9 May 2017 | Issue 15
Market corner

by Ghillie Little
Head of Corporate Consulting
Coach bags Kate Spade
Luxury retailer Coach announced on Monday that it has bagged Kate Spade for $2.4 billion. Last week we wrote about Kate Spade’s rocky road in the world of high-end accessories,​ and it’s on-and-off again relationship talks with Coach. It now looks like blue skies ahead for both companies. With it's new purchase, Coach looks to capture the millennial market, a generation it has apparently fallen out of fashion favour with. Coach's expertise is expected to help "unlock Kate Spade's largely untapped global growth potential" and drive profit growth by cutting down on back-end overlapping costs. Shares of Coach and Kate Spade were up yesterday after the announcement, suggesting investors are supportive of the deal.

Cruisin' towards a restructure
Hertz announced larger than expected losses in Q1 and has since seen its share price take a bigger tumble. Hertz CEO Kathryn Marinello itemised the issues that led to the losses and it is clear that there has been a structural shift in the rental car market that Hertz wasn’t prepared for. The firm has been affected by lower than expected cash flow from the cars it rents out and the used-cars it sells, but it is also being negatively affected by the consumer shift from car rental to rideshare.

For consumers, what’s not to love about shifting the driving and parking burden in an unknown city to rideshare companies like Lyft or Uber – which are also potentially less expensive. The rideshare market and focus on car automation,​ are two items that Hertz needs to address to remain a dominant player in the game - with the support of investors like Icahn, it’s only a matter of time for a company like Hertz to make a turnaround.   
Victoria not getting the support it needs
The lingerie secret is officially out of the bag. Weaker than expected foot traffic to Victoria's Secret stores,​ combined with an increase in industry newcomers ​(like Aerie continuing to take a bigger share of the market​), has led L Brands share price to plummet. L Brands, the parent company to VS, has seen its stock plummet more than 38% over the past year - 25% in this ​calendar ​year. Analysts predict even lower earnings for the next three years unless L Brands begins to make significant changes.

Insurance silver lining
Since Brexit, some experts have claimed that London’s position as the global centre for the insurance industry is under threat. But others are more optimistic that Brexit can be the industry’s next big opportunity.
Gains in specialist areas such as marine, energy and aviation prove that the City remains a hub for specialist insurance and the opportunity to continue capturing niche markets, like the quickly growing cyber insurance space, and untapped post-Brexit opportunities, is ripe for the taking. If and when these opportunities are seized, it will demonstrate that the London insurance sector will continue to be a major powerhouse.

Heroes of the week

Rescuers lift two-tonne car off trapped  boy after Leicester collision
...remarkable footage captures crowd of people in Leicester lifting car off trapped young boy. 
A well-intentioned miscalculation
This year we have seen a slew of companies miss the mark with cringeworthy attempts at reaching out to a target audience through apparent progressivism. Most recently, Dove unveiled its new body wash bottles, designed to emulate the various shapes and sizes of women in the hopes of celebrating ‘body positivity’. The Dove statement said, “Each bottle evokes the shapes, sizes, curves and edges that combine to make every woman their very own limited edition.” Pass me, a bucket someone. How did they not guess how wrong that was going to go?
Dove has ardently championed "natural" "real" beauty over the years, with somewhat divided public opinion, but this campaign has missed the mark by a long, long shot. However well intentioned the message they were looking to get across, the execution was unfortunately miscalculated and could have been avoided. Dove is not the first company to fall foul with such a mistake and will surely not be the last and it serves as a lesson for all that a bit of research and common sense goes a long way.

Who's having a good week?

Antonio Conte

...his first season with Chelsea and they look to be on their way to securing their fifth league trophy. 

Corridors of power

by Louis Rynsard
Director, Reputation & Strategy
Caps locked in
The conservative party has announced a policy to cap energy bills. Sounds awfully familiar to those of us young enough to remember 2015. Here’s the thing: yes, the reactions to Ed Miliband’s price cap were a bit extreme - after all, they were hardly “Marxist” (that’s the current Labour leadership) - but, as the CBI noted today, this kind of Government intervention in the free market can have “unintended consequences” and can actually end up punishing savvy consumers who shop around.
Your energy bills are too high, so are mine. However, solutions do not lie in Government setting prices but in technological innovation. A smart meter in every home would be a good first step. Shame once again that our political leaders have gone for unnecessary intervention, when a bit of clever tech would have done the job. Oh well, always next time.

Done, done, on to the next one
Well he only went and did it! Emmanuel Macron will be President of France. From a figure of mirth for the established parties, to head of a new political party, to the leader of one of the great nations of Europe and one of the world’s largest economies. All before 40.
Anyone would think he had earned a day off. Well politics doesn’t work like that. While he may have beaten back Le Pen in the run-off and seen off all the other leaders in the first round, Macron’s newly renamed “La Republique En Marche!” will now have to win a majority in Parliament or the Macron Presidency will find the establishment striking back (like the Empire strikes back but with more red tape and less lightsabers). However, does anyone really want to bet against the centrist poster boy pulling it off?
New Moon rising with trouble up ahead
So​,​ over in the non-crazy part of the Korean peninsula the votes are in! An election held under the shadow of potential war, where the most recent incumbent had been impeached and imprisoned, this was no ordinary election for the world’s 11th largest economy.  And with exit polls showing a win for the Democratic United Party, liberal forces are back in power after 9 years in opposition.

Moon Jae-in may be about to lead his party back into power, but that was the easy bit. The new President will have to deal with rising tensions that threaten to engulf Asia, mounting domestic concerns on corruption and the small matter of a slowing economy.

Notable headline

Why your next password might be an emoji

...adding a bit of enjoyment to unlocking your phone.
Silicon passage

by Louis Rynsard
Director, Reputation & Strategy
Dell's not-so-new venture
Formally “out of stealth”, today Dell Technologies Capital announced it has been very sneakily investing in enterprise technology and backing cloud companies for a while. Why break cover if it’s all going so well, I hear you ask? Well, Dell is now a victim of its own success and it's more trouble than it’s worth to keep it all secret. Makes us wonder who else has VC side-earners in the tech industry?

Some investors announce their VC fund with a press release, others with a couple of investments, some with a high-profile purchase or takeover attempt. Dell did it by announcing that it already has 27 exits out of its 70 investments, raising $1.3 billion for the firm. Way to make an entrance, guys. 
War for your house heats up further
It was all about Google and Amazon; who was going to own your house? The big question: Would you be saying “OK Google” or “Hey Alexa” for the rest of your life? 

Well here comes the grizzled old king, the undisputed ruler of our working lives, to try and take over our homes as well. Microsoft’s Cortana AI can now take a seat in your house, thanks to the new Invoke speaker.

With the dominance of Alexa and Google Home as the key challenger, it will be hard to win over anyone who has already bought (or who had one bought for them, and had it annoyingly imposed into their lives) a smart speaker. However, 145 million people use Cortana due to its integration into Windows 10, compared with only an estimate 11 million people who own an Alexa. While they may be playing catch-up, Microsoft has a large base to draw from. Bezos, Page and Brin look out: Nadella is on your tail and coming for you hard. As that seminal, ground-breaking film, Bad Boys 2 said “this sh*t just got real.”
The trouble with side bets
One thing Alphabet has never lacked is ambition. Not a year seems to go by when it doesn’t proclaim technology can solve one of the world’s greatest issues: population growth, climate change, the Iran crisis etc. the list of what tech can solve according to the High Priests of Silicon Valley is endless.

The problem is making this happen. Alphabet having a little punt on its “other bets” covering areas such as life sciences, drones, investments, home automation and the like. And when you're Alphabet a little punt can be quite a lot of money. 

Very admirable. Thing is, people keep leaving. The latest being Dr Thomas Insel of the life sciences arm. While tech can solve so many of our problems, businesses still need people and unless Alphabet can hold onto high-profile hires, its other bets may not come off like they planned.

Who's having a rough week?

Beaver taken into custody and released

...lesson learned?

SBC London Reputation & Communications

Our experienced advisers offer face-to-face strategic corporate reputation advice, and public relations service delivery, tailored to meet your firm’s specific circumstances.

Based in the City of London, SBC London serves CEOs and other business leaders to develop better strategies for reputation. Please contact me today to set up a meeting:

Poem of the week

How To Get On In Society by John Betjeman

Picked by Lief Anya Schneider

The SPIT is produced weekly by SBC London.
SBC London is a corporate reputation and communications advisory firm based in the City of London. 
Call us today. We look forward to meeting you.

SBC London
80 Coleman Street London EC2R 5BJ
+44 (0)207 104 2214 |

the SPIT © 2017 SBC London, All rights reserved.
Subscribe here
Our mailing address is:
SBC London
217 Chester House
Fulham Green
London, SW6 3JA
United Kingdom

Add us to your address book

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list