Marks & Spencer Group (MKS) bosses have pledged to rescue the ‘wobbly’ business as profits fell for the third consecutive year. The 139-year-old High Street stalwart unveiled a 10% drop in annual profits to £523million after it took a hit from store closures and restructuring costs. M&S is in the middle of an extensive shake-up as it battles against the slump that has hit Britain’s high streets. The company had already said at least 100 of its joint clothing and food stores would shut by 2022, but the latest figures add up to around 120 closures by 2024. It closed 35 last year and will axe a further 85, along with 25 Simply Food shops. Chairman Archie Norman, who joined in 2017, said: ‘It’s a bit like an egg and spoon race. ‘The more you run, the more it wobbles, and it’s been wobbling quite a lot at the moment.’ Chief executive Steve Rowe said: ‘M&S is changing faster than at any time in my career – substantial changes across the business to our processes, ranges and operations, and this has constrained this year’s performance, particularly in clothing and home. However, we remain on track with our transformation and are well on the road to making M&S special again.’
Royal Mail (RMG) is the latest major British company to slash its dividend – a huge blow to thousands of small shareholders. It will only pay 15p per share for the year to March 2020, down from 25p this year. The total doled out to investors falls to £150million, from £250million. Rico Back, Royal Mail’s boss, said this would fund £1.8billion of investment over five years to prepare it for a future dominated by internet shopping. Back said: ‘Our decision is not one that we have taken lightly. We have sought to find the appropriate balance between investing in the future sustainability, and shareholder returns.’ The internet shopping boom has prompted Royal Mail to shift towards parcels and away from letters. It has been ploughing cash into new technology to make sorting facilities more efficient. And it is now bringing back the second post because of the parcels boom.
The parent firm of Acacia Mining (ACA) has proposed taking it off the stock market. Barrick has offered to buy the 35% of shares it does not already own, at a heavily discounted price. The offer is an attempt to end a dispute with the Tanzanian government, which Barrick has been negotiating with on Acacia’s behalf. Barrick’s all-stock deal for 147p per share would value Acacia at £621million – less than the £654million or 159p it was worth on Tuesday before the offer was unveiled. Barrick said a buyout was the best way to break the impasse. Acacia said it was considering the proposal before it makes an announcement. It said it continues to be excluded from discussions between Barrick and Tanzania.
Energy giant SSE (SSE) has vowed to sever ties with its under-pressure energy supply business by mid-2020 after shedding 570,000 customer accounts over the last twelve months. The Big Six supplier has pledged to either sell or list the energy services arm as a separate business by the second half of next year, appointing a separate board for the division, which will be headed by executive chairwoman Katie Bickerstaffe. The Scottish supplier has also reported that profits have fallen far short of expectations. SSE’s energy services business – which is now reported separately to the wider business – saw underlying earnings crash 68% to £89.6million in the year to March. The group also posted underlying pre-tax profits of £725.7million for the year to March, down from £1.2billion in 2017-18 – a fall of 38%.
The collapse of British Steel has sparked fears for Hargreaves Services (HSP), a key supplier for eight years. It estimates it has around a £4.5million exposure to British Steel, comprising debts and work in progress. It also employs around 170 people in operations which serve the steelmaker, and could take a £3million hit if it has to make them redundant. Revenue could fall £11million and profit by £1.3million.
Pets at Home Group (PETS) profits climbed 6.1% to £89.7million for the year to March 28, not including the effects of a £40.4million charge related to the restructuring of its vet business. The retailer said its shops had returned to profit growth faster than expected, and sales were up 5.1%. Rather than trying to rake in more money by selling fewer expensive items, it has cut prices to attract more customers. This squeezed profits slightly. Profit was also knocked by a decision to buy back some of its vet practices, which it had previously run with individual vets. The firm admitted some weren’t performing as well as hoped. It has already spent £21.2million buying back 48 locations, and closed 19 of them. Pets at Home has set aside another £19.2million to pay off more of its vet partners, and will review how many need to close. There has also long been concern over the company’s £135.2million debt pile.
Babcock International Group (BAB) was under fire after a year of weak performance. Though the results were generally as expected, analysts were alarmed by a 7% dip in Babcock’s 2020 earnings forecasts. It was another disappointment for investors, who are trying to decipher accusations flung at the company by mysterious research firm Boatman Capital. Christopher Bamberry at Peel Hunt called it ‘another downgrade to estimates in a long series of downgrades’, and said it was difficult to imagine a catalyst that would boost the shares, which fell 47.2p, to 460p.
IG Group Holdings (IGG) was helped by a rise in market volatility. Market volatility, which generally prompts IG’s customers to trade, was relatively low for most of the year. But in the first few weeks of May, volatility began to pick up. So the full-year revenue is expected to be around £475million, better than investors had been predicting. IG also set out plans to boost revenue by 30% by 2022.
Funding Circle (FCH) was forced to clarify changes to its executive pay policy, which will be voted on by shareholders in June. Rather than allowing its bosses’ bonuses to be decided by looking at other FTSE 250 companies’ pay policies, Funding Circle is capping the bonus for its chief executive at £2million per year and for its chief financial officer at £1.1million. Boss Samir Desai has already decided to waive his bonus as shares are trading 42% lower than they were when they hit the stock market last September.
Property tycoon Nick Candy has upped his stake in podcast maker Audioboom Group (BOOM) after it ran to investors for cash. He now owns 25% himself, and another 24% through his investment firm Candy Ventures. Audioboom ended the day flat at 1.9p.
