WEBVTT - Is Britain’s High Street Going Broke? 0:00:01.240 --> 0:00:04.800 It's about twelve thirty on a Tuesday, and I'm Leanne 0:00:04.840 --> 0:00:07.840 Garin's a reporter and a producer for Bloomberg and I 0:00:07.920 --> 0:00:10.000 just had to nip out of the office to do 0:00:10.200 --> 0:00:13.119 some errands this afternoon. And as I left that in 0:00:13.160 --> 0:00:16.120 the city podcast team asked me to grab a mic 0:00:16.600 --> 0:00:19.080 and just get a feel for what's happening on the 0:00:19.160 --> 0:00:23.560 streets around our building again, what shops are closed and open, 0:00:23.760 --> 0:00:29.400 and what people are grabbing. I've just walked past o Waiters, 0:00:29.840 --> 0:00:32.560 one of my old clothing stores I used to come 0:00:32.600 --> 0:00:37.800 to regularly, but sadly it's now closed. There's a few 0:00:37.800 --> 0:00:40.320 people that I can see just shopping in argus. They're 0:00:40.320 --> 0:00:43.519 probably getting some more essentials. I need to pick up 0:00:43.560 --> 0:00:49.920 some coat hangers at some point. So I'm just outside 0:00:49.920 --> 0:00:52.920 Paper Taste, which is a shop that sells everything from 0:00:53.000 --> 0:00:57.440 cards to sparkly pens to fancy photo frames. So there's 0:00:57.440 --> 0:01:01.840 a big yellow sign saying all dark reduced, and when 0:01:01.880 --> 0:01:04.560 we peeped through the window, it says twenty percent off 0:01:04.560 --> 0:01:10.440 pretty much everything that's much. So I've just walked into 0:01:10.480 --> 0:01:13.960 Paper Chase. I'm having a look around. Oh my gosh, 0:01:14.160 --> 0:01:22.360 Peter Rabbit birthday invitations and it's off one fifty. So 0:01:22.520 --> 0:01:25.520 I'm carrying on walking down Poultry Street. I need to 0:01:25.520 --> 0:01:28.600 go and get a gym top. Actually, so I've just 0:01:28.840 --> 0:01:33.480 entered one ne change the shopping center near our office. Well, 0:01:33.560 --> 0:01:39.800 Hugo Boss is empty and then Espresso pretty much empty. 0:01:41.040 --> 0:01:45.280 I'm just in a very popular athletic shop here in 0:01:45.360 --> 0:01:48.120 the city and I was looking for a top to 0:01:48.160 --> 0:01:51.360 play my tennis match in trying to find a top 0:01:51.360 --> 0:01:53.080 in a different size, so I'm just gonna have to 0:01:53.120 --> 0:01:58.640 ask the lady. So ironically, I just had to leave 0:01:58.680 --> 0:02:01.640 Sweaty Betty because I couldn't stand in the queue any 0:02:01.640 --> 0:02:05.560 longer waiting to get another size top. And that's because 0:02:05.560 --> 0:02:08.040 it was just too busy. So maybe some stores are 0:02:08.080 --> 0:02:11.480 weathering the storm. So Dave and Francine, I hope you've 0:02:11.560 --> 0:02:14.520 enjoyed my on the ground reporting and got something out 0:02:14.520 --> 0:02:26.280 of it, because I didn't. I'm David Merritt's and I'm 0:02:26.280 --> 0:02:29.359 Francing Laquax and this is in the City, Bloomberg's podcast, 0:02:29.400 --> 0:02:31.680 connecting you to the stories and the voices at the 0:02:31.720 --> 0:02:34.040 heart of the City of London. Now this week we 0:02:34.120 --> 0:02:37.200 talk shopping and distress. It's not an easy time is 0:02:37.200 --> 0:02:39.040 it Francine on the British High Street. I mean you 0:02:39.040 --> 0:02:41.760 walk around here outside there are empty shops, they've been 0:02:41.760 --> 0:02:44.520 empty since the pandemic, but no one's taking the space. 0:02:44.560 --> 0:02:47.000 It's not just here, it's all over London. Yeah, I 0:02:47.000 --> 0:02:48.799 don't know how many people actually come to the City 0:02:48.800 --> 0:02:51.520 of London shop, but it is I guess, a good 0:02:51.520 --> 0:02:54.040 barometer on whether people are so come back to the office. 0:02:54.040 --> 0:02:57.160 So I wonder whether this is distressed companies, under stress retailers, 0:02:57.240 --> 0:02:59.919 or whether we shop differently selfages have got that few 0:03:00.080 --> 0:03:02.480 neon sign outside saying what does it say? We've got 0:03:02.520 --> 0:03:05.760 to reinvent how you change the way we shop? And yeah, 0:03:05.760 --> 0:03:07.600 there's a lot of footfall down Oxtor Street, but there's 0:03:07.600 --> 0:03:11.960 still those empty stores, those big flagship buildings like Debenhom's, 0:03:12.000 --> 0:03:15.359 like House of Fraser that no one wants to take over. 0:03:15.560 --> 0:03:17.560 And it's all about the economy, with of course the 0:03:17.560 --> 0:03:20.960 cost of living crisis, higher interest rates, the Hyacinths two 0:03:21.000 --> 0:03:25.400 thousand and seven and inflation hitting a lot of consumers 0:03:25.400 --> 0:03:28.080 that maybe would have you not thought twice by buying 0:03:28.120 --> 0:03:30.040 two or three codes exactly, And it just feels like 0:03:30.040 --> 0:03:32.840 it's possibly worse here than anyone in the We know 0:03:32.880 --> 0:03:34.920 the economic headwinds are everywhere. But you know, we've had 0:03:34.960 --> 0:03:38.360 the report about the British economy bearing worse than all 0:03:38.400 --> 0:03:43.240 the G seven this year and companies are in distress. 0:03:43.360 --> 0:03:47.080 We've got a new newsletter out, so that's exciting. This 0:03:47.160 --> 0:03:50.240 is a new Bloomberg newsletter which everyone needs to subscribe to, 0:03:50.360 --> 0:03:54.160 The Brink. The Brink, and it's called that because this 0:03:54.200 --> 0:03:56.640 is what companies are facing right There's a big debt 0:03:56.680 --> 0:03:59.280 cliff that everyone's looking at and who's going to be 0:03:59.360 --> 0:04:02.920 the next me, the big high Street name to fail. 0:04:02.960 --> 0:04:04.960 That's what everyone's talking about. The brink. It kind of 0:04:04.960 --> 0:04:06.880 fills me with dread. So to unpack all of this, 0:04:07.320 --> 0:04:10.280 we're joining the podcast studio by your UK Retail reporter 0:04:10.680 --> 0:04:14.280 Katie Linzel and Juliette More Poorer Go European Credit and 0:04:14.360 --> 0:04:17.200 High Yield and Distressed Reporter, So thank you both for 0:04:17.279 --> 0:04:20.440 joining us. So, Katie, how bad is it? Well, it 0:04:20.480 --> 0:04:22.360 depends which part of retail you look at, but it's 0:04:22.360 --> 0:04:24.560 not looking very comfortable, let's put it that way. So 0:04:24.600 --> 0:04:26.320 many retailers are hoping that over the course of this 0:04:26.400 --> 0:04:28.600 year things will get better, you know, inflation will start 0:04:28.640 --> 0:04:31.040 to ease off a bit. But really we're saying it's 0:04:31.080 --> 0:04:33.120 it's pretty tough. And for example, if you look at 0:04:33.160 --> 0:04:36.200 the online only fast fashion retailers, they had some very 0:04:36.200 --> 0:04:39.359 bumpy performance over Christmas. Of course, they will also faced 0:04:39.360 --> 0:04:41.440 by postal strikes, so that made it much harder to 0:04:41.480 --> 0:04:44.320 get items out to customers a source for example, if 0:04:44.320 --> 0:04:46.839 you'd take them as an example, they are looking at 0:04:46.880 --> 0:04:49.320 a loss for the first half and promising a lot 0:04:49.480 --> 0:04:52.080 in their second half performance and they have debt coming 0:04:52.120 --> 0:04:54.760 due next year. So yeah, there are many names we 0:04:54.760 --> 0:04:56.360 can look at that it's it's a bit painful at 0:04:56.360 --> 0:04:58.480 the moment. I mean we spoke before Christmas, didn't worry 0:04:58.480 --> 0:05:00.240 about what the outlook might be, and then was a 0:05:00.560 --> 0:05:03.040 kind of in now is it across the board? Has 0:05:03.080 --> 0:05:06.080 it been a bad season for the retailers in Britain? 0:05:06.200 --> 0:05:08.760 So volumes did actually fall at Christmas, it was only 0:05:08.760 --> 0:05:10.640 a minor fall, but still that's something that a lot 0:05:10.640 --> 0:05:12.320 of people are looking at because when you look at 0:05:12.320 --> 0:05:14.400 the sales figures, a lot of retailers are coming through 0:05:14.400 --> 0:05:17.599 and saying sales are they have grown. The supermarkets in 0:05:17.640 --> 0:05:19.560 many cases of saying we had record sales and approach 0:05:19.560 --> 0:05:22.839 to Christmas. But this is inflation that's pumping up sales figures. 0:05:22.880 --> 0:05:25.800 You know, we're paying more forgetting less at the moment. 0:05:26.080 --> 0:05:28.159 So yeah, I think it is looking very tough. And 0:05:28.600 --> 0:05:31.479 Christmas was a bit better than than many observers expected. 0:05:31.520 --> 0:05:33.120 But at the same time, we've seen a lot of 0:05:33.360 --> 0:05:36.039 consumers leaning on debt. They're using buy and our pay 0:05:36.120 --> 0:05:38.240 later to make some of those purchases. It's not the 0:05:38.240 --> 0:05:41.560 most comfortable position to be in going into three And Julia, 0:05:41.760 --> 0:05:44.880 how is this translating into the health of these companies? 0:05:45.160 --> 0:05:50.200 Are we seeing heightened levels of distress when we look 0:05:50.200 --> 0:05:53.080 at the debt a lot of these companies if your 0:05:53.440 --> 0:05:56.880 demand demand from your consumers is lower and if your 0:05:56.960 --> 0:05:59.520 costs are going up. Because we have to think about 0:06:00.160 --> 0:06:04.479 retailers like apperl stores, supermarkets, they'rely in lingalso with things 0:06:04.560 --> 0:06:08.120 like higher staff costs, have higher energy bills, so you've 0:06:08.160 --> 0:06:12.479 got like a combination that leads to them generating fewer 0:06:12.520 --> 0:06:17.039 profits and fewer cash to just pay interest on their debt. 0:06:17.680 --> 0:06:21.640 And that's particularly an issue when companies have a heavy 0:06:21.680 --> 0:06:24.720 debt structure, which is what a lot of these retailers, 0:06:24.839 --> 0:06:28.080 especially in the UK have built over the last years. 0:06:28.080 --> 0:06:30.680 You know, supermarkets that are loaded up with billions and 0:06:30.720 --> 0:06:33.360 billions of that. Like, as soon as you start generating 0:06:33.360 --> 0:06:35.760 a bit less cash, it becomes a problem to keep 0:06:35.800 --> 0:06:39.480 servicing these heavy debt structures. But what are they focusing on? 0:06:39.560 --> 0:06:42.960 So is it are they just trying to preserve market 0:06:43.000 --> 0:06:46.280 share at the moment or are we finding ourselves that 0:06:46.400 --> 0:06:49.040 because of leverage in the past, an interest rates going higher, 0:06:49.320 --> 0:06:51.680 there's just retailers that are going to go bust because 0:06:51.680 --> 0:06:54.040 they can't afford it. I think the focus is on, 0:06:54.640 --> 0:06:57.240 you know, just staying afloat in terms of operations and 0:06:57.480 --> 0:07:00.120 retaining the market share they have, but also on the 0:07:00.160 --> 0:07:03.760 death side is really trying to lower that that structure 0:07:03.800 --> 0:07:05.719 if they can. A lot of them are doing as 0:07:05.760 --> 0:07:08.640 it sales for instance, it's not exactly a retailer. One 0:07:08.640 --> 0:07:11.200 company that comes to mind is a stone Gate pub 0:07:11.360 --> 0:07:15.960 Bloomer reported that they're selling over a thousand pubs. The 0:07:16.000 --> 0:07:18.480 thing that they're trying to do mostly is really trying 0:07:18.480 --> 0:07:22.400 to refinance their deb if maturities are approaching. But that's 0:07:22.440 --> 0:07:26.600 increasingly challenging and increasingly costly, and as an that investor, 0:07:26.680 --> 0:07:30.040 you want to be selective when it comes to which 0:07:30.040 --> 0:07:32.400 credit you're going to be investing in. So you look 0:07:32.400 --> 0:07:34.760 at the retail sector and think, oh, well, maybe this 0:07:34.840 --> 0:07:36.800 is not for me. I'm gonna go with something that's 0:07:36.880 --> 0:07:39.600 less consumer e supposed because we are in a high 0:07:39.680 --> 0:07:44.080 inflation recessionary environment, so a lot of them are not 0:07:44.160 --> 0:07:46.360 able to access capital markets like they used to be, 0:07:46.840 --> 0:07:52.320 and therefore the they have to seek emergency funding and 0:07:52.400 --> 0:07:54.960 that's um and if they find it, because if they 0:07:54.960 --> 0:07:58.040 don't find it, it's probably gonna head for insolvency. We've 0:07:58.040 --> 0:08:02.000 seen many of them on able to meet their maturities 0:08:02.120 --> 0:08:06.360 and having to start talks with creditors. One example is Matalanda, 0:08:06.880 --> 0:08:11.240 discount retailer. They just got taken over by funds because 0:08:11.280 --> 0:08:13.720 they were not able to refinance their bonds that were 0:08:13.760 --> 0:08:15.920 doing January, and they were not able to sell the 0:08:15.960 --> 0:08:18.760 company because no one was offering enough for it. It 0:08:18.760 --> 0:08:21.600 sounds like a pretty bleak situation. You know, people are 0:08:21.640 --> 0:08:25.600 not able to refinance this debt. You mentioned the word 0:08:25.720 --> 0:08:28.160 was actually you know, we were in a recessionary environment. 0:08:28.600 --> 0:08:31.760 You said, I mean historically a recession means disaster for 0:08:32.000 --> 0:08:35.360 the high street, right for retailers is that what many 0:08:35.360 --> 0:08:37.679 of them are experiencing. Now, o Katie's are we are 0:08:37.720 --> 0:08:40.080 we deep in recession in Britain. Well, we've seen plenty 0:08:40.080 --> 0:08:42.280 of insolvencies lately, right. I think it was this week 0:08:42.320 --> 0:08:44.800 that paper Chase came to lighten. Yes, but one is 0:08:44.800 --> 0:08:50.680 boarded up downside. Yeah, so Testco overstepped into buy paper Chase. 0:08:50.720 --> 0:08:52.480 But that means the brand, That means the I P. 0:08:52.679 --> 0:08:55.280 That does not mean the stores or the employees. And 0:08:55.280 --> 0:08:59.439 how many stores is that? Well, it's many, yeah, it's hundreds. 0:08:59.559 --> 0:09:03.000 Um and um. Also late last year we saw Jewels 0:09:03.040 --> 0:09:05.920 going too insolvency made dot Com. Both of those were 0:09:05.960 --> 0:09:08.120 bought by Next. But again this is not the case 0:09:08.200 --> 0:09:11.240 of stores being kept or loads of jobs being kept. Um. 0:09:11.440 --> 0:09:13.600 So there are some opportunities for the for the big 0:09:13.600 --> 0:09:17.400 retailers who are playing the game correctly. Next and also 0:09:17.520 --> 0:09:21.360 phrases Mike Ashley's Empire, they're doing quite a lot of buying. Um. 0:09:21.480 --> 0:09:23.079 But you know, in the UK in recent years we've 0:09:23.120 --> 0:09:25.360 seen quite a few retailers go under and I think 0:09:25.440 --> 0:09:28.920 we're in that pattern. You know, it's it's not disappeared. Um. 0:09:29.000 --> 0:09:31.439 The retailers have really struggled to survive during the pandemic 0:09:31.480 --> 0:09:32.800 and now we've got across a living It's a pretty 0:09:32.840 --> 0:09:36.880 painful double whammy. I mean, no retailer is created equal. 0:09:37.040 --> 0:09:39.200 So is it is it the bad retailers? Like is 0:09:39.200 --> 0:09:41.360 it the retails where people don't sharp that girl bust? 0:09:41.480 --> 0:09:44.640 Or could it be a healthy retailer that just can't 0:09:44.679 --> 0:09:47.400 get up front of, you know, some of the financing 0:09:47.440 --> 0:09:50.280 that they need to deal with. I think it's definitely 0:09:51.160 --> 0:09:54.000 the l fy ones and with a healthy capital structure 0:09:54.160 --> 0:09:56.760 are going to be able to weather the storm. It's 0:09:56.800 --> 0:09:59.320 more a matter of really how levered your capital structure 0:09:59.480 --> 0:10:04.120 is and what's really your appeal to consumers in this time. 0:10:04.160 --> 0:10:07.840 You know, we're seeing a lot of mid range retailers 0:10:07.840 --> 0:10:11.480 being squeezed, for instance, and those are probably, you know, 0:10:11.520 --> 0:10:13.199 if combined with a lot of that are going to 0:10:13.280 --> 0:10:16.480 be the ones that struggle the most in the grocer space, 0:10:16.559 --> 0:10:19.800 the names that everyone is looking at as then Morrisons, 0:10:19.800 --> 0:10:22.280 which are kind of in the mid range when it 0:10:22.320 --> 0:10:26.000 comes to which consumer base they target, they are losing 0:10:26.040 --> 0:10:30.199 clients to supermarkets like Aldi and Liddle because people are 0:10:30.200 --> 0:10:33.160 trying to shopper a bit cheaper and both as the 0:10:33.280 --> 0:10:35.960 Morrisons have billions that that that were loaded on them 0:10:36.000 --> 0:10:39.400 as they were the object of leverage buyouts at a 0:10:39.480 --> 0:10:42.679 time when valuations were so high. Now it looks like 0:10:42.720 --> 0:10:46.080 their value and the market share that they have is 0:10:46.080 --> 0:10:49.320 going down and they have these, you know, billions of 0:10:49.559 --> 0:10:53.199 that that they need to service. So investors are particularly 0:10:53.200 --> 0:10:55.319 concerned about those types of names in the middle. I 0:10:55.360 --> 0:10:57.640 would say, so all of those deals that were donswer 0:10:57.760 --> 0:11:00.600 leveraging up these companies that happen for you in years 0:11:00.640 --> 0:11:03.520 with very low interest rates. Obviously thanking them put up 0:11:03.600 --> 0:11:08.320 rates to four. There's possibly more to come until those 0:11:08.320 --> 0:11:11.000 have peaked. Who's feeling the pain from all of this? 0:11:11.600 --> 0:11:13.520 Which investors are really hurtic. What is going to be 0:11:13.559 --> 0:11:16.719 the fallout from h these deals not being able to 0:11:16.720 --> 0:11:21.880 be refinanced. I mean definitely, if you're a junk that 0:11:22.000 --> 0:11:25.160 investors that has piled money into these deals, you are 0:11:25.320 --> 0:11:28.000 worried about seeing the bomb prices moving down and you're 0:11:28.040 --> 0:11:32.960 worried about not being able to refinance. On the other hand, 0:11:33.440 --> 0:11:36.280 if you are a distressed investor and you're looking at 0:11:36.360 --> 0:11:39.600 these bomb prices going down and you're thinking, Okay, this 0:11:39.679 --> 0:11:42.560 company is not going to be able to um access 0:11:42.600 --> 0:11:45.040 capital markets, it might be an opportunity for them. They 0:11:45.080 --> 0:11:48.560 might step in by the that and if a solution 0:11:48.640 --> 0:11:52.320 is not found, kickoff negotiations with the company and eventually 0:11:52.440 --> 0:11:55.520 take it over for a very cheap price. So there's 0:11:55.520 --> 0:12:00.720 opportunities for invest Definitely opportunity Exactly, you need to be 0:12:00.760 --> 0:12:03.040 able to digest a lot of risk. I guess how's 0:12:03.200 --> 0:12:06.959 I mean, how's luxury doing. It's been a huge growth sector. 0:12:07.080 --> 0:12:10.800 But I mean the Chinese luy luxury want what the 0:12:10.880 --> 0:12:13.360 Chinese coming it up post? But how how is the 0:12:13.400 --> 0:12:16.959 luxury doing in writin and also across Europe? Luxury is 0:12:16.960 --> 0:12:19.240 broadly doing much better. I mean we should be looking 0:12:19.280 --> 0:12:21.360 at sort the luxury and the budget and the retail 0:12:21.400 --> 0:12:24.760 as being the sort of strong form either pole basically 0:12:24.840 --> 0:12:27.079 sort of very cheap or luxury. Yes, and so people 0:12:27.080 --> 0:12:29.040 you know, they're still buying their luxury handbags. I mean 0:12:29.080 --> 0:12:30.640 that there are we should remember there are those who 0:12:30.679 --> 0:12:32.640 aren't so touched by the cost of living crisis, right, 0:12:32.640 --> 0:12:35.160 and they can keep buying um. But yeah, generally the 0:12:35.160 --> 0:12:37.080 picture with luxury in the UK is that we want 0:12:37.120 --> 0:12:39.960 the Chinese business bag and we want the sort of 0:12:40.000 --> 0:12:43.080 v Yes, but I think that's not until a bit 0:12:43.120 --> 0:12:44.400 later in the year. I think it's a bit early 0:12:44.440 --> 0:12:46.840 to say that right now. But yeah, I was speaking 0:12:46.840 --> 0:12:48.600 to Harrod's recently, for example, and they are very much 0:12:48.640 --> 0:12:50.800 looking forward to this later in the year. So who's 0:12:50.800 --> 0:12:54.080 the squeeze middle, Like, where's John Lewis? John Lewis, I mean, 0:12:54.120 --> 0:12:55.720 they're in a bit of a rocky position right as 0:12:55.800 --> 0:12:58.360 a department store with still still so many stores across 0:12:58.400 --> 0:13:01.920 the UK. Um, And I mean they didn't didn't actually 0:13:01.960 --> 0:13:04.160 have to report on their Christmas performance, so we'll wait 0:13:04.200 --> 0:13:07.080 and see. Um. John Lewis do sort of lean heavily 0:13:07.080 --> 0:13:08.600 on the fact that they there's this word that comes 0:13:08.679 --> 0:13:11.120 up in retail which I don't really love, but omni channel. 0:13:11.280 --> 0:13:13.360 So this idea that the retailer can reach you at 0:13:13.400 --> 0:13:16.199 home in store. Um. Of course they have a tie 0:13:16.240 --> 0:13:18.760 up with wait Rose for their deliveries and returns and things. 0:13:19.200 --> 0:13:22.640 So um, see John Lewis, I think the jury is out. 0:13:22.720 --> 0:13:25.240 We will see how that goes. Can I do a poll? 0:13:25.440 --> 0:13:28.560 When's the last time you were in store? Dave? You 0:13:28.559 --> 0:13:30.120 know what? I went into John Lewis the other day, 0:13:30.120 --> 0:13:34.760 but actually only to return a broken product that when's 0:13:34.760 --> 0:13:36.600 the last time you were in store? Kidding to purchase 0:13:36.679 --> 0:13:42.600 or just browsing? Um, I don't even know. I bought 0:13:42.679 --> 0:13:46.480 online the other week, does that this week? Probably everything 0:13:46.480 --> 0:13:49.560 on Amazon were last time I think like two three 0:13:49.559 --> 0:13:52.520 weeks ago. Okay, so you're like the outlier. But you 0:13:52.520 --> 0:13:55.120 know we're changing. We just don't go to stores really anymore. 0:13:55.160 --> 0:13:56.439 And this is the time of year as well, you 0:13:56.480 --> 0:13:58.960 know January February or the post Christmas gloom. You know, 0:13:59.040 --> 0:14:00.880 why why would we be the stores as much as 0:14:00.920 --> 0:14:03.040 we did during that that run up to Christmas? So 0:14:03.080 --> 0:14:05.679 it's it's a tough time. I think Dave went to 0:14:06.559 --> 0:14:08.439 talks for a Street and was shocked. He's never doing 0:14:09.880 --> 0:14:13.280 Christmas too many people feel a lot of people but no, 0:14:13.679 --> 0:14:16.560 you know, but well they're actually buying anything, the question. 0:14:16.800 --> 0:14:19.120 People are swarming to these areas, but I don't know 0:14:20.040 --> 0:14:23.000 they're actually transacting anything. Yeah, I mean retail is still 0:14:23.000 --> 0:14:26.120 a very popular sort of leisure activity. Right, So we've 0:14:26.160 --> 0:14:29.000 since the pandemic, we've seen online come back. As as 0:14:29.000 --> 0:14:31.320 we were discussing, you know, it hasn't been the boom 0:14:31.480 --> 0:14:34.320 that people were hoping. So there is more footfall to stores, 0:14:34.360 --> 0:14:36.440 but how much purchasing is happening is as yet to 0:14:36.440 --> 0:14:39.040 be seen. Do you know how we stacking up in 0:14:39.080 --> 0:14:41.720 Britain versus the rest of the world. I mean, we've 0:14:41.720 --> 0:14:43.320 heard about the r F say Britain is going to 0:14:43.320 --> 0:14:45.320 be the only G seven country that's going to contract 0:14:45.400 --> 0:14:48.240 this year. Are we to we you know, we love 0:14:48.280 --> 0:14:50.880 talking ourselves down in Britain. We are we worse in 0:14:51.000 --> 0:14:53.600 terms of the debt situation, in terms of the forecast 0:14:53.640 --> 0:14:57.080 for these retailers than there for us. Well, I have 0:14:57.160 --> 0:15:00.640 to say that it's not lookingly exactly good, especially when 0:15:00.640 --> 0:15:03.560 compared to the rest of Europe. The British high street 0:15:03.640 --> 0:15:08.200 is extremely extremely leveraged because it's a bigger sector and 0:15:08.240 --> 0:15:10.720 it's been the subject of a lot more leveraged buy 0:15:10.760 --> 0:15:15.320 out private equity firms. I've been targeting British retailers um 0:15:15.760 --> 0:15:17.920 for a long time and it's just not been the 0:15:17.960 --> 0:15:20.760 same level of transactions when it comes to the other 0:15:21.320 --> 0:15:23.880 European markets. But that means that they're more leverage and 0:15:23.920 --> 0:15:27.560 therefore when you start having less generating less cash, but 0:15:27.760 --> 0:15:30.520 you have these heavier death structures, and I mean that's 0:15:30.520 --> 0:15:32.600 going to be more of an issue in the UK 0:15:32.800 --> 0:15:36.320 than annyone see Europe. The other thing is that inflation 0:15:36.480 --> 0:15:40.520 as obviously hit the UK the artist especially vers years 0:15:40.560 --> 0:15:45.040 on for instance. So yes, it's not looking exactly good. 0:15:45.120 --> 0:15:48.400 But the US is in a similar situation as well. 0:15:48.440 --> 0:15:51.120 In the US we've seen a lot of big retailers, 0:15:51.720 --> 0:15:55.720 um nearing the brink of bankruptcy, I mean bad path 0:15:55.760 --> 0:15:58.640 and beyond we're expecting it to file within days. So 0:15:58.720 --> 0:16:01.960 that's I went into a bath and beyond. There you go. 0:16:02.080 --> 0:16:04.800 It's enormous on Sect Avenue. And that was the only persident. 0:16:04.880 --> 0:16:07.880 What were you looking for? I was looking for a mop. 0:16:10.640 --> 0:16:14.240 You're killing the dream you are killing. I didn't find 0:16:14.240 --> 0:16:16.400 a dream, by the way, so then I walked out 0:16:16.400 --> 0:16:17.840 and a half and ordered one on Amazon. There we go, 0:16:17.960 --> 0:16:22.440 There we go. Disclaimer disclaimer, Um, Katie, I guess the 0:16:22.640 --> 0:16:25.240 you know, as long as the labor market holds tight, 0:16:25.560 --> 0:16:28.400 so people will consume less. But the labor market is 0:16:28.440 --> 0:16:30.720 so tight in the UK because they can't find the 0:16:30.720 --> 0:16:33.600 staff that you could see maybe more of a pickup 0:16:33.640 --> 0:16:37.040 in consumer spending quicker than we think. Yes, And the 0:16:37.120 --> 0:16:40.200 key thing is you job numbers, people keeping their jobs. Um, 0:16:40.320 --> 0:16:42.120 So yeah, I think for example, whenever you talk to 0:16:42.200 --> 0:16:44.480 next Simon Wolfson. Next, there's these are the things he's 0:16:44.480 --> 0:16:46.920 looking at that we can keep employment high in the UK, 0:16:47.120 --> 0:16:49.760 then we can keep people spending to some extent um. 0:16:49.800 --> 0:16:51.280 And this year is going to be interesting one because 0:16:51.280 --> 0:16:53.080 it should be one of transformation, right, that's what we're 0:16:53.080 --> 0:16:55.840 hearing from the inflation figures. But later in the year 0:16:55.880 --> 0:16:58.160 we should really see purchases pick up again. So so 0:16:58.240 --> 0:17:00.560 we'll see what happens. But bath and Beyond, I mean, 0:17:00.560 --> 0:17:03.120 do we have any companies like this that could go under? 0:17:03.160 --> 0:17:05.480 I feel like the Brits are very much into their 0:17:05.560 --> 0:17:09.040 d I y and bathrooms. Yeah, I think in the 0:17:09.160 --> 0:17:11.919 UK will really like I mean the size and scope 0:17:11.920 --> 0:17:14.720 of bad bathroom beyond Like probably the thing that comes 0:17:14.760 --> 0:17:18.960 to closest is the supermarkets and that's what investors and 0:17:19.000 --> 0:17:23.200 the people in the credit community are really keeping their 0:17:23.200 --> 0:17:25.520 eye on at the moment. So we'll see how they 0:17:25.520 --> 0:17:27.800 weather the storm. And when you look at the debt 0:17:27.880 --> 0:17:31.000 pricing and what's happening in the in the markets where 0:17:31.040 --> 0:17:33.480 the warning signals is it is it's around the sup 0:17:33.800 --> 0:17:37.200 some of those bonds trading at really alarming levels. They 0:17:37.200 --> 0:17:39.639 are they are, I mean, especially when it comes to 0:17:39.640 --> 0:17:43.520 the UK. We've really hit the lows in September October, 0:17:43.960 --> 0:17:46.760 around the time when the market crisis tem from the 0:17:46.880 --> 0:17:51.280 mini budget really affected the British markets. But now they've 0:17:51.280 --> 0:17:54.120 recovered a little bit, but the ones that people are 0:17:54.119 --> 0:17:57.600 worried about are still trading at deeply distressed levels. I 0:17:57.640 --> 0:18:00.320 feel like everyone, like everyone I know and their mother 0:18:00.359 --> 0:18:03.240 and their cousin and their second cousin removed, has been 0:18:03.280 --> 0:18:06.439 to the power Battersey power station. So are we sharping? 0:18:06.480 --> 0:18:09.000 Are we expecting now an experience? So it's it's not 0:18:09.040 --> 0:18:11.560 sharping malls somewhere where you go and eat and maybe 0:18:11.560 --> 0:18:14.640 brows instead of you go to a shop with a purpose. Yeah, 0:18:14.680 --> 0:18:17.440 it's all about experience now. So as we've been discussing, 0:18:17.440 --> 0:18:20.160 you know, we've seen so many retailers boarded up and 0:18:20.560 --> 0:18:23.320 what retailers really want to have as some fantastic restaurants 0:18:23.320 --> 0:18:26.199 and bars and cafes right next to their store. Um, 0:18:26.240 --> 0:18:29.919 we're also seeing, for example, retailers bringing services and experiences 0:18:29.960 --> 0:18:33.719 into store. So for example, jim Shark, the fitness brand, 0:18:34.400 --> 0:18:37.920 opened up their new store on Regent Street not that lago, 0:18:38.160 --> 0:18:40.080 and they have I think it's called the sweat Room. 0:18:40.080 --> 0:18:43.320 Actually which is quite sort of visual, but they offer 0:18:43.440 --> 0:18:47.320 fitness classes inside the store. Um and this is really 0:18:47.359 --> 0:18:50.200 too sort of promote what my daughter did last weekend. 0:18:50.280 --> 0:18:53.040 She had a birthday party at Westfield, not to shop, 0:18:53.119 --> 0:18:56.080 but to do roller roller booting with the kind of 0:18:56.480 --> 0:18:58.520 sort of house music. And they get them all in there, 0:18:58.840 --> 0:19:01.920 and there's and it's packed sold out for weeks this place. 0:19:02.200 --> 0:19:04.120 And then when you're there you might then go into 0:19:04.160 --> 0:19:06.239 Zara or you might do something else. But that is 0:19:06.320 --> 0:19:08.119 the reason, that's the only reason to go to We'll 0:19:08.160 --> 0:19:10.120 go to cinema or go to check out the restaurants. Yeah, 0:19:10.119 --> 0:19:12.119 it's it's got to be in experience with all of 0:19:12.160 --> 0:19:14.400 these these items on offer. Really, and so how does 0:19:14.440 --> 0:19:17.919 that change the shopping centers? Actually, I mean how does 0:19:17.920 --> 0:19:20.320 it change or we can see more shopping centers and 0:19:20.480 --> 0:19:23.680 empty high streets. Well, hopefully those sites that are vacated 0:19:23.680 --> 0:19:25.560 by the retailers will be taken by the likes of 0:19:26.080 --> 0:19:28.719 restaurants and bars. And for example, Julie, I think you're 0:19:28.720 --> 0:19:30.840 mentioning McLaren as well. You know, we're seeing all these 0:19:30.840 --> 0:19:32.840 brands we wouldn't expect to see on our high street 0:19:32.960 --> 0:19:35.960 that range rover Land Rover whoever it might be at 0:19:36.000 --> 0:19:38.439 Tesla I think have have a store in brent Cross, 0:19:38.680 --> 0:19:40.280 so you know it's this idea of trying to get 0:19:40.280 --> 0:19:43.399 shoppers in to check out the cars, maybe also have 0:19:43.400 --> 0:19:45.360 an experience. You're not if you're buying a Tesla. You're 0:19:45.359 --> 0:19:47.280 not going to go to brink A Cross to buy, 0:19:47.440 --> 0:19:49.080 are you? Or maybe you want go to brint Cross 0:19:49.080 --> 0:19:52.400 to by Tesla's they do breaking news. Why why would 0:19:52.400 --> 0:19:54.959 you like to Cross to buy a Tesla? Don't want 0:19:54.960 --> 0:19:58.000 to be mean about brant Cross. You want the experience 0:19:59.680 --> 0:20:01.760 to go with it. How does the how does they 0:20:01.880 --> 0:20:05.200 lit I mean doing forecast? Is we get some big 0:20:05.280 --> 0:20:07.520 names going bust again? I mean, what's your sense talking 0:20:07.560 --> 0:20:09.480 to people in the market, talking to the people trading 0:20:09.520 --> 0:20:12.880 the bonds and thinking about the refinancing of these companies. 0:20:13.600 --> 0:20:16.080 You know the Bank of England talks about maybe things 0:20:16.080 --> 0:20:17.920 are going to be a little bit rosier this year 0:20:18.119 --> 0:20:21.359 than they said last year. What's your what's your sense? 0:20:21.720 --> 0:20:24.000 I definitely think it's going to be a matter of 0:20:24.040 --> 0:20:28.480