1. EY is in hot water over Wirecard scandal
Things are not looking for German payments giant, Wirecard, nor is it looking good for its auditor, EY.
Wirecard has filed for insolvency after admitting that $2 billion worth of cash never existed, which led the world to wonder how EY manages to miss that red flag.
According to the Financial Times, EY advised senior partners to tell clients that the “objective” of the large international fraud at Wirecard was to “deceive investors and EY”. It also provided partners with “summary talking points” about the scandal.
EY apparently failed to obtain Wirecard’s account information for three years, a routine audit procedure that could have uncovered the fraud.
In its memo to senior partners, EY claimed responsibility for discovering the fraud, despite signing off Wirecard’s accounts for more than a decade amid growing scrutiny from investors regarding its accounting practices.
The Wirecard scandal is not EY’s first scandal this year. EY audits for UAE’s debt ridden NMC Health and China’s Luckin Coffee also came under scrutiny. Luckin Coffee’s CEO has been ousted for basically making up sales figures and deceiving investors. Sounds familiar?
2. Coty to buy 20% stake in Kim Kardashian’s beauty line
Cosmetics maker Coty will spend $200 million to buy a 20% stake in Kim Kardashian West’s make-up brand KKW. The deal values KKW at $1 billion.
Last year, Coty bought 51% stake in Kim’s sister Kylie Jenner’s makeup brand. This time, the cosmetics giant is taking a more calculated, cautious approach by gobbling up minority shares.
The KKW deal marks the latest step taken by Coty’s majority shareholder, JAB Holdings, to turn round the unprofitable cosmetics group. Shares of Coty has fallen 62% this year.
With these Kardashian centric deals, Coty is adopting a more direct-to-consumer approach to cosmetics sales, especially with Instagram as a key marketing funnel with both brands. This diversifies its brand portfolio, which also includes mass cosmetics brand, Cover Girl
3. YEEZY x Gap is coming our way
Wait, so Gap is cool again? Kanye West surprised everybody when Yeezy announced a 10 year partnership with Gap, the once iconic American basics staple brand, home to large logo screened t shirts and baggy jeans.
It’s a good week for the Kardashian-West family indeed.
Yeezy Gap will be available in stores and online in the first half of 2021.
Yeezy’s design studio plans to create “modern, elevated basics for men, women and kids at accessible price points.”
At the five-year point of this 10 year partnership, Gap is hoping that Yeezy Gap will be generating $1 billion in annual sales. Gap’s brand brought in $4.6 billion in global revenue last year.
Gap, which also owns Old Navy and Banana Republic, is aiming to refocus its namesake brand. It’s hoping to leverage Kanye West and his streetwear label, Yeezy, to do it.
Yeezy has teamed up with Adidas to launch sneakers within the past few years, the sneaker side of Yeezy alone was valued at as much as $3 billion last year. Here’s to hoping Gap will be able to revive some of its old school charm.
4. China places county of 400,000 under quarantine
China has placed 400,000 residents of a northern county, Anxin under lockdown over the weekend after dozens of Coronavirus cases from the Beijing market outbreak was reported there. Anxin is 140 km from Beijing.
This lockdown is another example of China’s strict and rapid approach in containing any extent of outbreak.
Hebei province’s Anxin county has been sealed off and each household can assign only one person to go out for necessities daily.
Beijing is still reporting several new infections every day although the country’s top epidemiologist said that the outbreak had come under control. Infections from the market outbreak should be contained very soon.