Inside the world of business
Forget Deutsche mark, here comes Primark
HALF A CENTURY ago, teenage girls gave a screaming welcome to the Rolling Stones; on Wednesday, the hordes of hysterical teens were screaming for Berlin’s first Primark store.
The store in the capital’s upmarket Schloss Strasse is the 238th worldwide and the eighth opened in Germany in the last three years by the fast-fashion retailer, which trades in Ireland as Penneys.
The doors opened on Wednesday morning: a very slight delay in opening the doors at 11am prompted shouts of “We want in!” from the 1,000-plus teenage shoppers who were clamouring outside on the street.
The Bild tabloid recorded the madness with a picture of the massive crowd beside a story headlined: “Just so you know where your daughter’s spending her money . . .”
“Primark mania has hit” the newspaper exclaimed, adding that a second Berlin store was to open in the central Alexanderplatz square next year.
The clothing chain, a subsidiary of Associated British Foods, employs 544 people in Germany, where the clothing market is valued at €50 billion annually but has been stagnating for years.
Industry analysts say it is too soon to say if the Irish arrival can capture market share from better-known fast-fashion rivals such as H&M and Zara.
“In its Irish hometown, the chain is already cult,” explained the Berliner Morgenpost daily to its readers yesterday.
“In Dublin, it’s hard to find a girl between five and 25 who isn’t wearing clothes from Primark.”
Making heavy weather of financial reports?
READERS OF The Irish Times business pages may be familiar with the catchily titled song, Blame It on the Weatherman, a 1999 hit for Irish girl band B*witched. It would seem that some of our best-known Irish corporates certainly are.
This week, Grafton Group plc became the latest company to blame its trading performance on (you’ve guessed it) the weather. Trading conditions in the second quarter were “adversely affected by unseasonal weather” in the UK, it said in a trading update.
This follows a similarly worded update from Marks Spencer this week, which blamed “unseasonal weather conditions” for a fall-off in sales of womenswear.
When it comes to the Irish Stock Exchange, repeat offenders include C&C and DCC.
Virtually all C&C trading statements to the market now include a weather update, as the company explains the pattern of rising or falling sales of its cider brands. Similarly, DCC, a major supplier of home heating oil in the UK, regularly attributes its sales performance to the latest weather trends.
While weather is undoubtedly a factor in the performance of certain businesses, a question arises as to whether companies should incorporate the effects of seasonal weather patterns into their forecasting.
The concept of weather-risk hedging is gaining ground, particularly in the US, and is something that has obvious implications for energy and utility companies.
While dipping into the weather derivatives market may be a step too far for some companies, certain businesses may need to begin to manage and prepare for weather-related risk, rather than dismiss it as an aberration.
If not, shareholders will begin to wonder how long exactly their companies will continue to blame it on the weather.
Farewell, dear troika officials
MOST OF the 40-plus troika officials left Ireland on Thursday after wrapping up their seventh review of Ireland’s EU-European Central Bank-International Monetary Fund bailout, which was roundly lauded as “a success” by all involved.
Unlike the early days of the bailout, the troika officials no longer hold a press conference, mainly because the process is now deemed “routine”, and, well, we’re used to them. Some might even say fond.
Not all of the officials took flight, however. The IMF will commence its biennial review of Ireland next week. Some of their people have stayed on for that and may even be spotted enjoying a pint in Doheny and Nesbitt’s.
Be nice to them if you see them. Apparently, of the three branches of the troika, they have been the most supportive of Ireland. In fairness, all three groups of officials are understood to be supportive. But they in turn have had to convince their bosses, and the IMF bosses have been most receptive to Ireland’s cry.
It’s been a hard slog to get to where we are today. As we are no longer in extreme crisis mode, the relative stability and increasingly routine nature of the situation has allowed for the conversation with our quarterly visitors to broaden to the bigger, more strategic issues – debt relief.
In April, Ireland’s favourite IMF official (Ajai Chopra) told delegates at the organisation’s annual spring meetings in Washington that he had been pushing for additional support for Ireland from Europe. At that stage, the burgeoning crisis in Spain had only just hit the headlines. It seems now that the worse things got for Spain, the better they would get for us.
Ironically, the one official who isn’t staying on this weekend – because he never arrived – is Chopra. This seems to have escaped most of the media who insisted on printing his photograph alongside troika stories.
No doubt he will be back to visit us soon enough, however.
Be sure to give him a smile if you see him.
ONLINE
You can get the latest news each business day at irishtimes.com/businessor by following us on Twitter at twitter.com/IrishTimesBiz. We also have a Facebook page at facebook.com/IrishTimesBizwhere you can read the latest business headlines, blog posts and reader polls.
