The Telegraph 11/07/19 - Vox Markets | Vox Markets

The Telegraph 11/07/19

Wetherspoon (J.D.) (JDW) continues to outperform its peers, despite a slowdown in sales growth in the last three months and a refusal to put up prices eating into margins. Like-for-like sales swelled by 6.9% in the 10 weeks to July 7, better than recent performances by the likes of competitors Young’s and Greene King. However this was a slight slowdown on the previous quarter. Despite facing similar cost headwinds to its peers – such as rising wage bills and food inflation – the chain has not increased its prices, squeezing profits as a result. Recent industry research shows that the gap between Wetherspoon’s prices and the industry average had widened from 18% to 23%. Meanwhile, it continues to spend money sprucing up its pubs and splashed out £71m on buying the freeholds of sites where it was previously a tenant. Analysts estimate that just two in every five of its 900-strong estate are leasehold properties.

The chairman of BT Group (BT.A) has warned investors not to get “hung up” on the telecoms giant’s slumping share price after coming under heavy fire at its annual meeting. Jan du Plessis, who since his appointment nearly two years ago has overseen a 42% decline in the telecom giant’s share price to its lowest levels in seven years, dismissed attacks from the floor and insisted the company would recover. Speaking on the sidelines of the BT annual shareholders meeting on Wednesday, Mr du Plessis said: “I think we cannot afford to get hung up about the share price in 12 months’ time. We have to do what’s right for the company. “You know where companies go wrong? It’s when they get hung up about their stock price. To be clear, we cannot influence our share prices this month, next month or in a year’s time. Other factors will drive it.” At the meeting, Mr du Plessis told shareholders that he believes the share price will recover “in the long run” but that he would consider cutting shareholder payouts to fund BT’s ambitious plans for a fibre broadband rollout.

Vodafone Group (VOD) boss Nick Read has taken a £1.2m pay cut in a concession to angry investors amid the first dividend cut in the company’s history and a deep slump in its stock market valuation. Mr Read and chief financial officer Margherita Della Valle “voluntarily requested” a 20% reduction in their three-year share awards “to reflect the low valuation of the share price”, Vodafone said. Share awards known as the Global Long Term Incentive were awarded to top Vodafone executives on 26 June. After the reductions Mr Read received 3.9m shares worth £5.1m and Ms Della Valle 2.4m shares worth £3.1m. Vodafone is worth nearly a fifth less than it was when Mr Read was promoted to take over from Vittorio Colao in October, although they had already fallen sharply since the turn of the year.

Micro Focus International (MCRO) was firmly in the sights of investors yesterday as shares in the FTSE 100 company sank for the second day running. Britain’s second largest technology company has struggled to shake off concerns about the integration of Hewlett Packard’s software division, which it bought for £7bn in 2017. Micro Focus said earlier this week that combining the businesses represented a “complex and significant programme of work”. John King, at Bank of America Merrill Lynch, said that, with the second anniversary of the HP deal approaching, revenue trends “still appear challenged”. Analysts at Citi said they “continue to see downside risk” as shares fell 205p on the day, closing at £17.53.

Pagegroup (PAGE) warned that operating profit for the year will be towards the lower end of market forecasts, blaming weaker macroeconomic conditions in the UK and “much of continental Europe”, and a challenging market in China. Page’s fellow recruiter Hays (HAS) and Robert Walters (RWA) also suffered a slump as part of a broader decline across the headhunting sector. The former had its shares downgraded by UBS to a “neutral” rating from a “buy”, while the latter reported an 8% fall in net UK fee income earlier this week. Because of its dependence on other sectors, the recruitment industry is seen as a bellwether for the broader economy.

Retail tycoon Philip Day is poised to take control of ailing retailer Bonmarche Holdings (BON) after its second largest shareholder sold out to the billionaire. Artemis Investment Management offloaded its 12% stake in the over-50s fashion retailer for £773,000 on Wednesday as fears mount over the company’s future. Mr Day, which made a £5.7m takeover offer in April for the chain and subsequently withdrew it, now owns 82.96% of the business. This will allow him to take the company private and de-list the shares. Other smaller shareholders are expected to follow suit and sell out to Mr Day’s investment vehicle Spectre to avoid holing shares in a private company. Taking it private will most likely pave the way for material job cuts and possible store closures, the Telegraph understands.

Struggling fashion chain Superdry (SDRY) plunged into the red on Wednesday and warned sales would continue to falter before the business starts showing any signs of revival under co-founder Julian Dunkerton. Mr Dunkerton emerged victorious from a bitter battle over strategy and financial performance with Superdry’s old management, returning to the retailer in April after winning support from shareholders. He said on Wednesday that although he had been “trying to steady the ship” his early efforts to turn its fortunes around would not bear fruit any time soon. “We expect revenue to show a slight decline in 2020, particularly in the first half,” the company said.

Britain’s largest housebuilder Barratt Developments (BDEV) is on track to post another year of record profits after sales continued to boom and cost-cutting efforts bolstered its bottom line. The FTSE 100 giant built 17,856 homes in the year to June and now expects to make pre-tax profits of about £910m, up from £834m last year and well above City forecasts of £884m. David Thomas, chief executive, said profits had beaten expectations thanks to a 1.6% rise in completions, some one-off land sales and changes to the design of its homes which have boosted margins. He said: “In 2016 we relaunched our house type range… which simplified the process of building the houses and made them more suitable for modern methods of construction. “We also took out some costs where we felt there was no particular benefit to consumers. For example by reducing the roof pitch from 45 degrees to 40 degrees we could save money on the construction costs and improve the overall efficiency of the business.”


Questor: when Google and Amazon run out of steam, this trust should take up the pace. Questor investment trust bargain: while all Wall Street’s momentum is in growth stocks, Blackrock North American Income Trust (BRNA) takes the opposite approach


Mentioned in this post

Barratt Developments
Bonmarche Holdings
Blackrock North American Income Trust
BT Group
Wetherspoon (J.D.)
Micro Focus International
Robert Walters
Vodafone Group