AS I SEE IT: TERRY MURDEN says there is more speculation over asset manager Abrdn’s independence, while the luxury consumer market remains untouched by the cost of living crisis
There is more talk about the attractions of breaking up Abrdn, the asset manager whose CEO regularly talks up its prospects for a bright new future while the numbers are constantly telling us something else. At the time of its infamous disemvowelling – the controversial renaming of what was Standard Life Aberdeen – I suggested that worrying about the new brand would soon be overtaken by speculation over its independence.
Since then all asset managers have been under pressure from market turbulence and poor returns. In Abrdn’s case, the situation is particularly concerning as outflows continue to exceed inflows and only 58% of assets outperformed their respective benchmarks over three years. CEO Stephen Bird has recently shut its once star performing GARS fund and has overseen a churn of senior managers.
As a recognition of shifts in the market, not least among his customer base, Mr Bird has been trying to pivot the focus of the group. Hence the acquisition of Interactive Investor, though that caused a few analysts to question the price paid.
Numis’s number crunchers have now put a sum-of-the-parts value of £3.94 billion on the group, not far short of a billion pounds above its current market value. Splitting its asset management business from the wealth management side could prove a tempting option for shareholders who have seen their investment plummet by a third this year alone and two-thirds since the tie-up between Standard Life and Aberdeen Asset Management in 2017.
This week it was ejected from the FTSE 100 for the second time in a year. There are optimistic noises from some quarters that it could bounce back once the turbulence is over, but investors are already getting impatient and may not be prepared to wait that long.
While the rest of us tighten our belts and prepare to turn down the heating this winter, those who shop at the luxury end of the consumer market are clearly unfazed and untouched by the cost of living crisis.
That’s good news for those in the premium drinks, jewellery and accessories trades, and for those places – such as Edinburgh – which benefit from a core of high net worth residents and the return of big spending tourists.
Louis Vuitton this week re-opened its expanded store in fashionable Multrees Walk which has become home to upmarket retailers such as Burberry, Mulberry and Michael Kors. The pedestrianised street is also home to a new Genesis Studio, the premium car brand of the Hyundai Group.
This week has also seen whisky distiller Chivas Brothers post a 17% rise in net sales to a ten-year high among ongoing strong global demand for Scotch and the company’s long-term premiumisation strategy.
The shift to premium whiskies is proving a big profit mover at other groups, including Diageo which reported net sales up by 6.5% as consumers continued treating themselves to expensive scotch, whisky and tequila.
However, as a reminder that the market can be a fickle thing, the hitherto soaring Watches of Switzerland chain saw its shares hammered after Rolex acquired rival Bucherer. The London-listed retailer took another hit when Abrdn, one its biggest investors, cut its stake from 8.2% to 6.1%.
Watches of Switzerland is one of the leading sellers of Rolex, Omega and Breitling watches in the UK. The FTSE-250 retailer’s Glasgow-born CEO Brian Duffy, said “the success of watches” worn by celebrities such as retired tennis ace Roger Federer had helped lift annual revenues by 25% to £1.5 billion.
Duffy attempted to reassure investors by saying the Rolex deal was “not a strategic move into retail” but it has prompted speculation of renewed takeover speculation about the company.
Terry Murden held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business