TheChek News Flow

FT : Adanola’s affordable leggings are chasing Lululemon

Adanola’s affordable leggings are chasing Lululemon

The gym-to-coffee shop womenswear brand from Manchester needs to stretch carefully

When Adanola recruited Kendall Jenner, the US model and media personality, to endorse its leggings and sweatshirts this year, it showed how far the UK athleisure brand has come. This was a formal deal with a bona fide celebrity, not a scattering of Instagram posts by paid influencers.

Kourtney Kardashian, Jenner’s sister, was photographed wearing a sample Adanola tracksuit in the early days of the Manchester brand, eight years ago. But Adanola, known for its affordable clothing in muted colours, is now bigger and more professional. The company has been developing fast under Hyrum Cook, its founder.

Adanola’s revenues are likely to exceed £100mn this year; it has become the latest British athleisure brand to make a financial mark in the global industry after Gymshark, Sweaty Betty and others. The company was valued at $530mn in August with an investment from Story3, a Los Angeles-based private equity fund.

The industry is experiencing turbulence after expanding rapidly during and after the pandemic. Shares in the market leader Lululemon have fallen as consumers have cut back spending, while upmarket rivals such as Alo Yoga and Vuori have gained more attention. Sweaty Betty, the UK brand owned by Wolverine Worldwide, has restructured amid a drop in sales.

But Adanola is on a growth trajectory, helped by its Ultimate Leggings, which Cook launched in 2020 for women stuck at home in the pandemic. They were its breakthrough and remain its best-selling product: it has sold 1.5mn pairs, many in its popular coffee-bean shade. At £40, they are less than half the price of Lululemon’s comparable Wunder Train high-rise tights.

The challenge for Adanola is to grow sustainably in a fickle industry and keep the delicate balance between fashion and function. It aims to be an “everyday uniform” that women wear from gym to coffee shop and beyond. Alongside its leggings, it is known for Varsity sweatshirts with the brand (or just Ada) emblazoned across the chest, as if it were a US college.

Cook is himself an alumnus of Dragons’ Den. He appeared on the BBC investment show with his brother Josh in 2015, securing a £50,000 investment from the judge Deborah Meaden in their social media photo booth company Zeven Media. That went into liquidation, but he was undeterred by this failure. The lesson was “Give it a go, go all in, and if it doesn’t work, try again,” he says.

Early on, Cook saw an opportunity for Adanola in the blurring line between gymwear and streetwear. The name came from his personal blog, which in turn was a merger of the names of two friends. It was both intriguing and meaningless, allowing the brand to develop broadly.

That proved extremely valuable. Cook is 32 and has controlled Adanola since 2018, having first worked on it with Josh. This year’s annual report records that he sold intellectual property registrations to the company for £50mn, a “valuation determined by the parties involved”. The transaction happened a day before capital gains taxes were raised in the 2024 budget. Cook declined to comment.

Adanola’s sales quadrupled in 2023 and Cook last year appointed Niran Chana, former chief commercial officer of Gymshark, as chief executive to oversee its growth. The company is based in a former clothing warehouse in central Manchester, once a textile manufacturing city known as Cottonopolis. Although it designs clothes there, they are made around the world.

Manchester has experienced the rise and fall of fashion brands including Boohoo, Missguided, and PrettyLittleThing. But Chana says the city remains a supportive place for start-ups, citing the advice and encouragement provided by local companies including Represent and Nadine Merabi. “Manchester people are just nice, they want to help.”

Chana has made Adanola’s supply chain more robust, adding contract factories in Bangladesh, Cambodia, Vietnam and Sri Lanka to those in China and India. It will now distribute through a third-party logistics centre in the US, as well as a UK one. America accounts for only about 10 per cent of sales, but the share is growing.

Adanola knows the danger of becoming fashionable in a hurry and then losing sales. “We’re not a trend-oriented, fashion-led business,” Chana insists. For now, the brand remains on the rise. The trick is not to overstretch.

>>> TradeGate Pre-Market Indications

DAX:

Bayer (BAYN TH) +7.9%
- Trump Official Urges Supreme Court to Take Bayer Roundup Appeal

MDAX:

Bilfinger (GBF TH) +2.4%
- Bilfinger Aims to Raise Ebita Margin to 8% to 9% Until 2030
Evonik (EVK TH) -0.8%

SDAX:

Hypoport (HYQ TH) +4.1%
- Hypoport Raised to Outperform at BNPP Exane; PT 210 euros

FT : The UK Budget’s energy price cut won’t stop bills from rising

The UK Budget’s energy price cut won’t stop bills from rising

Neither the size nor the composition of the reduction addresses the system’s underlying problems

Opinions differ on the effectiveness of chancellor Rachel Reeves’ Budget. But on one thing almost everyone agrees: UK energy prices are intolerably high. That is something the Budget’s cut to household energy bills has failed to fix.

Amid a smorgasbord of hits and handouts, annual energy costs for a UK household were reduced by an average of £150. The “typical” gas and electricity bill will fall about 8 per cent due to Reeves ending a scheme to make lower-income households more energy efficient, and moving about three-quarters of the cost of old renewable incentive schemes out of household charges and into general taxation.

At first blush, that may look like good news. After all, £150 is not an insignificant amount. And electricity bills get more relief than gas. That’s sensible given the country’s decarbonisation objectives rely on rolling out heat pumps, electric vehicles and the like. The bad news, however, is that neither the size nor the composition of the cut addresses the UK energy system’s underlying problems.

Take the relative competitiveness of gas and electricity bills. The UK’s new policies reduce the price of electricity more than gas because it was electricity bills that bore the burden of renewable subsidies. But even after that, electricity remains not far off four times more expensive on a per-unit basis than gas, making it very unlikely that more consumers will be nudged into forgoing their boiler.

In terms of the overall cost of electricity, too, the government is fighting a rising tide. The UK is building lots of new transmission lines to bring renewable power to consumers, with an £80bn five-year investment plan up for approval from the regulator.

Over time, costs should slowly fall as new transmission infrastructure cuts the amount of renewable power that goes to waste. But that still leaves UK households with a sticky few years. Rising network costs are one reason why electricity bills in 2030 will be even higher than they are today, according to independent energy analyst Ben James.

One idea to address that hump is to stop charging power stations a carbon tax for burning fossil fuels. After all, the main objective of the charge was to tip the scales from polluting coal to natural gas, which has already been accomplished. Scrapping it would cut the cost of gas-fired electricity by well over 40 per cent, calculates think-tank Aurora Energy. Given that gas so often sets the marginal price for electricity, the measure alone could lop perhaps £60 off household bills, Lex calculates.

Such radical ideas are hard to pursue, not least because they look like compromising on the shift to clean energy. There are more palatable ones, too, like moving even more of the policy burden from electricity bills into general taxation. Such shuffling has benefits beyond window dressing. If electricity can compete with gas, that will increase demand, reducing the impact of infrastructure on consumers’ bills. Since last week’s Budget stops short of either, expect complaints over too-high charges to continue.

FT : ECB refuses to provide backstop for €140bn Ukraine loan

ECB refuses to provide backstop for €140bn Ukraine loan

Central bank rejects role in European Commission proposal that uses frozen Russian assets

The European Central Bank has refused to backstop a €140bn payment to Ukraine, dealing a blow to an EU plan to raise a “reparations loan” backed by frozen Russian assets.

The ECB concluded the European Commission proposal violated its mandate, according to multiple officials, adding to Brussels’ difficulties in raising the giant loan against Russian central bank assets immobilised at Euroclear, the Belgian securities depository.

It comes amid pressure on the EU to finance Ukraine for the next two years, as Kyiv faces a cash crunch amid a renewed Russian military onslaught and a US peace initiative.

Under the European Commission plan, EU countries would provide state guarantees to ensure the repayment risk on the €140bn loan to Ukraine is shared.

But commission officials said the countries would not be able to raise the cash rapidly in an emergency, and this could put markets under pressure.

The officials asked the ECB whether it could act as a lender of last resort to Euroclear Bank, the lending arm of the Belgian institution, to avoid a liquidity crisis, according to four people briefed on the discussions.

ECB officials told the commission this was impossible, three of these people said.

The ECB’s internal analysis concluded the commission proposal was equivalent to providing direct funding to governments, as the central bank would cover the financial obligations of member states.

This practice, called “monetary financing” by economists, is banned in EU treaties because of evidence it results in high inflation and loss of central bank credibility.

The ECB said “such a proposal is not under consideration as it would likely violate EU treaty law prohibiting monetary financing”.

In response to the ECB’s stance, the commission has begun working on alternative proposals that would provide temporary liquidity to backstop the €140bn loan, according to two officials briefed on the matter.

A commission spokesperson said it had been “in close contact with the ECB” since late October, and the central bank had “participated actively in all the discussions” regarding the loan proposal.

“Ensuring the necessary liquidity for possible obligations to return the assets to the Russian central bank is an important part of a possible reparations loan,” they added.

“This is a must to ensure that the EU, its member states and private bodies can always fulfil its international obligations. Reflections on how to ensure this liquidity in detail are ongoing.”

Euroclear declined to comment.

The EU has frozen Russian assets worth about €210bn since Russia’s full-scale invasion of Ukraine in 2022.

Belgium has opposed the loan to Kyiv on the grounds that in the event the Russian assets were unfrozen and Moscow was able to reclaim them, Euroclear would not be able to repay the money immediately.

Belgium’s prime minister Bart De Wever has said the EU plan is “fundamentally wrong”, and demanded the bloc’s other 26 member states sign up to “legally binding, unconditional, irrevocable, on-demand, joint and several guarantees” to share the risk of repaying the loan.

He wants such a commitment before EU leaders gather on December 18 for a summit that is meant to decide how the bloc should continue funding Kyiv.

De Wever argues the member state guarantees and some form of backstop are required in case the EU sanctions that keep the Russian assets immobilised are suddenly annulled.

The sanctions have to be rolled over every six months through a unanimous decision. Some countries, including Hungary, have argued against renewal.

The US push for a peace deal between Russia and Ukraine, and alternative proposals from the Trump administration for use of Moscow’s immobilised assets, have raised concerns across the EU.

Belgium is particularly worried a potential peace agreement struck between Washington and Moscow could negate the EU sanctions and force Euroclear to repay Russia immediately.

Under the commission’s proposal, Ukraine would only have to repay the money if Russia agreed to pay reparations to Kyiv.

FT : The probe gripping Italy’s banking industry

The probe gripping Italy’s banking industry

The insurer at the heart of the deal upending Italian finance

The bank takeover that has gripped Italy’s finance sector this year was orchestrated by a secret alliance going after a stealth target, prosecutors are alleging.

DD readers are familiar with the back story. In January the state-backed bank Monte dei Paschi di Siena (MPS) launched the takeover of rival lender Mediobanca, shocking markets and analysts.

The €17bn acquisition was finalised in September. But the saga didn’t end there.

Last week the FT reported that Italian prosecutors were investigating MPS boss Luigi Lovaglio and top shareholders for alleged market manipulation and obstruction of supervisory functions in connection with the takeover. Now, a search and seizure warrant seen by the FT casts the takeover in a new light.

According to prosecutors, MPS’s real target was not Mediobanca, but the insurer in which Mediobanca is the largest shareholder: Generali.

The warrant alleges that Lovaglio and billionaire investors conspired to execute the takeover with Generali as the ultimate prize.

Generali is one of the largest holders of Italian sovereign debt, making it a crucial player in the country’s financial services industry.

The insurer’s chief executive, Philippe Donnet, has been a longtime target of billionaire investors Francesco Gaetano Caltagirone and the Del Vecchio family, which runs the eyewear giant Luxottica and the holding company Delfin. Both are major investors in Generali and acquired substantial stakes in MPS over the past year.

Prosecutors are alleging they used MPS as a vehicle to execute a broader plan to seize control of Generali without launching a costly full-blown takeover.

They allege Caltagirone, along with Delfin, co-ordinated efforts and investment decisions for years without informing the market or regulators, ultimately enlisting MPS chief executive Lovaglio to execute their plan.

Lovaglio, Delfin and Caltagirone have always denied the takeover of Mediobanca was a strategy to install a friendly chief executive at Generali.

MPS said it was “confident it can provide all the necessary information to clarify the correctness of its actions” and is co-operating with authorities.

Yet the probe could make it more difficult for investors to oust Donnet ahead of the end of his term in 2027, and could also complicate MPS’s integration of Mediobanca.

FT : EU can produce twice as many electric cars as needed, says study

EU can produce twice as many electric cars as needed, says study

Slow drive

Investment in electric car production has slowed in Europe, partly because there is already the capacity to build twice as many EVs as there is demand for, according to a new report seen by Alice Hancock.

Context: Brussels is gearing up to present a series of proposals on December 10 aimed at bolstering the bloc’s flagging industry and reviewing its ambitious plan to phase out internal combustion engines by 2035.

The combustion engine ban in particular has become a political lightning rod and its review may yet be delayed amid deep divisions between member states and within the commission, according to people close to the talks.

Brussels-based think-tank Bruegel has run the numbers on clean tech investment in Europe. Its new Clean Investment Monitor published today finds that investment in electric vehicle plants grew rapidly up until the beginning of 2024, but has declined since.

Part of the reason for that is that existing factories are already producing 200 per cent of the total demand for EVs in the EU, with a total capacity to produce about 4.6mn EVs.

Germany is home to the highest capacity of all member states, helped by a €5.8bn Tesla facility opened in 2022.

Bruegel’s tracker, which monitors facility-level data to work out real-time investment in the EU, found that Spain and Hungary were attracting the most clean tech investment, despite Hungary’s naysaying on climate policy.

Both have brought in significant amounts of Chinese investment relative to other member states. The Chinese battery maker CATL, for example, is currently building a €7bn facility in Hungary and a €4bn plant in Spain developed through a joint venture with Stellantis.

Previously the majority of investment into battery supply chains in Europe came from South Korean companies such as LG Energy and Samsung.

“While industrial-policy debates in Europe tend to focus on how best to support manufacturing projects, the EV case illustrates the equally important need to strengthen demand-side measures,” said Simone Tagliapietra, senior fellow at Bruegel.

“This means better co-ordinated EV purchase-subsidy schemes across Europe and avoiding market confusion by watering down key provisions such as the 2035 combustion engine ban,” he added.

Tagliapietra also noted that “squeezed between Chinese competition and US tariffs, European carmakers are unlikely to be able to rely on exports for relief”.

The Information : OpenAI CEO Declares ‘Code Red’ to Combat Threats to ChatGPT, D

OpenAI CEO Declares ‘Code Red’ to Combat Threats to ChatGPT, Delays Ads Effort

The Takeaway

OpenAI CEO Sam Altman declares ‘code red’ to improve ChatGPT.
The company is preparing to release a new reasoning model that scores well against Google’s Gemini 3
The code red also involves making improvements to OpenAI’s image-generating AI

OpenAI CEO Sam Altman on Monday told employees he was declaring a “code red” to marshall more resources to improve ChatGPT as threats rise from Google and other artificial intelligence competitors, according to an internal memo.

As a result, OpenAI plans to delay other initiatives, such as advertising, Altman said.

“We are at a critical time for ChatGPT,” he said.

OpenAI hasn’t publicly acknowledged it is working on selling ads, but it is testing different types of ads, including those related to online shopping, according to a person with knowledge of its plans. Millions of people already use ChatGPT to search for products to buy.

Altman said the code red “surge” to improve ChatGPT meant OpenAI would also delay progress with other products such as AI agents, which aim to automate tasks related to shopping and health, and Pulse, which generates personalized reports for ChatGPT users to read each morning.

He didn’t specify what was going wrong with ChatGPT, but Google said this fall that its Gemini chatbot had gained ground in terms of usage. Altman recently warned employees privately that Google’s AI resurgence could cause “temporary economic headwinds” for OpenAI.

In a call with OpenAI investors last month, CFO Sarah Friar alluded to a slowdown in ChatGPT growth, though it wasn’t clear what growth metric she was referring to, according to a person with knowledge of her remarks.

ChatGPT’s performance will impact OpenAI’s ability to raise another $100 billion or so to weather the significant cash burn the company has projected. The company projected this summer that while it burns tens of billions of dollars to develop new technologies and power ChatGPT and other products in the coming years, the chatbot will generate about $10 billion in revenue this year from subscriptions, $20 billion next year and roughly $35 billion in 2027. (It launched just three years ago.)

OpenAI’s code red represents a role reversal from three years ago, when Google began its own “code red” to respond to the threat ChatGPT posed to Google Search. Google later launched its Gemini chatbot, which still lags OpenAI in terms of user numbers, but there are signs it may be catching up. Google said in October that Gemini has 650 million monthly active users, up from 450 million monthly active users in July, though it’s still a far cry from the user figures OpenAI has disclosed for ChatGPT.

Google also has launched “AI mode” in Google Search, which essentially turns the search app into a chatbot akin to ChatGPT.

For its part, OpenAI estimates ChatGPT handles 70% of the world’s AI “assistant activity” and 10% of “search activity,” ChatGPT leader Nick Turley said in an X post Monday night.

Altman said Monday in an internal Slack memo that he was directing more employees to focus on improving features of ChatGPT, such as personalizing the chatbot for the more than 800 million people who use it weekly, including letting each of those people customize the way it interacts with them.

Altman also said other key priorities covered by the code red included Imagegen, the image-generating AI that allows ChatGPT users to create anything from interior-design mockups to turning real-life photos into animated ones. Last month, Google released its own image generation model, Nano Banana Pro, to strong reviews.

Altman said other priorities consisted of improving “model behavior” so that people prefer the AI models that powers ChatGPT more than models from competitors, including in public rankings such as LMArena; boosting ChatGPT’s speed and reliability; and minimizing overrefusals, a term that refers to when the chatbot refuses to answer a benign question.

Altman’s code-red declaration comes as new models from competitors including Google and Anthropic have been met with especially strong praise from app developers.

Altman said OpenAI is planning to ship a new reasoning model next week that is “ahead of [Google’s] Gemini 3” in OpenAI’s internal evaluations but the company had more work to do on improving the ChatGPT “experience.” Reasoning models spend more computing power to produce better answers, powering ChatGPT’s Thinking mode and features such as Deep Research.

An OpenAI spokesperson did not immediately have a comment.

>>> Skew Monitor : AXA, BMW, Iberdrola, Prosus, Santander, Siemens Energy

Biggest skew gainers:
- Iberdrola skew up 1.2 point to 6.3, in the 88th percentile; stock fell 0.3% w/w; RSI: 57
- Ahold Delhaize skew up 0.8 point to 6.8, in the 70th percentile; stock rose 1.8% w/w; RSI: 53
- BMW skew up 0.6 point to 4.8, in the 44th percentile; stock rose 2.7% w/w; RSI: 64
- Prosus skew up 0.3 points to 4.3, in the 77th percentile; stock fell 2.7% w/w; RSI: 30
- Danone skew up 0.2 points to 5.6, in the 83rd percentile; stock rose 0.3% w/w; RSI: 50
Biggest skew decliners:
- Bayer skew down 4 points to -3.4, in the 1st percentile; stock fell 0.4% w/w; RSI: 63
- Santander skew down 3.4 points to 6.8, in the 23rd percentile; stock rose 5.3% w/w; RSI: 60
- AXA skew down 2.9 points to 7.3, in the 35th percentile; stock rose 1% w/w; RSI: 50
- Siemens Energy skew down 2.5 points to 2.1, in the 35th percentile; stock rose 5.7% w/w; RSI: 55
- Mercedes skew down 2 points to 3.7, in the 21st percentile; stock rose 2.7% w/w; RSI: 62

The Information : Marvell In Advanced Talks to Buy Celestial AI in Multibillion

Marvell In Advanced Talks to Buy Celestial AI in Multibillion Deal

The Takeaway

Marvell is in advanced talks to acquire chip startup Celestial AI.
The total value of the deal including earnouts could be over $5 billion.
Celestial AI develops optical interconnect technology for faster AI data movement.

Marvell is in advanced talks to buy Santa Clara-based chip startup Celestial AI in a cash-and-stock deal worth multiple billions of dollars, according to people with knowledge of the deal.

Under the deal they’re discussing, Marvell would pay several billion dollars upfront for the startup, which has yet to generate any revenue, according to one of the people. Celestial has the potential to receive performance earnouts if it hits certain product milestones, said the same person. The total deal price, including earnouts from product milestones could be higher than $5 billion.

A deal could be announced as soon as Tuesday, the people said.

Celestial AI was last valued at $2.5 billion in March and has raised more than $580 million from investors including Fidelity Management, BlackRock and Tiger Global Management.

Founded in 2020, Celestial is developing an optical interconnect technology designed to more efficiently move data between AI processors and memory inside data centers. Along with including Lightmatter and Ayar Labs, it is one of several startups that are using photonics, or light, rather than electrical systems to make AI run faster.

Lip-Bu Tan—a semiconductor veteran and the CEO of Intel—joined Celestial’s board of directors in January of this year.

Marvell designs and develops semiconductor chips for data centers, networking and storage systems. It competes with Broadcom in the custom AI chip business and counts Amazon Web Services as one of its customers.

Shares of Marvell are down roughly 20% this year and currently has a market capitalization of around $75 billion. In contrast, other rival chipmakers such as Nvidia, Broadcom and AMD all surged this year.

The CEO of Celestial, David Lazovsky, did not respond to a request for comment. A spokesperson for Marvell didn’t immediately respond to a request for comment.

>>> US After Hours Summary: MDB +20.2%, CRDO +17.8% sharply higher on earnings;

After Hours Summary: MDB +20.2%, CRDO +17.8% sharply higher on earnings; JANX -41.1% under pressure after interim trial data; VSTS -5.1% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: MDB +20.2%, CRDO +17.8%, EHC +1.6% (guidance)

Companies trading higher in after hours in reaction to news: ACIC +2.7% (special dividend of $0.75/share), SB +2% (new 10 mln share repurchase program), PACS +1.7% (business updates), FCF +1.5% (new $25 mln share repurchase program), CMC +1.4% (completes acquisition of Concrete Pipe & Precast), WBD +1.2% (ticks higher on report that it was fielding a second round of bids on Monday, including a mostly cash offer from Netflix, according to Bloomberg), NVTS +1% (availability of new ultra-high voltage products), STLD +0.8% (completes acquisition of remaining 55% equity interest in New Process Steel), HL +0.2% (permit for 2026 Polaris Exploration Program), AMZN +0.2% (testing Amazon Now in Seattle and Philadelphia), BA +0.2% (awarded $104 mln Navy contract), ESRT +0.1% (new retail leases with HOKA and Tecovas), PRG +0.1% (to acquire Purchasing Power), ATKR +0.1% (sale of its Tectron Mechanical tube product line), AAPL +0.1% (SVP for Machine Learning and AI Strategy stepping down)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: VSTS -5.1%, HUN -4.3% (guidance), SLP -0.1%

Companies trading lower in after hours in reaction to news: JANX -41.1% (updated interim data for JANX007), VENU -8.1% ($1 bln mixed shelf offering), BKV -6% (6 mln share offering), IREN -5.2% (convertible notes offering), CART -5% (in response to AMZN's ultra-fast delivery options), AGRO -1.8% (binding offer to acquire 50% stake in Profertil S.A.; also mixed shelf offering), VVV -0.9% (completes acquisition of Breeze Autocare), AMRX -0.8% (FDA approval of cyclosporine ophthalmic emulsion), DASH -0.5% (in response to AMZN's ultra-fast delivery options), OOMA -0.1% (completes FluentStream acquisition), SEG -0.1% (names new CFO), BLTE -0.1% (proposed public offering of American depositary shares), CTRE -0.1% (acquires three Texas senior living communities), O -0.1% $800 mln preferred equity investment in CityCenter Las Vegas Real Estate Assets)