Morning:
10°c
My great grandfather once owned a very well-known grocers on Piccadilly. He lost it (and various other valuable assets) after he took up horserace ownership in the late Twenties just in time for the Great Depression.
Actually, I think that was rather a good thing. I doubt I would ever have made anything like a decent grocer in the modern world. I reckon Messrs Sainsbury, Sieff, Cohen and Morrison would have seen me off long ago.
But how are those great men's successors faring in today's world? On the basis of the Christmas trading statements so far, I reckon Justin King at Sainsbury gets eight out of 10, but Sir Stuart Rose at Marks & Spencer a mere 4/10 for his groceries. Looking ahead, Sir Terry Leahy at Tesco is probably well on course for another 8/10, while Marc Bolland as he departs Morrisons for M&S (lawyers permitting) probably rates a 7/10 with a lot more money now riding on his future than his past.
There has developed something of theme of this having been Waitrose's Christmas. The grocery side of John Lewis Partnership reported a 13.1 per cent uplift in sales in the 13 weeks to Boxing Day. Unfortunately, Waitrose only provides total sales growth, not the less flattering like-for-like sales growth, so its headline figures will always look far better than those of its rivals'.
It is also reasonable to take on board King's point that while Sainsbury is reporting two successive years of growth over Christmas, Waitrose and M&S are playing catch up having shrunk sales a year ago.
But there is clear evidence that the consumer behaved with far more confidence in the run-up to Christmas than some retailers had expected. Certainly in groceries we appear to have been shopping hard both at the top end of the market and the bottom. For every one of Sainsbury's 52,000 Norfolk Black turkeys sold I bet there were 100 mince pies flying off the shelves at Greggs the bakers.
We also turned increasingly to the internet for our groceries. Ocado claims a 30 per cent increase in like-for-like sales, Sainsbury had a 15 per cent rise and Tesco, which dominates the market, is likely to have done even better. I know Tesco's offer of a mere £2.50 delivery charge between Christmas and the New Year suckered me into an extra shop.
But let's not get carried away. We all treat ourselves well at Christmas but it doesn't necessarily mean we are feeling better. Rose is correct to say we will have to swallow some pretty unpleasant medicine in the coming months.
That means it's likely to remain very tough going for King, Bolland (his successor) and Leahy to sustain sales growth through 2010 with little sign of food inflation kicking in to help them out. It's not the best sector to back at the moment.
Cadbury suffers its latest Buffetting
Nick the Greek, Omar Sharif and Warren Buffett are probably the three people I would least like to play poker against — even if bridge is the game favoured by the latter two.
That's why I am not taking anything Buffett says about Kraft's £10.4 billion for Cadbury at face value.
Yes, he has warned Irene Rosenfeld not to overpay for the chocolate maker. Yes, he has already cast his proxy vote against Kraft issuing new shares to fund the takeover. But he hasn't said how much he actually thinks Cadbury is worth. And he can change his vote if he turns up at the Kraft shareholder meeting on 1 February.
In the meantime, Cadbury shares have fallen from their recent peak of 814p to 773½p — barely 5p ahead of the current value of the bid. Nice work, Warren, talk the bid down and make it more likely to succeed and at a lower price than most people expected.
Don't forget one of the most popular freebies handed out at Buffett's Berkshire Hathaway annual meeting — attended by 35,000 adoring shareholders — is packs of playing cards with the Sage of Omaha's silhouette on the back. I'm folding my hand now.
Westminster greed could rehabilitate our bankers
Everyone is pretty much agreed it's time bankers gave something back to the country for the billions of pounds of support we have handed them over the past year.
Even the one-off 50 per cent bonus tax on them will raise a paltry sum in comparison with the money the taxpayer has pumped in to keep the banks going. And there is still little genuine evidence that the bailed-out banks are lending more money to homebuyers or small businesses. Certainly what they are lending is on much tighter terms than it would have been even two years ago.
So here's an idea to get the banks to pull their finger out and do something for the public good.
This week's “dodgy dossier” row when Chancellor Alistair Darling claimed to have found a £34 billion black hole in the Conservatives' election pledges is only the first of many such rows between now and election day. The Tories said they had picked £11 billion of holes in his “dossier” within minutes of its being released.
There was also the strange admission by Labour that it had used Treasury civil servants to help it to compile what was a blatantly party political document.
What I propose is that a panel of top UK economists from Barclays, Royal Bank of Scotland, Lloyds, HSBC, Standard Chartered, Goldman Sachs, Morgan Stanley, JPMorgan, Citigroup and Credit Suisse should be assembled.
Once each of the major political parties has published its manifesto, the 10 should be locked in a room and not allowed out until they have produced a detailed costing of each party's spending and taxation plans.
Once a consensus of sorts has been arrived at, it should be published free on the internet. I'm even happy to take minority views if, say, Goldman's Jim O'Neill disagrees with Gerard Lyons of Standard Chartered over indirect tax rises.
The point is we, the public, would then get independent, largely non-political views on the major points on which this election is going to be based. Indeed, when the non-bank economists chip in with their criticisms of their peers we could have a plethora of valid opinions to chew over.
Wouldn't it be nice, for once, to listen to the bankers rather than the politicians?
And, of course, it would all be on the record so we can judge them over the years to come. Then we'll know if they're really worth all that money they are paid.
