FTSE 100 Live: Marks & Spencer pleased with festive sales and Tesco ups profits guidance on
arks & Spencer and Tesco today added their names to the list of big retailers reporting strong Christmas trading.
M&S boss Steve Rowe said the festive period had been strong for the chain as it increased clothing and home sales for the second consecutive quarter and the food division maintained its recent momentum.
Tesco said market share growth in the UK meant that retail operating profits for the year will be slightly above its current £2.6 billion guidance. There are also updates today from Halfords and ASOS, as well as from Persimmon in the housebuilding sector.
FTSE flat in lunchtime trade
The FTSE 100 has pulled higher to climb into positive territory this lunchtime: just.
Next trails the index, down 3.7%. It has said today it will stop offering full sick pay to unvaccinated workers, though it’s not clear that’s what’s influencing shares.
Countryside’s tranquility shattered
Countryside’s share price is falling through the floor today after the housebuilder reported a near 50% drop in sales in the first quarter despite the UK’s booming property market.
The gloomy numbers sent investors packing, sending Countryside’s share price down by more than 27% to 287p in a generally flat FTSE 250.
The developer’s CEO Iain McPherson today stepped down with immediate effect as a ceasefire deal was brokered with activist investor Browning West.
ASOS heading for the main market
ASOS is primping itself for a move onto London’s main market after 20 years on the junior AIM index.
The online fast-fashion seller — which hoovered up Covid-19 casualties TopShop, TopMan and Miss Selfridge last year — has brought ex-Paddy Power boss Patrick Kennedy onto its board as it prepares for the jump.
Its shares have plunged by nearly one third since last March amid squeezed supply chains and soaring shipping costs. Sales growth slowed to 2% in the four months to January.
But a £2.25 billion market cap would ensure a place on the FTSE250, opening up access to new investors and passive tracker funds.
Retail analyst Nick Bubb noted the promotion is likely to “set the cat amongst the pigeons at [AIM-listed] Boohoo HQ”.
ASOS shares surged 10% to 2500p.
Sad news for retail nerds: Christmas winners game is over
Figuring out the retail winners from the Christmas trading period is a favourite task for the (immaculately dressed) anoraks who obsess about shops.
Did Tesco flog slightly more Albanian Prosecco than Sainsbury? Didn’t Waitrose’s fancy cheese board selection just leave M&S’s in the dust?
For the retail nerds – strange folk who think like-for-like sales are keys to understanding the universe – this game could be up.
Tesco, Sainsbury and M&S are still dutifully on the stock market, for now, which means we can believe the figures it posts.
Mitchell & Butler sees sales of pints and meals hit by Omicron
All Bar One and Toby Carvery owner Mitchells & Butler tried to strike a positive note today despite a slump in business over Christmas.
M&B, which runs around 1,700 bars and restaurants across the country, said the introduction of measures to curb the spread of Omicron led to a 10% slump in sales over the last four weeks. That derailed what looked like a decent recovery at the start of the quarter. The Christmas and New Year slump meant total sales in the 15 weeks to 8 January were 1.5% than a year earlier.
CEO Phil Urban put a positive spin on things, saying sales of pints and Yorkshire puds were likely to quickly bounce back as restrictions were rolled back and Britain learns to live with Covid.
“Experience shows that as restrictions ease, and confidence returns, our business is able to swiftly recover,” he said. “To that end, whilst we expect activity to continue to be adversely impacted in the short term, we are encouraged by the latest data on the Omicron variant which we believe will boost consumers’ confidence to return to pubs and restaurants allowing us to regain the momentum which was beginning to build.”
Omicron isn’t the only issue facing the company: M&B which also owns the Harvester chain, said it is facing a surging costs due to higher wages and energy costs. The hospitality firm expects to costs to rise by between £60 million and £65 million compared to pre-pandemic levels due to the inflation pressures.
Shares improved 2.8p, or 1%, to reach 260.4p.
Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, said: “The group’s been forced to stutter, start and stop multiple times, but trading when it’s going is going well. Longer-term, the challenge remains about how best to tackle fierce competition in the mid-market dining and drinking space, but that’s a question that can be left until the nearer-term hurdles have been cleared.”
Standard Life lands £1.8bn Imps pension deal
The trend for large companies to switch their staff pensions to insurers continued today with a £1.8 billion deal between Standard life and the Imperial Tobacco Pension fund.
The deal sees the pensions of 6,600 Imps staff move to the insurer, providing security for the funds.
Helen Clatworthy, chair of the trustee of the fund, said: “We are delighted to have completed this bulk annuity transaction with Standard Life. This buy-in is a major step in the fund’s de-risking strategy and significantly improves the security of members’ benefits.”
Standard, is part of Phoenix Group, which is big in the Bulk Purchase Annuity market.
Hymans Robertson acted as lead advisers to the Trustee for this transaction.
M&S shares fall, ASOS rallies 8%
Marks & Spencer shares are 5% lower amid signs that investors have used today’s update as a chance to lock in profits following a strong run.
Despite further signs of turnaround progress, the widely-held shares fell 11.6p to 241.4p in the FTSE 250 index. They had been 263p on Monday, having surged from 145p in August.
It was a similar story for Tesco, which nudged up profits guidance but still fell back 5.15p to 287.1p in the FTSE 100 index. Other retail fallers included Next and JD Sports Fashion.
The FTSE 100 index was 13.08 points lower at 7538.74, having risen to its highest level since early 2020 in yesterday’s session. The FTSE 250 index was broadly unchanged, aided by engineering consultancy Wood rising 9% on the back of a trading update.
Countryside Properties fell 15% after it announced below par trading and the immediate departure of its chief executive Iain McPherson.
Halfords was down 4% after its trading update, but the latest from ASOS helped shares in the fast-fashion business to surge 8%.
Tesco profits to hit £2.6bn after bumper Xmas
Tesco, the UK’s biggest grocer, now expects profits could top £2.6 billion, ahead of previous guidance.
Yesterday Sainsbury told a similar story, but was able to bump up profits forecasts by a higher percentage.
Persimmon poaches Aviva CFO
House builder Persimmon has poached Aviva’s CFO Jason Windsor as its new head of finance.
Windsor, an Oxford-educated former investment banker, replaces Mike Killoran, who has been at Persimmon for 25 years and is retiring.
Roger Devlin, Persimmon’s Chairman, said: “Jason is a well-respected and proven FTSE 100 CFO and we are delighted to have recruited someone of his calibre and experience as Chief Financial Officer to complement our strong management team.”
Windsor, a former first-class cricketer who still dabbles, has been at Aviva since 2010 and been CFO since 2019. He has helped oversee as slimming down of the business under CEO Amanda Blanc.
He said: “I’m delighted to be joining the Group and excited by the opportunities ahead. Persimmon has a leading position in a critical sector of the UK economy and I’m looking forward to working with the team as they continue their journey to becoming Britain’s best housebuilder, whilst maintaining industry-leading financial returns.”
He will join in July. Blanc thanked Windsor for his “commitment and contribution during this time here.”
News of Windsor’s appointment came as Persimmon reported strong 2021 trading. Revenue was up 10%, supported by a bounce back in new home sales.
Some purchases were delayed at the end of 2021 by people isolating with Omicron and inflation pressures continue, but the company said these issues are minor.
Mitchells upbeat despite festive slowdown
Mitchells & Butlers, the owner of Harvester, Toby Carvery and All Bar One, today highlighted Omicron’s impact on the hospitality industry.
The chain’s like-for-like sales slid 10.2% in the four weeks of the festive season, having been 2.7% higher prior to the discovery of the variant.
Chief executive Phil Urban is encouraged by recent Omicron data and hopes that Mitchells will soon return to its earlier momentum.
He said: “Experience shows that as restrictions ease, and confidence returns, our business is able to swiftly recover.”