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Among the great value-creating corporate breakups of recent decades was that of Great Universal Stores.
From the ashes of the empire built by the late Sir Isaac Wolfson have emerged three companies: Burberry, credit data giant Experian and Argos, now part of Sainsbury’s.
Burberry has had a long history as an independent entity capturing the zeitgeist in the US, Japan and China as a quintessentially British luxury fashion group defined by its signature trench coats and checks.
Burberry’s value lies in its traditional virtues. The most successful CEOs and designers, such as Angela Ahrendts, sought to create new products around the core offering rather than delve into the ultra-luxury world of LVMH, Hermes and others.
Jonathan Akeroyd, who was ousted as chief executive, clearly thought the way to compete was to enter the world of high fashion and charge Sloane Street prices for products that nobody wants.
A chequered past: Burberry has had a great career as an independent entity, capturing the zeitgeist in the US, Japan and China as a quintessentially British luxury fashion group.
His summary dismissal comes at a time when annual profits are expected to fall below expectations, the dividend is to be suspended and layoffs are to be announced.
Replacing Akeroyd will be Joshua Schulman. Fortunately, he is a former CEO of Coach and Jimmy Choo, two labels with distinctive brands that do not compete directly with the higher-end brands.
Standard rules for corporate turnarounds state that boards must not remove the chairman (Gerry Murphy) and the chief executive at the same time. Meanwhile, Bradford-born designer Daniel Lee survives, but how long he will last remains to be seen.
The slowdown in China, a key market for Burberry, has not helped. Reclaiming that space, at a time when geopolitics is changing the relationship between Beijing and the West, will be an uphill task.
However, Burberry still has enormous cachet, as evidenced by its sales in Japan, which values heritage and authenticity.
The impact of the dividend loss and poor outlook sent Burberry shares down 16.1% and they have fallen by almost half since the start of the year.
Investors can take comfort in the thought that fashion is volatile and that, with the right leadership, Burberry is a franchise valued enough to be restored to health.
It would be bad for Burberry and the UK manufacturing industry if Murphy decided that selling to a luxury conglomerate or private equity firm was the way forward.
Saving made easy
However wonderful Labour’s plans to create new super-corporations such as GB Energy and the National Wealth Fund may be, they alone will not stop the outflow of private assets from these shores into global investment.
If Rachel Reeves wants to stop the erosion of savings in UK shares, the Chancellor of the Exchequer could do worse than listen to the message from AJ Bell, which is under siege from Hargreaves Lansdown and other investment platforms.
They want to make it easier for private investors to access British shares. That, according to AJ Bell, means abolishing the distinction between cash and stock ISAs and creating a simpler and more flexible system.
HMRC data shows that three million people have more than £20,000 in cash in Isas that could be redirected into shares.
Rather than creating a new UK ISA, as proposed by former chancellor Jeremy Hunt, AJ Bell says it would be better to have one ISA (open to everyone, including young people) and set the annual limit at £25,000 rather than the current £20,000.
This may be attractive to brokers and platforms, who also want to eliminate stamp duty on stock transactions.
It is a lot to ask of the Chancellor. If her call for a scrutiny of public finances hits a huge black hole at worst, which is probably the aim, the prospect of further tax cuts, rather than smaller ones, will quickly disappear over the horizon.
New taxes, rather than tax breaks on wealth, seem more likely.
Cyber attacks
The war in Gaza may still be going on, but Israel’s status as an emerging nation survives.
Google owner Alphabet is in advanced talks to buy Israeli-US cybersecurity pioneer Wiz for £17.7bn.
This suggests that Thoma Bravo’s £4bn bid for Cambridge cyber innovator Darktrace is a bargain.
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