IT has been another tough year for business. The sovereign debt crisis rocked already shaky market confidence, while uncertainty has kept consumers from splashing out. It is in hard times that reputations are made, though, and over the past year the best have bounced back. Both retailers on our list have, in their different ways, grabbed the opportunities presented by globalisation. Burberry has transformed a British brand into one that is now familiar from Bogota to Beijing, while Tesco is a model for expansion and is sure to reap the benefits from its American and Far Eastern arms in the coming years. Similarly, HSBC has an explicitly Asian focus and Barclays is expanding its operations there. Sky has done the opposite, and through sheer determination squashed the opposition in a fiercely competitive market.
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HAVING avoided a tax-payer bailout during the financial crisis, Barclays has only enhanced its image of respectable solidity in the past year. Weathering the sovereign debt storm and slow economic conditions, its results for the first half of the 2010 were 13 per cent ahead of the City predictions, at £3.95bn.
Much of that came from the investment banking arm Barcap – hence its boss Bob Diamond’s promotion to the group’s CEO and inclusion on the Personality of the Year shortlist. But those profits have helped the bank to lend £18bn to British households and businesses in the same period, something which has allowed current CEO John Varley to become an outspoken defender of universal banks.
Last month Varley reiterated banks’ “wider social responsibility as an enabler of economic growth and prosperity” and their “duty” to pursue these ends. At a tricky time for the City, Barclays has continued to make solid profits and to defend the industry. More power to it.
IT’S often said that Britain’s creative industries are its strongest suit, and Burberry is one of the most successful examples. The fashion house’s expansion beyond these shores has proved an object lesson in building a luxury brand. Despite deserted high streets in the UK, it made a 24 per cent rise in first quarter revenue, posting pre-tax profits of £215m on sales of £1.2bn.
Good management helped too, of course. It responded quickly to the recession by cutting jobs and ranges and has bounced back so quickly that it plans to open 20-30 new stores in America and Asia Pacific this year, while also extending its presence in emerging markets such as Brazil, Mexico and India.
Since she took over in 2006, CEO Angela Ahrendts has changed the label’s image and with the help of creative director Christopher Bailey turned a 154-year-old brand into a global icon, proving along the way that style and substance need not be strangers.
WHEN HSBC boss Michael Geoghegan opened the bank’s sparkly new Shanghai office earlier this year, the symbolism was lost on nobody. While some were still paralysed by the banking crisis, HSBC immediately and publicly switched its focus to the emerging markets of Asia, with Geoghegan making Hong Kong his base.
HSBC said that profits from Asian markets were the “bedrock” of the bank’s 121 per cent rise in pre-tax profits for the first half of 2010, to £6.98bn, which came despite the Eurozone’s woes in the second quarter.
Well perhaps. As shrewd observers have pointed out, the best thing that HSBC has done in the past 12 months is to turn around the losses it made on its ill-fated North American home loans adventure. That it did so quickly is impressive.
Now that it has turned around that arm of its business, it is perfectly positioned to turn its gaze east to China and India. For a banking behemoth, HSBC has proved itself not only forward-looking, but able to sort out problems efficiently and admirably nimble. A class act.
RUPERT Murdoch’s satellite television station is one of the jewels in his empire’s crown. It constantly leads the market – nobody thought that HD could work, until BSkyB did it. Now it is leading the way with 3D as well. Its movie and football offerings are the market standard and with the launch of Sky Arts it has shown that it is not afraid to indulge in some loss-making brand-building that can entice snooty middle class viewers to make the switch to satellite.
CEO Jeremy Darroch has proved that he is willing to battle to keep Sky ahead of its competitors, blocking Virgin from buying ITV. When BT offered Sky sports channels for lower prices than Sky was offering, it fought back and looks sure to win the tussle.
All this toughness is getting results too; Sky is inching close to 10m subscribers, its HD offering pulled in almost half a million in its first three months, and this year its profit trebled to almost £1.9bn. A lesson in how to make television pay.
SIR Terry Leahy’s departure from the company he guided for the past decade and a half might be seen as a blow. But the business he passes on to his successor, Tesco lifer Phil Clarke, is in the rudest of health.
A few numbers show just how perky this company is. An astonishing 28 per cent of Tesco’s floor space is less than three years old. And 65 per cent of its floor-space is now abroad. At the moment, just 23 per cent of sales come from the overseas stores, but as those move into profitability over the next five years Tesco’s bottom line is going to rocket. Already Asian stores are starting to motor – profits were up 24 per cent to £440m, on sales of £9bn. American operations, while still losing money at the moment, should come into profitability by 2014.
Even better, all of this has been built slowly and safely. One proof is that the company’s property portfolio is worth almost exactly the same as its market capitalisation. This is a retailer that is built to last.