Bloomberg Audio Studios, Podcasts, Radio News same week, but another episode of In the City of podcasts from Bloomberg about the stories shaping the city of London.
I'm Francin Laqua and I'm David Merritt.
David were in the London studio again because we have all these chief executives wanting to come to talk to us ahead of the UK election.
That's right, proper election fever. We're in the thick of it. I think it's safe to say here at Bloomberg HQ and the city and as you say, lots of people coming through to talk to us, and we notice that we have the boss of one of Britains big It's retailers Curries in the building, so we had to put them aside into the studio and you because this is somebody who is hearing on the ground what are consumer's saying,
what is the mood out there? And the economy is such a big subject in this election and he's got a great read on it.
Yeah, he sees everything firsthand because they sell of course items such as vacuum cleaner's, laptops iPhones to British consumers. So he's going to talk to us about the customer living crisis, how people are spending differently, and what he's expecting from labor policies.
I think he's been a conservative donor in the past, so prospects not looking so great for the Tories. Of course at this moment when we were taping this, if the polls are accurate, so what is his view on the Tory chances, but also how he might be embracing a potential new labor government.
Welcome to the City of London, the city of the City of London's mind, the gap.
Between the and the financial hearts of the country, the city, the city. Welcome to in the city. Then clear of the doors.
What we have with us Alex boaldarka chief executive Curries now for international listeners, and we do have many currieres is and electricals, retail or not. Something we'd have to explain to anyone who lives in the UK. They're everywhere, Dave, including all around your house. I'm a customer. I don't know whether I need a disclaimer for that, but I am a good currier's customer.
Well, welcome to in the city act, thank you very much, and I'm delighted to hear we've got some customers as well as some interrogators in.
The room and talk to us a little bit about what kind of economy you see in the UK right now. So we're, you know, two weeks three weeks from an election. The consumer has been feeling a little bit of a pinch, have a cost a living crisis. The economy is kind of better than expected, but flatlining.
The UK consumer definitely still speaking in general terms, feels hard pressed and is very conscious of a cost of living crisis and is watchful of their spending, particularly on bigger ticket discretionary items such as the technology that carries sells.
All of that's certainly true. However, if you wanted to take a more optimistic view of the prospects for the UK consumer, you could, I mean, for start, consumer confidence as measured by GfK and the like has been up pretty much with the exception of two months every month for twenty two months. Real wages are continuing in growth, Employment is still high, and retained savings are still relatively
high for this stage of the cycle. And all of that is starting to translate into a more benign environment for selling the sort of stuff that carries sells.
How important is the inflation number to your business and to that sense of sentiment? The data taping this, we've seen finally, for the first time for years, inflation out at the two percent Target's that a big milestone, you think in terms of like changing the mood out there among consumers.
I mean, the mood has already been improving amongst consumers as I say that, whether you look at stated consumer confidence or whether it's confidence in one's own finances or propensity to buy bigger ticket items, all of that has been trending upwards for getting on for two years now.
But undoubtedly, I mean real wage growth, both perceived and actual, is really important for consumer confidence and their willingness to loosen the purse strings, and so inflation coming down to the target will definitely help.
Yeah, we had a technical recession here in this country. Did you notice that we were in this contraction route? Did it feel like we were going to reverse or was that more of a kind of technicality. Really, and broadly the economy is on a up pertic.
Well, if the technology market can be a useful proxy for customers big ticket spending, discretionary spending, then the technology market has been in decline for every year for four years in the UK since the pandemic. So it certainly hasn't felt like a technicality for those of us who sell technology, no, because we've been running up a down escalator for the past year. When it comes to when
it comes to financial performance. Now that said, I mean, in Curry's case, we've been able to show four years of improving financial performance in the UK through self help on margin and on cost, even in the absence of
many sales growth. But looking forward, I think this is the year where, in part because of recovering consumer sentiment, but also in part because of various opportunities specific to us, this is a year where we can see a realistic prospect of a return to market and market growth and the sales growth for US as well.
But this is what laptops did. People spend a lot on laptops and technology to upgrade their homes during COVID, and so is that a natural kind of trend.
That's one factor. Yeah, And the replacement cycle, I mean, if it's roughly four years and it varies between products, but many pandemic era purchases will be coming up coming up for a mule, Yeah, But there are others AI is you know it may as we managed to get this far into the podcast without mentioning a we are AI. There, you go very convincingly from a yeah. But AI is going to have many effects in direct and indirect on businesses like us. But it does provide us with more
things to sell. So we've already seen, for example, AI powered mobile phones take off quite nicely, and consumers are starting to see how this this rather abstract and maybe slightly frightening technology can be useful to them, for example with simultaneous translation or with help making them world class photographers. That there are real use cases coming from AI now which are meaningful to consumers.
How excited are you about the election? We're all very excited around here two weeks ago. The result doesn't look to be in much doubt at this point. But what's going to be the fallout from that? I mean, it's sort of steady as they goes with the Labor Party manifesto in terms of the economics. You know you've donated to the Conservatives in the past, But how are you feeling about and the prospect of a new government.
Well, I mean, the first thing is my job is to make sure that Curries is successful whoever's in office, and so that's how that's how I approach it. Now, there's a few things that businesses tend to look for, and Curries included. I mean the first is mood music. I mean this matters and pro business mood music is now coming out of the current labor party in a
way that perhaps wasn't wasn't always the case. I mean second, and you will be you'll forgive me because I'm sure you're tired of people like me banging on for the need for stability. It's on every business leader's lips, but it's true. I mean, wild swings in policy, interest rates, currencies, prices aren't Regulation aren't helpful, nor is a more general sense that the UK's are risky or a difficult place
to do business. And so to the extent that you know there are, in the words of one US investor, that there are grown ups in charge on both sides of the aisle.
Now.
As well as providing a stable environment, there are also there are also things any government should be able to do to provide the conditions for growth. And both parties are intent on growth as a as a priority, which is good and we would argue that there are things that anyone should, any party should do on skills, on infrastructure, on taxation, on regulation, and on the rule of law. By the way, when it applies to retail.
Colleagues, what are you expecting terms of workers' rights under a labor government? So you've increased actually base pay for a lot of your employees, I think by almost ninety percent, if not more, for the start of twenty twenty.
Four, by twenty nine percent over the twine over the past three years.
Based colleagues, but this year nine percent.
That's right. As curries, we're a retailer, and retailer is the largest private sector employer in the country. I mean, we've got three million jobs in our sector, and we encourage were not the only retailer who are determined to provide really good, secure jobs that are often many people's first job in the employment ladder, and provide them with a good first step in that career ladder.
Do you think you'll have to increase pay further under a labor government.
Let's see, I mean, the national minimum wage has risen significantly in recent years. I mean we've said and we've acted on it that we want to keep ahead of that and to make sure that our colleagues both on their pace pay, but also by the way, on their variable pay and on their other benefits, are well rewarded. I mean, I think if we take a step back for a moment, I think any government would do well to recognize that modern businesses don't necessarily have to be
compelled to treat their colleagues well. And it's not just because we're nice guys, but for us to attract and retain top talent, as any business must do, you have to treat your colleagues well. It's a commercial imperative as well as the right thing to do, which is why businesses like Curries invest so much not just in reward, but in development, in learning, in training and communications, in leadership.
But isn't it different if a government mandate it?
Well, I mean clearly that law the law is the law, and we're going to We're going to more than abide by that, as we have done with base rates of
colleique pay. All I would say is there's clearly a balance to be struck here, and here Curries takes the same view as our industry as articulated by the BRC and in our trade body that you know, further significant increases to the national minimum wage should be done with caution, because clearly there is a balance here between wanting to protect and fairly reward people but also providing incentives for
further job creation for businesses. And as I say, there are many jobs at stake in retail, there are three million of them.
I just want to ask you about the broader UK market. You'll remember that, you know, you're one of the two fifty companies of the biggest two hundred fifty companies publicly traded in Britain. You've had an approach this year for the US hedge fund, Elliott. What does that say about the valuations across the whole of the UK market. There's a lot of commentary around Britain being undervalued compared to other sizable comparable economies. Is Britain cheap at the moment?
Companies like yours too cheap? That's why the US hedge funds are circling.
What you could make that argument? I mean, in one fact is that we've recently sold our Greek business, and if the whole of Curriers was valued at the at the same level as we sold the Greek business, for or the share price will be twice what it is today. So I mean that's one. That's one fact, but there there are obviously plenty of others, and some of which are beyond the control of any one company. I mean, I can't not much we can do about thirty consecutive
months of net outflows from UK equities, for example. It's not in my power to do something about the unnecessary friction of the stamp duty on share sales, for example. But all of that said.
I mean, there are all these measures the government had tried to the current government are trying to put in place to improve all of that. Are they to reverse the flows? But of course they're about to potentially leave office. So do you think they're asking that the government has a role in this? Don't they? In terms of regulation?
And well, of course. But I mean we go back to the things we were talking about before. I mean, ultimately, the UK equity market is largely There are some technical factors there, like stamp duty on shares for example, but ultimately the UK equity market is a reflection of the broader UK economy and if there's a if the UK economy is stable and seen as a good place, a
good place to do business. If the skills, the infrastructure, the tax the planning, the regulatory regimes are all in good Nick Will, that will have a beneficial impact on UK equities as well. But I do want to draw us a distinction here. You won't find me whining about the state of UK equities when it comes to the Curry's share price. I see it as my job to make sure that we're doing the things to make sure that investors want to invest in our share and in
our case is quite straightforward. The UK business Curries in the UK has been showing great momentum for the past four years. We need to keep that going. We've had some issues with our international business. That's getting back on track and we need to keep that going. And we've got now rock solid balance sheet and liquidity and we need to keep that. Now. Happily, all three of those
things are heading in the right direction. It's my job to make sure that they continue doing so, and when they do, that will ultimately be rewarded by the share price.
Was it a nightmare having Elliott on your back?
No? I really don't see it that really, No, No, not at all. Firstly, it was actually pretty flattering. They're no fools, and they saw value as we do in our business, and they've backed our prospects and our plans. So that was the first thing, now that said, you know, the board decided that the two bids substantially undervalued the business.
And I suppose that's the second thing that's flattering is when you get the board and eight of the top ten shareholders within twenty four to forty eight hours whatever it was, coming out publicly and saying no, there's a lot more in the tank in this business. We believe in the current plans and we want we want to see them realized. That was good validation for all the hard work of all our thousands of colleagues as well.
So I chose to experience it as flattering and whimistic. Well, that's part of the job, right, and these things can be as distracting as you allow them to be. Without interest from from private equity has gone away for now. But honestly, I didn't spend I didn't spend a great deal of my time sitting speculating and worrying about it. I spend my time on the things that we can control, and as we're just talking about there's plenty that we can.
What one thing that some companies have decided to do to fix the valuation problem is to move the listing to New York. Is that cross your mind at all?
No, it hasn't. We're admitted to the London stock extrage were I can you can have it here first? An exclusive for Bloomberg. I know we're committed to the London Stock Exchange and we're committed to making it work here.
What do you want labor to do when it comes to the stock exchange attracting more capital FDI and really supporting I guess you're growth well.
I think, as I say, there's some technical things that any government can do, I mean taking stamp duty of share shared dealing seems like a sensible removal of unnecessary friction.
But more than that, I think there's there are plenty of speculation about what might might or might not be done to encourage or other encourage UK based pension funds to invest more of their money in UK equities and fine, but I think more more generally, as I say, UK equity markets are a reflection of UK PLC, reflection of
the economy at large. And if there's a stable, a stable environment where the UK is not seen as a risky or a volatile place to do business, and when skills and infrastructure and planning and regulation and tax are all in good shape. That will translate to a healthier stock market.
Alex. When you look at you know what happens after the election. What's the most pressing concern for businesses in the UK under a labor government?
I think the most pressing concern for any for any business under any administration is for the conditions for growth to be there. Everyone agrees that growth is essential and to be able to provide that growth, the government needs to provide the right conditions for it. It needs to provide the right stable environment first of all, and avoids of unpleasant shocks and the perception that this is a
risky place to do business. But then attend to making sure that the skills and the infrastructure, and the taxation regime, and the planning and the regulation and energy costs and all of the all of the various things that any government needs to do to enable businesses to prosper and to grow, to allow business to be a powerful force for societal good, which I believe I can can and should be. That's the regime that governments need to put into place.
Thank you so much for joining us.
My pleasure.
Thank you, and that's a long list, Alex. Thanks for listening to this week's In the City from Bloomberg. This episode hosted by me Francis Laqua and David Merritt. It was produced by Summersati production support and sound designed by Moses and dam Brendan. Francis Newman is our executive producer. Sage Bauman is Head of Podcasts. Special thanks to Alex Baldoc and Sabam Meddings. Please subscribe, rate, and review wherever you listen to podcasts.