Evening Standard 11/01/19 - Vox Markets | Vox Markets

Evening Standard 11/01/19

Woe for manufacturers casts cloud over UK growth hopes. The UK economy is heading for one of its worst performances since the Brexit vote as a manufacturing malaise saps growth, downbeat official figures revealed on Friday. November’s 0.4% output slide for a sector employing 2.9 million and accounting for around 10% of the economy is its fifth monthly decline in a row, marking the worst run for the sector since the financial crisis a decade ago. The weakness dragged the pace of the overall economy down to 0.3% in the three months to November, offsetting the heavy Black Friday discounts which helped overall GDP in November alone rise 0.2%, according to the Office for National Statistics. With more tepid growth likely in December the economy could eke out growth of just 0.3% in the final quarter, the worst since the referendum period barring snow disruption a year ago.

Lidl shops from upmarket rivals for festive sales. Discounter Lidl took a swipe at its rivals today as it bragged about luring affluent shoppers from the likes of Waitrose and Marks & Spencer. The German grocer, which has been opening shops aggressively in Britain over the past few years alongside Aldi, said shoppers “switched over £58 million of spend” in the festive period from the Big Four and the more upmarket grocers. Lidl saw sales increase 8% in the six weeks to December 30, but the figures include sales from new stores, potentially making the numbers appear better than they are. Christian Härtnagel, the boss of Lidl UK, said its Deluxe products, such as luxury mince pies and hand-cooked crisps, “proved a major draw for new and existing customers”. He said sales for its upmarket range rose 33% year-on-year, while alcohol sales were up 18%.

AO World eyes up breakthrough into Europe following fine finish to 2018 year. Online washing machines to TV seller AO World (AO.) had a decent Christmas in the UK and is showing strong signs of breaking Europe. UK sales were up 4.4% in the three months to December, but Europe was the standout, with revenue soaring 31.3% over the quarter. Chief executive Steve Caunce said: “Against a challenging backdrop, Q3 represents a solid performance across the AO Group. We are on track with our plans.” AO shares were up nearly 4%, by 4.6p to 128.8p, at which price the company is worth £608 million.

Flybe bailed out by £2.2m rescue deal with Stobart and Virgin Atlantic. Flybe Group (FLYB) on Friday avoided becoming the latest casualty of turbulence in aviation, with a consortium involving Stobart Group Ltd. (STOB) and Virgin Atlantic rescuing the troubled airline. The group, which also includes investor Cyrus Capital Partners, will buy the struggling carrier — which has 76 planes and valuable slots at Heathrow and Stobart’s Southend airport — through a joint venture company called Connect Airways. A £2.2 million deal has been agreed that values Flybe at 1p per share — a 94% discount to yesterday’s closing price. The firm was valued at £215 million when it floated on the London Stock Exchange in 2010. Under the agreement the consortium will provide a £20 million loan to Flybe. A further £80 million could be put into the new combined business

Quiz shares dive after poor Christmas brings second profit alert. Shares in fast-fashion retailer Quiz (QUIZ) tanked on Friday after a woeful Christmas caused it to warn on profits for the second time in four months. Quiz, set up in 1993, said it now expects to notch up profits of £8.2 million this year, down from £11.5 million expected, making it the latest High Street sufferer after bike seller Halfords and trainers business Footasylum also warned on profits this week. The shares fell 24%, or 8.5p, to 27p. This is despite an 8.4% increase in revenues for the six weeks to January 5. Its online sales were strong too, up 34%, albeit these are less profitable for retailers. Finance chief Gerry Sweeney struck a bullish tone: “It’s disappointing that we’ve fallen short of expectations but our belief is that the brand is strong and we can rebuild the margins.”

EI Group (EIG) sells £348m pubs portfolio to cut debt mountain. Pubs group Ei on Friday agreed to sell hundreds of properties to a US hedge fund for £348 million. The firm said 370 of the 412 sites in its commercial property arm will be bought by Tavern Propco, which is owned by Texas-based Davidson Kempner Capital Management. Most of the sites are watering holes which Ei, formerly known as Enterprise Inns, owned the freehold of but did not operate. Ei’s chief executive Simon Townsend said he thinks the assets “are best suited to a free-of-tie, rent-only business model”. The boss has long been trying to boost profits, including by shifting Ei’s 4500-strong estate away from the “beer-tie” model, which involves a publican renting a site and buying beer at inflated prices from a landlord in return for lower rent.


Mentioned in this post

AO World
EI Group
Flybe Group
Stobart Group Ltd.