categories and products within the collection.
Officially speaking, Louis Vuitton considers the curation an exhibition, in view of its comprehensive nature. The exhibit also features artworks from Galleria Ca’ d’Oro, including Lorenzo Perrone, Melissa Herrington, Giorgio Tentolini, Irene Mamyie, Michael Haggiag, and Ewa Bathelier, and works from artists Jorge Wellesley and multidisciplinary artist Rachel T. Hicks. All the design pieces, furniture and artwork are available for purchase.
Touring the condo evokes a sense of luxury layered on luxury. It’s a celebration of Louis Vuitton, that supports the marketing of the condo. According to one sales rep, a sale of the condo could be imminent. The condo has three bedrooms; three baths; two dressing rooms; 14-foot, floor-to-ceiling windows; custom smoke-gray solid oak floors, and a Gaggenau-outfitted kitchen. It’s priced at $28.5 million, unfurnished. There are other two-to-four bedroom condos for sale in the tower, starting at $7.75 million, which began marketing the apartments about four years ago.
The exhibit is also an exclusive opportunity for Louis Vuitton clients to discover the scope of the brand. The exhibition will be up through July 4, and during the days and weeks till then, invitation-only events and private appointments are on the agenda.


A view of the condo furnished with Louis Vuitton Objets Nomades. Photo by Adrian Gaut.
“We are thrilled to host the “mise en scene” of Louis Vuitton’s Objets Nomades collection. The exceptional exhibit juxtaposes striking and thought-provoking design pieces with our gracious residences and breathtaking panoramic views of Central Park,” said Michael Stern, founder and chief executive officer of JDS Development Group, which developed 111 West 57th Street along with the Property Markets Group and Spruce Capital Partners.
The tower, designed by SHoP Architects with a terracotta, bronze and glass exterior, is 1,428 feet high, and considered the second tallest residential building in the Western Hemisphere. It’s along the stretch of 57th Street known as “Billionaires’ Row” because of the super tall, luxury residential towers lining the wide thoroughfare, including 432 Park Avenue, considered the tallest residential building in the Western Hemisphere, as well as One57, and 225 West 57th Street which houses the Nordstrom women’s flagship.
A block and a half east of 111 West 57th Street, there’s the Louis Vuitton flagship, situated on the northeast corner of 57th Street and Fifth Avenue.
The bath area in the condo filled with Louis Vuitton Objets Nomades furnishings. Photo by Adrian Gaut.
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FT : AstraZeneca-Daiichi drug sharply raises breast cancer survival rate, trial

AstraZeneca-Daiichi drug sharply raises breast cancer survival rate, trial shows
Doctors hopeful antibody therapy could change treatment for most common type of late-stage breast cancer

Oncologists are hopeful a drug developed by AstraZeneca and Daiichi Sankyo will change how doctors treat the most common type of late-stage breast cancer, after data showed it doubled the progression-free survival rates of patients compared with chemotherapy.

Research presented at the world’s largest cancer research conference on Sunday demonstrated that Enhertu — an antibody treatment targeting cancers linked to a protein called HER2 — also significantly improved the overall survival rates of patients when the disease had spread throughout their bodies.

It marks the first time such a targeted therapy has improved survival rates in patients suffering from HER2-low metastatic breast cancer, a category that covers up to half of all late-stage breast cancer patients.

Jane Lowe Meisel, a cancer expert at the American Society of Clinical Oncology, said the results presented at the organisation’s annual meeting would “redefine” how doctors classify breast cancer and significantly expand the population of patients who could benefit from drugs targeting the HER2 protein.

The clinical trial of more than 550 patients found those using the drug had a 49 per cent reduction in risk of the cancer progressing and a 36 per cent reduction in risk of death compared to those who received the standard form of chemotherapy treatment. It recorded progression-free survival, the time during which the tumour was stable or shrank, of 10.1 months with Enhertu, compared with 5.4 months for those who received chemotherapy.

Both companies told the Financial Times they would use the trial results — due to be published in the New England Journal of Medicine — to seek approval from global regulators to target this new category of breast cancer patients with Enhertu.

“This is not only a breakthrough, it is practice-changing,” said Gilles Gallant, Daiichi’s global head of oncology development.

He said Daiichi was conducting studies on early-stage breast cancer patients to see if Enhertu is more effective than existing treatments and whether it could in the future cure the disease.

Enhertu is the brand name of the antibody drug conjugate trastuzumab deruxtecan, which AstraZenca and the Japanese company Daiichi are developing to treat cancers that express HER2 — a protein that helps cancer cells grow. It is a targeted treatment that is designed to deliver a payload of chemotherapy to shrink cancer cells while limiting the damage to healthy cells.

The treatment has already been approved by the US Food and Drug Administration for a smaller group of late-stage breast cancer patients with tumours, which express high levels of the HER2 protein. But the trial found Enhertu also worked against a much larger cohort of tumours that express low levels of HER2.

Existing cancer drugs, such as Roche’s Herceptin, have so far only shown benefits against the minority of tumours that produce large amounts of the HER2 protein, leaving most late-stage breast cancer patients reliant on chemotherapy to slow the progression of their disease.

Enhertu is already approved to treat certain types of gastric cancer in the US and has shown promise in treating some lung cancers.

David Fredrickson, AstraZeneca’s executive vice-president of oncology, said Enhertu had the potential to become a “multi-blockbuster” medicine by being transformative in treating different types of breast cancer, as well as types of gastric, colon and lung cancers.

He said Enhertu could become an available treatment for HER2-low breast cancer patients within months following talks with regulators.

Analysts said the trial results would probably accelerate Enhertu’s transformation into a blockbuster cancer drug, which could earn several billions of dollars a year in peak sales.

Global sales of Enhertu outside the Japanese market were worth $426mn in 2021, according to AstraZeneca.

Tara Hansen, a consultant at Informa Pharma Custom Intelligence, said the trial results were “groundbreaking” and would position Enhertu as a competitive option in a patient population with a high unmet need. She said the results would lead to an increase in the forecast peak annual sales for Enhertu, which are currently at just under $3bn in 2030.

Breast cancer recently overtook lung cancer to become the world’s most commonly diagnosed cancer. Every year more than 255,000 cases of breast cancer are diagnosed in the US.

FT : Value of US and European IPOs tumbles 90% this year

Value of US and European IPOs tumbles 90% this year
First-quarter drought extends into second quarter as Ukraine war and volatility deter companies from listing

The value of initial public offerings in the US and Europe has fallen 90 per cent this year as the Ukraine war and rising inflation and interest rates have forced businesses to shelve plans to go public.

Just 157 companies raised a total of $17.9bn in the first five months of 2022, compared with 628 that raised $192bn in the same period last year, according to data from Dealogic.

Globally, the value of IPOs dropped 71 per cent — from $283bn to $81bn — in the period and the number of listings fell from 1,237 to 596.

The figures suggest that the issuance slump in the first quarter of 2022 which was triggered by Russia’s initial invasion of Ukraine has not eased, with volumes also set to be sharply down year-on-year at the end of the second quarter, later this month.

The first three quarters of 2021 were the busiest period ever for listings, as companies rushed to go public after putting plans on hold during the coronavirus pandemic. But market volatility, the war in Ukraine and the threat of global recession have made companies much less willing to do so this year.

“A lot of people were raring to go and then a confluence of factors hit them all at once,” said Martin Glass a partner at law firm Jenner & Block who advises companies on IPOs.

“Once things stabilise, we will see a return of activity, even if it does not reach last year’s levels. People are not abandoning ship — they are pausing.” 

He added the US market had been particularly affected by a near collapse in listings of special purpose acquisition companies, shell companies that list to raise money and then find an acquisition target.

In the past two years, Spac deals hit record levels, but this has slowed to a trickle over the past six months, following some disappointing performances, more scrutiny from regulators and waning appetite among banks to underwrite them.

Dealmakers said despite worsening conditions in general for IPOs, higher energy prices as a result of the Ukraine war made listings a more attractive option for oil and gas companies.

There are also several major IPOs in preparation that could be completed by the end of the year.

UK pharma group GlaxoSmithKline has sought regulatory approval to bring its consumer health joint venture Haleon to market this year in what is expected to be the largest listing in London for a decade.

In March, US insurer AIG filed for a long-expected IPO of its life and asset management business that could value the unit at more than $20bn. Volkswagen is planning a €20bn partial float of Porsche later this year.

But lawyers predict many planned IPOs will be pushed back into 2023 as conditions take time to improve.

“Maybe if we come back from the summer holidays in September and for some bizarre reason things have suddenly turned for the better, maybe there will be more activity,” said White & Case partner Inigo Esteve, who advises companies on IPOs.

“But I’m not sure a whole lot of people are holding their breath for such a change in the underlying conditions by then.”

He added that he expected many would postpone until next year at the earliest. “Why would you launch now when you could wait for better conditions?”

Among the 10 highest-valued IPOs this year, just two listed on US or European exchanges. Private equity group TPG raised $1bn on the Nasdaq in January, while Norwegian oil and gas producer Vår Energi raised $880mn in Oslo.

WSJ : Ukraine Counterattack Takes Back Parts of Strategic Donbas City

Ukraine Counterattack Takes Back Parts of Strategic Donbas City
Close urban combat in Severodonetsk makes it harder for Russia to use artillery, as Ukraine awaits a U.S. rocket system

KYIV, Ukraine—Ukrainian forces managed to retake parts of the city of Severodonetsk as part of a counterattack, boosting hopes that they could hold off the Russian offensive in the eastern Donbas region as Kyiv waited for new long-range rocket systems to arrive from the U.S.

The close-quarters combat in Severodonetsk, the capital of the Luhansk region, makes it harder for Russian troops to unleash their artillery against Ukrainian forces. That has been Russia’s main advantage in the east, enabling them to crush Ukrainian defenses and make slow but steady gains.

Ukrainian leaders are hoping that the arrival of heavier weaponry from the West will enable them to turn the tide against better-armed Russian forces in the east of the country. The Biden administration last week said it would provide Ukraine with a guided-rocket system capable of striking targets from as far as 48 miles.

Ukraine’s push to get more capable weaponry from the West comes as France’s president expressed concerns about escalating the conflict with Moscow and as Russian President Vladimir Putin warned about the latest U.S. military assistance.

Mr. Putin said Sunday on state television that deliveries of Multiple Launch Rocket Systems, or MLRS, wouldn’t change anything, calling it an effort by the West to make up for military equipment that Ukraine had already lost. He did, however, indicate it may prompt Russia to escalate its attacks.

“If they are supplied, we will draw appropriate conclusions from this and use our own weapons, of which we have enough, to hit targets that we have not yet struck,” Mr. Putin said.

Russia, meanwhile, launched missiles at a number of sites around the country over the weekend, breaking the relative calm in Kyiv and several other regions far from the fighting in Donbas.

Explosions were heard in Kyiv early on Sunday, sending one person to the hospital. Russia’s Defense Ministry said Sunday that it was targeting equipment supplied by Eastern European countries that was located on the outskirts of the Ukrainian capital.

But Oleksandr Kamyshin, head of the state-owned Ukrainian Railways, accused Russia of lying about targeting military equipment and said the missiles struck a train car repair plant located on Kyiv’s left bank. “They want to block our opportunity to export Ukrainian products to the West,” he said in a statement Sunday.

In Mykolaiv, a city near the southern front line, three people were killed by Russian shelling, according to local media.

And in Donbas, where the fighting is now concentrated, four towns were hit by Russian missiles, including Svyatohirsk, where some 300 people were sheltering in a monastery. Four were killed and the monastery, which is a Unesco World Heritage site, was destroyed, according to Ukrainian President Volodymyr Zelensky.

“They are ready to burn everything—Orthodox churches just like anything else in Ukraine,” Mr. Zelensky said in an address posted online late Saturday night. He said 113 churches had been destroyed since the full-scale invasion began in February.

Despite Russia’s superior artillery and air power, its troops were still struggling on Sunday to take Severodonetsk, the focus of their Donbas offensive.

Moscow first captured a portion of Severodonetsk more than a week ago, and has moved forces in other regions of Ukraine into defensive postures to concentrate all available forces on taking the city, according to the Institute for the Study of War. Last weekend, Ukrainian officials spoke of potentially pulling out entirely of Severodonetsk.

The city is a Ukrainian stronghold in Luhansk and would offer Russia a symbolically important victory. Ukraine designated Severodonetsk as the administrative capital of the region after separatists seized the city of Luhansk in 2014.

But after a week of bloody, block-by-block urban fighting, Ukrainian fighters have reclaimed parts of Severodonetsk, according to Serhiy Haidai, the governor of the Luhansk region that is part of Donbas, and now control half the city.

“The occupiers lost a huge number of personnel,” Mr. Haidai wrote on Telegram on Sunday.

The British Ministry of Defense said that the Ukrainian counterattack is “likely blunting the operational momentum Russian forces previously gained through concentrating combat units and firepower.”

Russian forces in the Severodonetsk area include reserves from the self-declared Luhansk People’s Republic, according to British intelligence.

Britain’s Defense Ministry said Moscow’s use of the separatist fighters, who are poorly trained and lack heavy equipment, indicates a desire to shield Russian units from casualties in urban combat.

As fighting in Donbas continued, French President Emmanuel Macron expressed concerns about the risk of an escalation in the war. He said in an interview published Friday that Russia shouldn’t be humiliated, drawing criticism over the weekend from a top Ukrainian official.

Mr. Macron has spoken with Mr. Putin several times since Moscow’s invasion, angering some allies in Central and Eastern Europe who say dialogue benefits the Russian president.

“Russia shouldn’t be humiliated so that on the day when fighting will stop, we can fight for a way out through diplomacy,” Mr. Macron said in an interview with regional French newspapers. “I am convinced it’s the role of France to be a mediating force.”

Ukrainian Foreign Minister Dmytro Kuleba responded on Twitter, saying: “Calls to avoid humiliation of Russia can only humiliate France and every other country that would call for it. Because it is Russia that humiliates itself. We all better focus on how to put Russia in its place.”

FT : kraine hits back at Macron’s latest warning against ‘humiliating’ Putin

Ukraine hits back at Macron’s latest warning against ‘humiliating’ Putin
Retort comes as Kyiv suffers first Russian missile attacks since April

Volodymyr Zelensky’s chief of staff on Sunday hit back at remarks by Emmanuel Macron in which the French president said it was important not to “humiliate” Russia over the war in Ukraine.

In an interview with French regional newspapers on Saturday, Macron said maintaining dialogue with Vladimr Putin was crucial “so that the day when the fighting stops we can build an exit ramp through diplomatic means”.

In a Telegram post on Sunday as Russian air strikes on Kyiv resumed for the first time since April, Andriy Yermak responded, saying: “Some countries are proposing not to ‘humiliate’ Russia. At the same time we are being shelled: our cities, people.”


“They are trying to take away our territories . . . And the responsibility for crimes, for the genocide of Ukrainians should be as strict as possible. The aggressor’s responsibility is not humiliation, but justice,” Yermak added.

The French president made similar comment in Strasbourg last month, saying a peace settlement would eventually have to be negotiated between Moscow and Kyiv.

France has been playing a go-between role since before the Russia invasion with Macron holding frequent calls with leaders of Ukraine, Russia, and other countries. Working with European allies, France’s position has been to support Ukraine militarily and financially, back sanctions against Russia, and to pursue talks with all involved. But Macron has repeatedly said that any negotiated solution has to be reached between Moscow and Kyiv “by respecting the sovereignty and territorial integrity of Ukraine.”

The Elysée declined to respond to Yermak’s comments on Sunday. Elsewhere in the interview, Macron said that he believed Putin had committed a “historical and fundamental error” by invading Ukraine and that the Russian leader had “isolated himself”, a position that it would be difficult for him to get out of.


The attacks on the Ukrainian capital, which local officials said did not claim any lives, came hours after Russia’s president warned in a state television interview that Moscow would ramp up attacks if western countries continued “supplying longer-range missiles” to Ukraine’s army.

“We will strike at objects that we do not touch yet,” Putin said.

Sunday’s attacks on eastern Kyiv and other Ukrainian cities appeared to be aimed at hitting railway infrastructure, a common target along with fuel depots of almost daily Russian missile strikes across Ukraine in the months since the Russian full-scale invasion began on February 24.

Experts say the strikes are aimed at disrupting the supply of western weapons flowing into the country towards front lines in far eastern Donbas and southern coastal regions.

Russia’s defence ministry said in a post on messaging app Telegram that it used air-based long-range high-precision missiles for the strike on Kyiv. It claimed that it destroyed T-72 tanks given to Ukraine by eastern European countries as well as other unspecified armoured vehicles the ministry said were stored in a car repair facility on Kyiv’s outskirts. Ukrainian officials did not confirm the Russian claims, which it was not possible to verify.

State atomic power company Energoatom said one of Russia’s cruise missiles fired early on Sunday flew “critically low” over South Ukraine Nuclear Power Plant. It is one of four nuclear plants operating in Ukraine, including Zaporizhia Nuclear Power Plant, which is in Russian occupied southern regions.


Artillery battles, meanwhile, continued to rage in the Donbas where Ukraine claimed its troops had pushed back Russian forces within the key city of Sievierodonetsk.

“The Russians [last week] controlled 70 per cent of Sievierodonetsk, but within two days they were repelled — the city is now divided in half,” said Serhiy Haidai, governor of Luhansk region.

Sievierodonetsk, which appeared close to falling last week, is one of the last main cities not yet under Russian occupation in Luhansk region. Together with Donetsk province, it compromises Ukraine’s eastern Donbas industrial coal mining and steel heartland. Russian forces have for months unsuccessfully tried to encircle Ukrainian forces in Donbas, including in Donetsk province towns west of Sievierodonetsk.

“Over the last 24 hours, Ukrainian forces have counter-attacked in the contested city of Sievierodonetsk in eastern Ukraine, likely blunting the operational momentum Russian forces previously gained through concentrating combat units and firepower,” the UK’s defence ministry’s intelligence unit tweeted on Sunday.

WSJ : Macy’s, Gap and Other Clothing Stores Are Stuck With the Wrong Items

Macy’s, Gap and Other Clothing Stores Are Stuck With the Wrong Items
Shoppers shifted spending from casual clothes and home items, catching some retailers off guard and leaving them with excess goods

Joggers are piled up at Gap, Macy’s has too much activewear and Kohl’s is full of fleece.

Shoppers have shifted their spending from the casual clothes and home items that had been in demand during the height of the pandemic, catching some retailers off guard and leaving them with excess goods that need to be marked down.

The scenario playing out this year at Gap Inc., GPS -0.55% Macy’s Inc. M 0.04% and other chains is a reversal from the past two years, when soaring consumer demand and supply-chain delays created a scarcity of goods that allowed retailers to scale back discounts and push through price increases.

Macy’s has too many casual clothes, activewear, home textiles and tableware, as shoppers in recent weeks instead bought dressier clothes to wear to the office or social engagements. Macy’s Chief Executive Jeff Gennette said in an interview in late May that the shift was dramatic and happened faster than the company had anticipated.

Macy’s net sales jumped 13.6% in the spring quarter, compared with a year before. But Macy’s said markdowns to clear the excess inventory would weigh on profit margins going forward and warned of higher promotional levels throughout the industry as other retailers do the same.

“It’s classic supply and demand,” Mr. Gennette said. “Too much supply, not enough demand.”

Many retailers had a banner 2021 as consumers emerged from the pandemic and began going out more often to work or social engagements. Shoppers were flush with cash from their own savings and government stimulus checks. With travel and entertainment still restricted, they had fewer places to spend that money. Big beneficiaries were companies that sold apparel and home goods. Constrained supply chains kept many items in scarce supply.

Those tailwinds are reversing this year. Inflation is prompting consumers to spend more on necessities like food and fuel at the same time that they are funneling more of their disposable income to experiences like travel, entertainment and dining out. That is leaving fewer dollars for discretionary items like apparel and home goods just as the supply chain is loosening and merchandise is becoming more plentiful.

“There was a lot of misforecasting in terms of how fast that shift would go back the other way,” said Citi analyst Paul Lejuez.

Walmart Inc.’s WMT -1.72% inventories rose about 33% in the first quarter as the biggest U.S. retailer misjudged that shift in consumer spending, contributing to markdowns and weaker profits.

The increase also reflected the higher cost of goods due to inflation, executives said, along with a sudden improvement of moving goods through U.S. ports after the company had decided to buy products aggressively amid supply-chain snarls and out-of-stocks in past quarters.

At Walmart’s annual investor meeting on Friday, the company’s U.S. chief John Furner said about 20% of the inventory are items the company wishes it didn’t have, but much of the rest are goods it needed to restock or for later in the year.

“It’s going to take this quarter and probably part of next, maybe a couple of quarters would be the best way to describe it, to get back to where we want to be,” Mr. Furner said.

Analysts expect the excess inventory to crimp retail profits this year and potentially send the industry into a downward spiral of discounting that plagued it before the pandemic.

“Retailers are falling back to the problems they faced over the last few decades,” said Simeon Siegel, an analyst with BMO Capital Markets. “We are starting to see them chase growth at the expense of profits.”

The problem is acute among apparel retailers. Gap Inc., American Eagle Outfitters Inc. AEO 6.76% and Urban Outfitters Inc. URBN 2.50% are among the chains that said they were sitting on too much inventory and would have to increase discounts to clear out the excess.

Gap, which owns the Gap, Old Navy and Banana Republic chains, ended April with 34% more inventory than at the same time last year. At American Eagle, inventory jumped 46%, and at Urban Outfitters it was up 32%, compared with a year before.

Some of the increase is due to imports that were disrupted, leaving 2021 inventories below normal levels. Inflation is also a factor, but units are up too. At American Eagle, for instance, the number of units climbed 24% compared with last year.

“Our current inventory levels, mostly at the Urban Outfitters brand in North America, are higher than we would like and could lead to higher markdowns versus last year’s low levels,” Melanie Marein-Efron, the company’s finance chief, told analysts on May 25.

Some of the bloat is due to inventory that arrived late as a result of factory closures and other supply-chain delays. Abercrombie & Fitch Co. said it held clearance sales to get rid of holiday items that arrived late at its Hollister and Gilly Hicks brands because of factory closures in Vietnam.

But there are other factors at play. Retailers are placing orders with factories earlier to ensure goods arrive on time. That has made it harder to forecast demand and style trends, some executives said.

“We were defining customer trends too early in the process and were unable to chase into the right fashion choices,” Gap Chief Executive Sonia Syngal told analysts recently.

Rather than try to sell through all the excess goods at lower prices right away, some retailers are packing away items for sale at a later date. The strategy had been used for years by discounters like T.J. Maxx. Now, it is going mainstream.

Kohl’s Corp. KSS 0.73% , which has 40% more inventory than a year ago, is packing away pajamas and fleece that arrived late with hopes of selling them in the fall.

Gap is doing the same. “We are packing and holding fashion inventory that we think we can sell next year,” said Katrina O’Connell, Gap’s finance chief. “Rather than try and really push that through the system at lower margins.”