Weekend and Morning Financial Press Review
Paul Kettle
AM and W/E Press Round-Up -3 min read
06:06, 20th May 2019

Below are the key morning and weekend headlines from the financial papers, featuring the Financial Times, The Times, The Telegraph, The Daily Mail & more - see the full Press section here.

Fever-Tree gets first taste of alcoholic drinks market. Fevertree Drinks (FEVR) FOLLOW is launching a range of pre-mixed gin and tonics as it looks to continue its stellar growth. The £3.4bn tonic maker, already valued at 50 times its earnings, is making its own batch of four gins with London-based Thames Distillers to be sold for £2.75 in small glass bottles. Tim Warrilow, Fever-Tree’s co-founder, said it was not designed to take on the drinks giants with whom it works. It will, however, ramp up competition with Schweppes, which already sells Gordon’s gin pre-mixed cans and has been unseated as market leader in the tonic market.

Shareholder groups urge pay revolt at Sorrell’s S4 Capital (SFOR) FOLLOW. Two shareholder advisory groups, Glass Lewis and Institutional Shareholder Services, have advised investors to reject the company’s pay policy. Ahead of S4 Capital’s first annual meeting this month, Glass Lewis has expressed concerns about pay strategy, including “complex vesting conditions”, which put no limits on individual rewards. ISS also said it had concerns. The pay of the advertising pioneer has long been a source of conflict with investors. While leading WPP, which he founded in 1985, he received £48 million in 2016 and £70 million in 2015, one of the highest payouts made by a British company, which triggered a revolt by a third of its shareholders. Sir Martin built WPP into the world’s largest advertising and marketing conglomerate.

Thomas Cook Group (TCG) FOLLOW has been desperately trying to reassure customers that their summer holidays will go ahead amid fears it is close to collapse. Britain’s biggest independent tour operator has suffered a dire few days that saw its share price fall 40% after posting a £1.5 billion half-year loss. Pressure mounted on Saturday when an intermediary which processes customer payments said it would hold millions of pounds owed to Thomas Cook for up to several weeks due to concerns over its financial health. Yesterday Thomas Cook fought back against what it called ‘irresponsible’ suggestions the 178-year-old business could collapse. It added: ‘We have ample resources to operate our business and at the same time, as usual, our liquidity position continues to strengthen into the summer period. Our customers can have complete confidence in booking their holiday with us.’

Marks & Spencer Group (MKS) FOLLOW is speeding up its store closure programme with plans to shut 100 by the end of 2020 – two years ahead of schedule. The shift in gear emerged ahead of its annual results later this week, which are expected to reveal an 11% fall in pre-tax profits to £519 million – the third consecutive year of decline. Since the end of March, M&S has closed 14 shops, bringing the total over two years to 63. While speeding up the remaining closures will take a chunk out of profits, bosses believe it will get the High Street stalwart back on firmer footing.

Sports Direct considers launching legal challenge to Debenhams’ restructuring plans. Sports Direct International (SPD) FOLLOW is considering slapping Debenhams with a legal challenge over its restructuring plan amid claims support for the proposals was unrealistically high. Creditors overwhelmingly backed proposals put forward by Debenhams last month to shut 22 stores and slash its rent bill in a last-ditch bid to stay afloat. Mike Ashley’s Sports Direct was understood to have voted against the plans at the time, although is a relatively small creditor. A source close to Sports Direct confirmed that it was now talking to a number of third parties – including landlords – with a view to making a joint challenge to the company voluntary arrangement (CVA).

Barclays and Co-op Bank in failed takeover discussions. Co-op Bank approached Barclays (BARC) FOLLOW late last year about a potential takeover that could trigger a new wave of banking mergers as the industry attempts to move on from the financial crisis. The Sunday Telegraph understands that Co-op Bank, which is in recovery after a brush with collapse in 2013, ­approached Barclays about a deal in November but talks did not progress beyond the exploratory stage. Both sides declined to comment. The gambit has emerged less than two years after Qatari conglomerate Al Faisal Holding and Swiss investment firm Interritus hired Barclays to advise them on a bid for Co-op Bank.

M&S profits dive amid chairman Archie Norman’s scramble to close stores. 100 outlets to shut by 2021. Marks & Spencer Group (MKS) FOLLOW is accelerating plans to close stores, setting it on course to shut 100 outlets by the end of 2020, almost two years ahead of schedule. Sources say the cost of speeding up the closures will take a bigger chunk out of profits, although some stores will be relocated to new sites on more affordable rents, or converted to food-only outlets. Analysts expect M&S to report an 11% drop in underlying pre-tax profits to £519m this week — a third consecutive year of decline.

Royal Mail to deliver investor gloom. Investors are braced for Royal Mail (RMG) FOLLOW to slash its dividend when it reports slumping annual profits on Wednesday. Its shares have fallen 28% below its 2013 float price, relegating it from the FTSE 100.Operating profits are set to be a quarter down to about £500m, amid an unexpected drop in letter volumes, competition and weak business confidence.

Just Eat loses flavour after rival Deliveroo courts Amazon. Just Eat (JE.) FOLLOW is in danger of being demoted from the FTSE 100 for the second time in six months after the revelation that its rival Deliveroo had won backing from Amazon sent its shares tumbling. The takeaway delivery company only returned to the blue-chip index in mid-March and its shares have been weak since. The prospect of its rival being invigorated by the might of Amazon pushed the price 55¾p lower yesterday, down 8.2% to 622p. The next index reshuffle will take place next month, based on the closing price on June 4. Just Eat’s position is safe at present but if the stock continues to lose ground it could be at risk of losing its place once again. Amazon is set to be the largest investor in Deliveroo’s latest funding round, providing an undisclosed share of the $575 million total alongside existing investors. The so-called series-G funding round will lift the amount raised by Deliveroo since its creation to $1.53 billion.

Watchdog puts JD Sports-Footasylum union on ice. The competition watchdog has slapped a temporary restraining order on the proposed combination of JD Sports Fashion (JD.) FOLLOW and Footasylum (FOOT)  FOLLOWon the ground that it might dilute choice for consumers. The Competition and Markets Authority served an initial enforcement order preventing the two sportswear retailers from integrating their businesses until further notice. The CMA, which has increasingly shown its teeth under the leadership of Lord Tyrie, 62, its new chairman, will now consider whether to launch a Phase 1 merger inquiry, at which point it would embark on a consultation with interested parties

Future gets on its bike to track down new assets. The owner of Music Week and Guitar World magazines is on the hunt for more acquisitions after record profits sent its share price soaring. Future (FUTR) FOLLOW, which owns gadget, sports, music and other specialist titles and websites, doubled its revenues to £109 million in the six months to the end of March. Operating profits surged 163% to £10 million, boosted by a large US takeover. Zillah Byng-Thorne, chief executive, said that she is looking for targets after securing a new £135 million debt package. “There are a lot of interesting things on the market,” the former Auto Trader executive said.

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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