The Mail 10/01/19 - Vox Markets | Vox Markets

The Mail 10/01/19

John Lewis staff bonus under threat for the first time since the 1950s as heavy discounting eats into the High Street firm’s profits. The John Lewis Partnership dropped a bombshell today, warning that its annual staff bonus could be quashed for the first time since 1953, amid another hard fought Christmas. Its 83,000 employees are usually awarded the payout in March, but they may be disappointed this year following slower sales growth and an expectation that profits will be ‘substantially lower’. Outgoing chairman Sir Charlie Mayfield said: ‘The board will need to consider carefully in March, following the usual process, whether payment of a bonus is prudent in the light of business and economic prospects at that time.’

Jaguar Land Rover confirms it is slashing 4,500 jobs to save £2.5billion while Ford announces ‘significant’ cuts in worker numbers across Europe in double blow to British car industry. Britain’s biggest carmaker Jaguar Land Rover (JLR) is to make 4,500 job cuts, mainly in the UK, following 1500 job losses last year. The announcement this lunchtime comes as Ford signalled ‘significant’ cuts to be made among its 50,000 European workforce under plans to make it more competitive and make its business more sustainable. JLR said the 4,500 global redundancies will start will voluntary redundancies as unions promised to ‘scrutinise the business case’ for the cuts. But the firm has promised UK investment with Electric Drive Units to be built in Wolverhampton and new electric Battery Assembly Centre at Hams Hall, North Warwickshire. Most of the cuts are expected to be in the UK, with the savings and ‘cashflow improvements’ coming over the next 18 months.

Germany is on the brink of a recession as Europe’s financial powerhouse suffered a collapse in industrial production. The German economy stunned traders this week when it plummeted more sharply than expected. Industrial production fell by -1.9% in November – a year-on-year low of -4.6% – which has fuelled uncertainty in the world’s fourth largest economy. A recession in Germany could have a devastating impact on the fragile Greek and Italian economies

Debenhams sales tumble over Christmas as pick-up in traffic online fails to offset steep declines at its shops. Management is struggling to stop the rot at ailing department store chain Debenhams (DEB), which saw UK sales slide 3.6% over the all-important Christmas period. It put the decline over the last six weeks down to fewer visitors to its stores, compared to the same time last year. Debenhams insisted that it was seeing improvements online, however, which helped stem some of the decay over the period. For the last four months of 2018, the sales fall was steeper – down 6.2% overall despite a 4.6% surge online

Marks & Spencer blames dismal November, heavy discounting by rivals and dwindling footfall for sluggish sales, but its shares still rise. Marks & Spencer Group (MKS) has blamed a challenging November, heavy discounts by rivals and lower in-store footfall for falling sales over the three months to 29 December. The High Street stalwart posted a 2.2% drop like-for-like sales over the period, which includes Christmas. The sales slip was slightly worse than some analysts expected, but the embattled retailer retained its profit forecast for the full year.

Halfords shares tank after retailer ‘bizarrely’ blames the weatherman for falling sales this winter. A profit warning from Halfords Group (HFD) today has left analysts scratching their heads and caused some investors to jump ship. The cycling and car specialist cautioned that its profits for the full-year will be much lower than expected – between £58million and £62million, a far cry from the £70million analysts had pencilled in. But it blamed warm weather over the last three months for a 1.7% decline in sales, and some analysts are unconvinced.

Tesco celebrates strongest Christmas sales numbers since 2009 as boss confirms supermarket is stockpiling for Brexit. Britain’s biggest supermarket Tesco (TSCO) enjoyed a bumper festive period, with sales up 2.2% from the same time a year ago. With sales on the up, the supermarket enjoyed its strongest Christmas sales period since 2009. The supermarket’s ‘Festive 5’ vegetable offer proved particularly popular with shoppers, selling 19.7 million units over the three weeks to Christmas. Half-price lamb and beef joints helped meat sales grow by 12.2% over the Christmas period. A deal for a quarter off six bottles of wine also proved popular with shoppers.

Sainsbury’s suffers Christmas shocker: Boss Mike Coupe in the firing line as supermarket lags rivals. Pressure is mounting on Sainsbury (J) (SBRY) boss Mike Coupe after the supermarket posted miserable Christmas results. Sales at the UK’s second biggest supermarket fell 1.1% in the 15 weeks to January 5 as consumers shopped elsewhere. Even Argos, which is seen as the jewel in the Sainsbury’s crown, failed to prop up the grocer as general merchandise sales fell 2.3%. This category covers all Argos’s sales and other non-food and clothing products sold at Sainsbury’s, such as homeware. Chief executive Coupe said Argos did not cut prices as aggressively as others during the Black Friday weekend, hitting business.

Hargreaves Lansdown slashes its top funds list down to a new Wealth 50, as Woodford keeps his place but Fundsmith fails to make the cut. DIY investing giant Hargreaves Lansdown (HL.) has slashed its top funds list to relaunch it as the Wealth 50. The Wealth 50 directory replaces the firm’s Wealth 150 and 150-plus lists. Hargreaves Lansdown’s research director Mark Dampier says the new slimmed down selection aims to remove confusion, provide more focus, and reflect the difficulty in finding managers that its analysis shows have the skill to consistently deliver market-beating returns for investors. Star manager Neil Woodford’s flagship fund keeps its place on the list, despite his recent struggles, but another investment big hitter Terry Smith’s Fundsmith still failed to make the grade, even though it has delivered exceptional returns for investors over eight years.

Confident builder Taylor Wimpey surges 5.4% after a ‘very strong’ start to the year. Shares in Britain’s housebuilders rallied after Taylor Wimpey (TW.) started 2019 in a ‘very strong’ position. The FTSE 100 firm said the property market remained stable ahead of Brexit as low interest rates, high employment and the Government’s Help to Buy scheme boosts demand. Its shares surged 6.2%, easing fears that a market slowdown was gaining pace. It also buoyed rivals Berkeley Group, Persimmon and Redrow, although analysts warned trouble could be on the horizon. Taylor expects to beat its previous annual sales record of nearly £4billion, and average prices on private sales rose 2% to £301,000. It ended 2018 with orders worth £1.8billion, up from £1.6billion the year before.

MPs slam ‘cynical’ Provident Financial Christmas ad which enticed borrowers to take out loans at more than 500%. Doorstep lender Provident Financial (PFG) has been rapped for festive adverts aimed at vulnerable borrowers to take a loan at more than 500% interest. The Provvy, run by Malcolm Le May , posted ads showing a child wearing a Christmas hat and people hugging, and encouraged people to take loans with interest of 535.3%. The Advertising Standards Agency ruled it was irresponsible and should not be used again. Rachel Reeves, chairman of the Business Select Committee, has called for a probe. The firm said: ‘Provident provided assurances that such content will not be used in any further marketing materials.’

Naked Wines the jewel in Majestic Wine’s crown over Christmas as firm is stretched by brutal retail market and changing shopping habits. Majestic Wine (WINE) said today that Christmas trading was more difficult than it anticipated as economic uncertainty and weak consumer confidence in the run-up to Brexit take their toll. The group toasted a significant 6.3% sales rise in the last 10 weeks of the year, which is a marked acceleration on the 3.2% uplift it reported a year ago. But this rapid growth was driven by a near-16 per cent leap at its fast-growing Naked Wines business, as well as heavy discounting. Majestic Wine insisted its profits for the full-year will still meet market expectations, but flagged that gross margins over the festive period slipped by 1.2% as it joined in with a ‘very price promotional market’. Despite the strain of a tough Christmas, group boss Rowan Gormley said he remained confident that the firm will be one of the winners in what he termed a ‘retail revolution’.

Greggs gobbles up a healthy sales rise and share price boost while hailing success of ‘very popular’ vegan-friendly sausage roll. Greggs (GRG) has hailed the success of its ‘very popular’ vegan-friendly sausage rolls, as it cooked up a 7.2% rise in sales over the past year. Breakfast food, hot drinks, mince pies and the puffy pastry and chicken Festive Bake, all proved popular among customers at the High Street bakery chain in the last few months. With its vegan menu causing a stir and sales on the up, t he FTSE 250 listed bakery’s share price is up 7.83% or 107p to 1,474p

Ted Baker (TED) shares jump as harassment claims against its founder fail to take shine off the fashion brand over Christmas. Ted Baker’s ailing shares received a much-needed boost in early trading today after a strong Christmas update from the fashion brand offered concerned investors some reassurance. The stock, which nose dived 25% to a five-year low last month when allegations of harassment were levelled at its founder and boss Ray Kelvin, picked up nearly 12% on Wednesday to once again reach £18.00.

Mothercare continues to struggle with the retailer revealing sales fall over crucial Christmas period as even online buyers dwindle. Baby and children’s retailer Mothercare (MTC) suffered an 11.4% fall in like-for-like sales in the 13 weeks to 5 January. The struggling retailer admitted that ‘challenging trading conditions’ dragged down its performance. Its trouble was not limited to the High Street, with online sales falling 16.3% as fewer people visited its website than a year ago.

Sainsbury’s delivers ‘truly woeful’ Christmas results as Argos flops with the supermarket blaming cautious consumers for its troubles. Sainsbury (J) (SBRY) stock slid into the red today after the UK’s second biggest supermarket posted what an analyst has called ‘a truly woeful set of numbers’ for the all-important ‘Golden Quarter’. The group’s same-store sales fell by 1.1% in the last 15 weeks, steeper than the 0.3% decline the City was expecting. A 0.4% uplift in grocery sales was overshadowed by a 2.3% slump in general merchandise, which includes Argos, with the group claiming that shoppers were more cautious about how they spent their money this Christmas.

Investors have lapped up a trading update from Vimto-maker Nichols (NICL), which said sales jumped 6.9% to £142million last year. The UK branch of the business did particularly well, as sales shot up 12.6% to £114.6million. The UK soft drinks market grew 7.4% in 2018. As well as Vimto, which was 110 years old in 2018, Nichols also owns Feel Good drinks, the Levi Roots brand, Sunkist and a range of frozen slushy products.

Broadcaster ITV was racing ahead yesterday as City analysts predicted it could soon ink a new deal with Sky, giving it a £120million boost. Ian Whittaker at broker Liberum said a deal between Scottish broadcaster STV and Sky, announced this week, could point to a bigger agreement in the pipeline for ITV. Sky (SKY) currently has a deal with ITV (ITV) to broadcast its programmes on the Sky player, but this is due to expire imminently. This week’s STV deal, Whittaker argues, shows Sky is willing to renew deals on relatively uncontentious terms, and quickly. A new partnership between ITV and satellite giant Sky could rake in an extra £120million for ITV, Liberum calculated, based on higher prices agreed in recent similar deals.

Technology company Softcat (SCT), which helps customers ranging from NHS trusts to The National Gallery in London with services from cybersecurity to printing systems, said it was ‘materially ahead’ of where it expected to be at this stage of the year.

TBC Bank Group (TBCG), one of the largest financial institutions in Georgia, said it was being investigated by the country’s central bank and public prosecutors, and had been fined £294,000. The National Bank of Georgia is looking into transactions in 2007 and 2008, which it believes were made between TBC and its then-chairman and deputy chairman, and entailed conflicts of interest. TBC said it was challenging the fine in court.

Logistics company Wincanton (WIN) edged up 1.3%, or 3p, to 235p after it agreed a deal with Weetabix to transport and manage the warehouse storage of its cereals.

Payments business SafeCharge International Group Limited (DI) (SCH), whose customers include World Duty Free and taxi app Gett, shot up 14%, or 33p, to 268p as Miton fund manager Gervais Williams recommended it as his stock tip of the year.

Shock departure of Silence Therapeutics (SLN) chief financial officer hurt shares. Silence, which is creating medicines to interfere with the body’s genetic processes in the hope of treating rare genetic diseases, fell 1.9%, or 1p, to 52.2p, after telling investors David Ellam would leave. Rob Quinn, the firm’s head of financial planning and analysis, will fill the role until a replacement is found.

Investors were unimpressed by the results from small gas producer Regal Petroleum (RPT), even though the average daily rate from its projects in Ukraine was up 48% in the final three months of 2018, compared to a year earlier.

President Energy (PPC), the Argentina-focused oil and gas firm, beat its 2018 target of 3,000 barrels per day, and production rocketed 50% year-on-year. Shares rose 5.4%, or 0.5p, to 9.7p.

Investors were happy with Central Asia Metals (CAML). The copper, zinc and lead producer met production guidance across all its metals. Shares were up 5.4%, or 12p, to 233p.

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Mentioned in this post

CAML
Central Asia Metals
DEB
Debenhams
GRG
Greggs
HFD
Halfords Group
HL.
Hargreaves Lansdown
ITV
ITV
MKS
Marks & Spencer Group
MTC
Mothercare
NICL
Nichols
PFG
Provident Financial
PPC
President Energy
RPT
Regal Petroleum
SBRY
Sainsbury (J)
SCH
SafeCharge International Group Limited (DI)
SCT
Softcat
SKY
Sky
SLN
Silence Therapeutics
TBCG
TBC Bank Group
TED
Ted Baker
TSCO
Tesco
TW.
Taylor Wimpey
WIN
Wincanton
WINE
Majestic Wine