Fed chief will appear before Congress again as inflation

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Center Jerome Powell attributed the rapid price increases to factors linked to the reopening of the economy from the pandemic.
Credit…Luca Bruno/Associated Press

When Federal Reserve chairman Jerome H. Powell appears before the Senate Banking Committee on Thursday, he will testify at a tense moment, both politically and economically, given the recent rise in inflation.

Consumer Price Index skyrocketed It was 5.4 percent year-on-year in June, the biggest increase since 2008, and a bigger move than economists had expected. Price pressures seem poised to last longer than policymakers at the White House or the Fed expect.

In Testifying before the House Financial Services Committee on WednesdayPowell attributed the rapid price increases to factors linked to the reopening of the economy from the pandemic, and responded to those who questioned that Fed officials expect inflation to begin to calm down within six months.

He acknowledged that “incoming inflation data are higher than expected and hoped for”, but said the gains came from a “small set” of goods and services directly tied to reopening.

For now, he expressed comfort with the central bank’s relatively patient policy path, even in light of the warmer-than-expected price data. He said the labor market was improving but “still a long way to go”.

He also said the Fed’s goal of making “significant progress” toward its economic goals before taking the first steps toward establishing a more normal policy is “still distant”.

Rooftop pool at Soho House in New York.  Membership Collective Group, the chain's parent company, will test investors' appetite for a company built on exclusivity.
Credit…Tick ​​Mainz/Getty Images

LONDON – Since its inception, the Soho House chain of member clubs has been associated with jet-set venues where celebrities and pocket professionals spend thousands of dollars each year to congregate in stylishly designed urban binaries.

Now its parent company, the Membership Collective Group, is poised to join a different kind of club – public exchanges – when it starts trading on the New York Stock Exchange at a valuation of nearly $2.8 billion on Thursday. The company raised $420 million from its initial public offering at the lower end of its expected range, largely on the promise that it could continue to rapidly export its model worldwide.

“There’s a huge global opportunity,” said Nick Jones, the company’s founder and CEO, in an interview. “We really, really think now is the time to do that.”

MCG’s new life as a public company will test the proposition that a business built on exclusivity (59,000 people on the waiting list for membership as of May 30) can achieve its ambitious growth targets.

Mr. Jones, who created the first Soho House in 1995 as a modern interpretation of traditional gentleman’s clubs in a central London restaurant, argued that MCG was following in the footsteps of companies like Peloton, which revived the status symbol created by expensive exercise bikes. and treadmills into reliable subscription fees.

Soho House now has approximately 119,000 members in 30 clubs worldwide, largely from industries such as the arts and media. Notables include celebrities: British tabloids babbled for weeks over reports that Prince Harry and Meghan Markle were having an early date at one of their London Soho Houses.

But MCG must also prove that its business is resilient.

It lost money over its entire existence, including $235.3 million during the pandemic lockdowns in 2020, almost double what it lost the previous year. In-house food and beverage sales, a major source of revenue, fell 60 percent in 2020.

And the company’s balance sheet has been strained by debt: As of April, it carried a total liability of $2.1 billion, largely assumed as part of expansion efforts.

But MCG executives argue that the worst is over for the company. Even during the pandemic last year, the retention rate was 92 percent, as members largely opted to continue paying their dues. And when clubs could reopen, members largely flocked back, according to Mr. Jones.

“We don’t have a problem with demand,” he said. (One thing that has changed is that members have acknowledged that they are not as late as pre-pandemic.)

Bill McMahon Sr., president of the McMahon Group, which advises the industry, said this reflects the general demand for private clubs. In the United States at least, the industry as a whole exploded, most likely thanks to the booming economy. Mr McMahon said the number of new clubs and applicants for them is increasing, especially those 55 and younger.

“When people have more money in their pocket, they sign up,” he said.

MCG hopes to add three to five clubs to their lineup each year, including beach clubs Ned and Scorpios. his prospectus.

Andrew Carnie, chairman of the MCG, suggested that these goals are conservative. The company opened a Soho House in Austin, Texas this spring, and clubs in Paris, Tel Aviv and Rome are also gearing up to make their debut this year. Seven clubs are expected to open next year, including a Scorpios facility in Tulum, Mexico.

Mr Carnie said the company expects to pay off most of its debt with the proceeds from the sale of shares. And it hopes to finally make a profit by the end of 2022.

MCG is also expanding its offerings. Last year it launched Soho Friends, which allows limited access to clubs and events for an annual fee of £100 or $138. (A traditional full-service membership costs about $3,400 per year.)

The company also highlighted the Soho Works co-working spaces, which operate in three cities and have more than 1,000 members. For residents of cities where the company does not yet operate, Homeless Cities is expanding its memberships to 80 locations next year.

And this year, it will offer a digital membership, largely aimed at attracting customers in Africa, Asia and South America and connecting them with existing members.

However, perhaps MCG’s biggest test will be its effort to push beyond the market cap. Last month, he bought the Line hotel group to promote memberships for slightly smaller scale stays around the world – Mr Jones said the company could run alongside traditional elite clubs.

“We want to cover every angle,” he said. “It doesn’t matter which market segment we go to.”

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