Morning Financial Press Review
Paul Kettle
AM Press Round-Up -2 min read
07:07, 18th March 2019

Below are the key morning headlines from today’s papers, featuring the Financial Times, The Times, The Telegraph, The Daily Mail & more - see the full Press section here

M&S under pressure to slash prices to revive food business as it plans to open new superstores. Marks & Spencer Group (MKS) FOLLOW is under mounting pressure to slash prices in order to stop the rot in its food business. The High Street stalwart plans to open new superstores to try and bring families in for the big weekly grocery shop – pitting M&S against the likes of Sainsbury’s and Tesco. It will also start selling its food online for the first time next year after it bagged a £1.5billion deal with online food delivery company Ocado. The tie-up has been hailed by chief executive Steve Rowe as the retailer’s ‘biggest and boldest’ move to date, as it desperately scrambles to reverse falling sales. The retailer is battling against the unstoppable rise of discounters Aldi and Lidl and experts have warned that unless M&S dramatically reduces prices, its food division will continue to struggle. Richard Chamberlain, an analyst at RBC Capital Markets, said: ‘Prices across the board are going to have to come down. ‘If you look at their pricing I think they are more expensive than Waitrose on branded and own-branded products.’

Deutsche Bank and Commerzbank launch merger talks. Germany’s Deutsche Bank and Commerzbank have begun talks about a merger after getting approval about a tie-up from the Berlin government. Discussions about a combination will move forward after politicians indicated that they would accept job losses and other cost cuts that a merger would entail. The boards of both banks are understood to have met separately on Sunday about starting talks, before confirming that formal discussions about a tie-up will begin. In a statement, Deutsche said that its management board had decided to “review strategic options… focused on improving the growth profile and profitability of the bank.

Intu malls on Canada shopping list. Canada’s biggest pension fund is poised to raise its stake in Intu Properties’ Spanish shopping centres. Canada Pension Plan Investment Board is in talks with Intu Properties (INTU) FOLLOW over increasing its ownership of the shopping centres, which include Intu Asturias in Oviedo, northern Spain, and Puerto Venecia in Zaragoza, in the northeast. The pension fund already has a 50% stake. Intu also shares control of the Xanadú shopping centre in Madrid in a joint venture with Nuveen Real Estate. Intu’s share of the three centres was valued at £630 million at its latest results. It is also developing a complex called Intu Costa del Sol, near Malaga, with shops, hotels and restaurants.

Patisserie Valerie administrators face legal challenge over fraud report. Patisserie Holdings (CAKE) FOLLOWshareholders are threatening to take the collapsed chain’s administrators KPMG to court to get hold of a devastating report alleged to show how the company’s cash balances were artificially inflated. Produced by forensic accountants at PwC, the document is alleged to detail a suspected fraud running to tens of millions of pounds. It is claimed to reveal how suppliers provided fake invoices and multi-million pound cheques were submitted to bolster the company’s finances.

Barclays board faces fresh cull under incoming chairman. Barclays (BARC) FOLLOW board faces a sweeping overhaul in the coming months as incoming chairman Nigel Higgins prepares to further stamp his mark on the bank. Sources told The Telegraph that a major cull will take place later this year as the veteran Rothschild investment banker prepares to replace John McFarlane in May. Four non-executives have left the board in the past few weeks alone after investors pushed for change. The exits mean that 11 of the bank’s 14 remaining board members are seeking re-election at the group’s annual meeting in May. One Barclays shareholder said “not many of the existing team” will remain after the shake-up takes place amid investor demands to shrink the board’s size.

Investor flight from Europe now longest in a decade. European markets are suffering the longest withdrawal of money in a decade as investors desert the politically volatile and slowing region. Money has poured out of Europe’s equity funds for 50 consecutive weeks, the longest run of outflows in 10 years, according to Morgan Stanley. The direction of investment has reversed in the last 12 months amid mounting political tensions in the UK and Italy. Although global stock prices have staged a recovery in 2019, investors have continued to pull money out of Europe amid stronger growth in the US.

Interserve was handed work despite crisis. The government has been accused of “irresponsibility” as it emerged that Interserve (IRV) FOLLOW won £660 million worth of public contracts as it slid into a financial crisis that led to its collapse into administration last week. Analysis of government projects has revealed that the outsourcing giant was handed public jobs worth £432 million in 2017 and £233 million last year. The deals were awarded even while it advised investors of its financial problems.

Fears that the low-cost gym market could soon run out of steam after a period of rapid expansion appear to be wide of the mark, according to a new report. Analysis of the market by PWC suggests that total capacity for budget gyms in Britain is between 1,200 and 1,400 sites, up from forecasts of about 1,000 previously. There are 654 low-cost gyms trading, implying scope for another 550 to 750 sites over the next few years. The number of low-cost clubs has increased more than tenfold from 58 gyms over the past eight years, with low-cost members accounting for about 25% of health and fitness memberships. The expanded capacity estimate assumes that market penetration by low-cost gyms will grow to between 5% and 6.9% of the population, up from 3.7% last year. PWC’s report was commissioned by the The Gym Group (GYM) FOLLOW, the second largest low-cost operator behind Pure Gym Group (WI) (PGYM) FOLLOW, with 24.2% of the budget market.

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