Business owners are counting down the days until they can begin operating again with a measure of normality. For many, survival will be the priority after seeing their revenues disappear over the past three months.
Others, though, will emerge from lockdown fighting fit. Ben Mead, who founded Varley, the sports fashion maker, with his wife Lara in 2015, said that he had been inundated with online orders since March, which had offset a collapse in physical sales.
“Where we wholesale to gyms, clearly no one is taking our goods right now, but we’re experiencing high levels of growth in the UK and our own ecommerce revenues are up 300 per cent,” Mr Mead, 36, said.
In contrast with many other businessmen and women, the Meads have not had to downgrade their financial targets for this year. Home workouts have been a boon for Varley, which counts Ron Dennis, the former McLaren boss, and Anders Povlsen, the Danish fashion tycoon, among its investors.
Athleisure firms such as Sweaty Betty, Gymshark and Varley are not the only businesses that have managed to stay on track during the pandemic. Other sectors, too, have prospered by helping consumers to stave off the boredom of enforced isolation and preserve their mental and financial health.
Bike shops
Step aside Mamils; there’s a new kid in the bicycle shed. The shutdown has spawned a new breed of bike fanatic.
“We’re seeing more women than men buying bikes,” Graham Stapleton, chief executive of Halfords, said. He said that there had been a “resurgence” in leisure cycling, with families seing the activity as both beneficial to their health and an enjoyable diversion from the tedium of lockdown life.
Bike shops were deemed “essential” retailers and were allowed to continue operating after March 23, when the government closed down much of the economy. Halfords kept 335 stores open, but shut the doors on about 100 outlets. Yet demand has been robust enough for the retailer to signal that profits will be at the upper end of its £50 million to £55 million guidance.
The Bicycle Association, the industry trade body, said that sales of bicycles, parts and accessories rose by at least 50 per cent in April. It said that about seven in ten bike sales during lockdown were to new or returning cyclists.
Mr Stapleton, 52, said that Halfords’ cycle to work business had enjoyed “unprecedented growth” and that sales of electric bikes had risen “two and threefold”. Bicycles were “starting to become essential means of travel to work”, he said. Sales of turbo trainers, static devices that enable cyclists to ride indoors, have risen fivefold.
Computer games
Some people have used lockdown to dust off those long-neglected Marcel Proust tomes or to brush up on their baking. Many more of us have turned to video games to kill time while imprisoned in our homes.
Since late March, games have become an increasingly popular pastime for millions of people, from shoot-’em-ups, such as Fortnite and League of Legends, to family-friendly fare, such as Animal Crossing.
“The industry is performing really well. People are turning back to video games when they haven’t played for a long time and other are discovering them for the first time,” said Andrew Day, chief executive of Keywords Studios, the largest games company listed on the London stock market.
Games that allow players to interact with friends online are performing particularly strongly, said Mr Day, 56, whose company provides tools and services to developers and publishers.
Sales of games, controllers, headsets and other paraphernalia have risen sharply in recent months. Consumers are loading up on Xbox and Playstation consoles, even though new models will hit the shelves later in the year. In America consumers spent $1.6 billion on hardware, software and accessories in March, a jump of 35 per cent year-on-year, according to industry figures.
Mr Day believes that habits formed during the lockdown will stick after restrictions ease. Developers, he said, would need to “refill their content pipes” rapidly to meet increased demand. Like players, investors are flocking to video games. Shares in Keywords Studios have risen by 16 per cent this year, with those of Team17 and Frontier Developments, which develop and publish games, up by 40 per cent and 64 per cent, respectively.
Gold traders
Sellers of gold bullion enjoyed a huge leap in demand as the pandemic hit stock markets.
The Royal Mint said that in April and May sales of its physical bullion coins and bars were up 487 per cent on the year before. A record 11,000 new bullion customer accounts were created in March and April.
“Precious metals have a reputation of being safe-haven assets during times of economic volatility,” Andrew Dickey, The Royal Mint’s precious metals director, said. “Since March we have seen sustained high demand for gold coins and bars, as investors turn to gold to ride out unpredictable market conditions.”
Rob Halliday-Stein, founder of the online dealers Bullion By Post and gold.co.uk, said that demand had been “extremely strong”, especially through the end of March and April. That coincided with gold refinery shutdowns in Switzerland and disruption to flights to transport the gold.
“It was just absolutely crazy and all dealers were struggling to get stock anywhere,” he said. “We were selling everything we could get — our sales were over three times normal levels and we could have sold a lot more if we could have secured any more stock.”
Jewellery Quarter Bullion, his company, reported revenues of £126 million in the year to April 2019. Mr Halliday-Stein said that at the peak of demand it was turning over an extra £25 million a month, helping it to head for record revenues in the year to April 2020.
Spread-betters
Business has boomed for the City’s spread-betting companies, as traders have tried to profit from the big market swings that the pandemic has caused.
IG Group, CMC Markets and Plus500 have all reported jumps in revenue in recent months as they benefit from customers scrambling to trade.
The latest to publish numbers was IG, the City’s oldest spread-betting firm, which on Thursday said that net trading revenues during the three months to the end of May had more than doubled from £117.9 million in 2019 to about £259 million.
The company had said in April that staff bonuses for the year would rise to about £42 million, from £25 million a year, earlier because of its strong performance.
Plus500’s figures also give a glimpse into the losses that some customers have endured trying to predict the markets. This is because the group’s business model allows it to make money from its clients’ losses.
These losses contributed about $82.3 million of the $316.6 million in revenues that Plus500 generated in the three months to the end of March. Its revenues were up 487 per cent year-on-year.
Other City firms to have thrived on the increased trading activity this year include TP Icap, the interdealer broker that acts as a middleman in trades, and Hargreaves Lansdown and AJ Bell, the retail investment platforms.
Corner shops
While snaking queues of socially distancing shoppers have become a regular sight outside big supermarkets, local convenience shops are also reporting a surge in trade.
Independent retailers, which include newsagents and Co-operatives, reached a record 30 per cent of the British food market last month after a 9 per cent increase in sales in May. Industry experts put this surge down to shoppers being reluctant to queue or mix with people at the big supermarkets as they try to limit their risk of infection. The sharp rise in home working also means that many people are more likely to buy essential items from their local shop.
Meanwhile, Iceland, the frozen foods retailer, has had its highest market share in two decades as it has lured more customers with available delivery slots. B&M Bargains has cashed in after being allowed to keep the majority of its stores open because its cut-price food aisle meant that it was classed as an “essential retailer”. However, the discount chain revealed that the biggest sales boost had been from DIY and gardening equipment as people have spruced up their homes and gardens during lockdown while garden centres were closed for two months.
Sanitiser makers
The government’s public health message that people should wash hands for about 20 seconds, the amount of time it takes to sing Happy Birthday twice, has been something to celebrate for Reckitt Benckiser.
The FTSE 100 consumer goods company is targeting production by the end of this month of about 20 times the amount of hand sanitiser it manufactured last year. The surge in demand helped Reckitt, the maker of Dettol and Lysol disinfectants, to announce its strongest sales growth in the first quarter since it was formed in 1999.
Sales of its over-the-counter health products, which include Strepsils throat lozenges and Nurofen painkillers, jumped by a third to £618 million, making it the company’s best-performing business. Stocking up by worried consumers has led to “blowout” trading for Reckitt, which has been one of the leading stocks on the FTSE 100 share index this year.
Other leading consumer healthcare businesses have profited. Sales in the consumer division of Glaxosmithkline, the west London-based FTSE 100 drugs group, rose by 11 per cent to almost £2.9 billion in the first quarter, benefiting from what Emma Walmsley, its chief executive, has called “pantry-loading behaviour”. It means that Glaxo, which makes Panadol painkillers, is set to pay a quarterly dividend, unlike many Footsie members, next month.
