At this point in the game, we would probably settle for a market in which companies are able to cope with a bout of volatility without falling over like a pack of cards. Twenty-nine suppliers have collapsed so far, shoving about £2bn of cleanup costs on to billpayers.
Yet a fiddle with the price cap, which may not have saved a single supplier, is only a minor change. Ofgem’s more important ideas for reform are those that will erect ringfences around customers’ deposits and ensure companies’ balance sheets can withstand financial stress. Those ideas remain the main regulatory event. Ofgem needs to hurry up the hard stuff that some suppliers will not like.
Why is Unilever still operating in Putin-land?
The exit of McDonald’s from Russia turns the spotlight on those western consumer giants still continuing to operate in the country. One is Unilever, the Dove-to-Wall’s-ice-cream group. So it was intriguing to see its former chief executive Paul Polman pop on Twitter to laud the McDonald’s move as “courageous”. Polman did not join the dots to his old shop but others will. Why is Unilever still operating in Putin-land?
The short answer is that the current chief executive, Alan Jope, takes the view that ceasing imports and exports to Russia, and starving the local operation of capital expenditure and an advertising budget, is a better response. Simply closing four factories would expose employees, especially local bosses, to punishment by the Kremlin, the argument goes.
Unilever says it will not profit from its presence in Russia but “will continue to supply our everyday essential food and hygiene products made in Russia to people in the country”. Since one of the main products is a local ice-cream brand, the definition of “essential” is being stretched but you get the picture: Unilever’s defence is that it has responsibilities to its employees.
But so, of course, does McDonald’s, which said it considered the “dedication and loyalty” of local staff and suppliers but concluded that some things were more important. In other words, operating in Russia is incompatible with being a grownup western business.
Nobody should deny the complexities here but Unilever’s stance looks increasingly misguided and isolated. McDonald’s will seek to offload its Russian operations to a local buyer while retaining its trademarks. It is hard to understand why Unilever cannot do the same.
Ailing Made.com has much to prove
For most consumers, a new sofa or kitchen table is a deferrable purchase, so one shouldn’t be surprised that the online furniture retailer Made.com is in the profits warning business. Yet the size of Monday’s alert was extraordinary.
As recently as March, the company expected revenues to improve by 25-35% this year. Now its best outcome imagines no growth, and its “lower guidance” foresees a 15% decline. In the process, the arrival of profits (at an “adjusted Ebitda” level, note) has been deferred for another year.
Since last year’s £775m flotation, the shares have fallen almost 75% in a straight line, more or less. They will find a floor eventually but the listing price was plainly an exercise in optimism. Made, then as now, has an innovative model that has much to prove.