FTSE 100 Live: JD sinks as Cowgill halves stake, Marks & Spencer, Tesco, and ASOS report on ‘Super Thursday’

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 (ESI)
(ESI)

Marks & 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.

Key Points

  • Tesco upgrades profit forecasts after strong Christmas

  • M&S sales surge

  • ASOS to join main market after 20 years on AIM

  • FTSE falls on profit taking

  • Mitchells & Butlers trade hit by Omicron curbs

FTSE hangs on to gains despite JD sell-off

16:59 , Oscar Williams-Grut

The FTSE 100 has closed up 12 points, or 0.16%, at 7563, just about staying positive despite that afternoon sell-off for JD Sports.

The retailer ended he day at the foot of the index with a fall of 6.4% after Peter Cowgill sold 10 million shares.

Prudential maintained its lead at the top of the index, rising 2.9%. British Airways and Iberia owner IAG wasn’t far behind, up 2.7% as France announced it would relax travel restrictions for Brits.

That’s all from us on the blog today. Join us again tomorrow.

JD sinks as Peter Cowgill dumps shares

16:30 , Oscar Williams-Grut

Shares in JD Sports have sunk after executive chair Peter Cowgill offloaded £20 million worth of shares in the business.

Stock market filings show Cowgill sold 10 million shares today at an average price of 213.22p. The sale leaves Cowgill with 9.7 million shares in the business, meaning he cut his holding roughly in half. No details were given as to why Cowgill offloaded such a large stake.

JD slumped 7.7% to 195p in the wake of the news.

The sale comes a day after JD Sports upgraded profit forecasts after strong Christmas trading.

Next cuts sick pay for unvaccinated who self-isolate

15:30 , Oscar Williams-Grut

High street stalwart Next has become the latest major UK business to cut sick pay for unvaccinated workers as the corporate work increases the pressure on staff to get the Covid jab.

Next, which employs around 44,000 people, said unvaccinated staff who are “pinged” by the NHS app or told to self-isolate by Test and Trace will only be paid statutory sick pay.

Employees who test positive for Covid-19, regardless of vaccination status, will be paid the more generous sick pay offered by the business, which is based up their standard rate of pay.

The retailer is the latest major business to restrict sick pay for unvaccinated staff. Morrisons and Ikea have announced similar changed in recent days. In the US, Citigroup bank this week said it would fire any staff who were unvaccinated by next month.

Read the full story.

The Omicron effect: Painkiller sales up, restaurant bookings down

15:01 , Oscar Williams-Grut

The Office for National Statistics has put out new figures today on the effect of the Omicron wave on the UK economy and businesses.

The ONS says 3% of the national workforce were off sick with Covid by late December, which was the highest proportion since it began collecting data in June 2020. 44% of hotels, bars and restaurants reported higher cancellations of bookings as customers stayed away.

Was anyone doing well? Drug makers.

Separate data also out today from the ONS shows paracetamol was running low in shops this week as sick Brits stock up on pain killers.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says: “The latest ONS data paints a picture of sick Britain as shoppers have stocked up on paracetamol, ibuprofen and toilet rolls as Covid cases surged. Aches and pains, upset stomachs and runny noses saw demand for loo paper and pain relief soar, with the products in shorter supply.”

KKR and Advent join the race for Boots

14:25 , Oscar Williams-Grut

Private equity giants KKR and Advent are circling Boots, according to Bloomberg.

The news wire says the pair have joined the race to buy the pharmacy chain, citing sources. Boots could fetch up to £7 billion.

Sky News reported in December that Boots’ US owners Walgreens Boots Alliance were preparing for a sale of the business. Walgreens has owned the chain since 2012. This week Sky said private equity firms CVC and Bain had joined forced to launch a joint bid for the business.

Bloomberg said buyout firms Clayton Dubilier & Rice and Apollo Global were both also considering a bid for Boots. Both firms looked at buying Morrisons last year.

Boots runs 2,200 stores across the UK and has smaller operations in Ireland, Norway, the Netherlands and Thailand.

Halfords climbs despite sales fall

14:01 , Oscar Williams-Grut

Shares in bikes-to-car parts retailer Halfords are up about half a percent, despite the retailer reporting a drop in sales at its shops.

Halfords said in a Christmas update today that retail sales were down 1.8% on 2020 and down 5.3% on last year. Group revenue was down 2.2% on 2021.

Despite a drop-off in retail sales, the company is seeing surging demand for car services at its Autocentres, which is helping to offset the weakness. Revenues were up 10.7% year on year and a massive 90.2% on 2020, when lockdowns over Christmas left most cars firmly in park.

CEO Graham Stapleton says: “With the recent addition of National to the Group, Motoring will represent more than 70% of our revenue, and we expect to carry out 7.5 million motoring servicing jobs a year. We are working hard to continually increase our capacity, capabilities, and geographic reach in this area, making it easier and more convenient for customers to have a broader range of vehicles serviced than ever before at over 1,400 fixed or mobile Motoring Services locations.”

Matt Britzman, equity analyst at Hargreaves Lansdown, says: “The government’s MOT deferral programme in 2021 caused a seasonal shift in MOT timings, with the new peak period falling into Halfords third quarter. Autocentres reaped the rewards.

“The group’s still confident in its recently raised full-year guidance, but markets seem wary of the fact it’s predicated on Omicron setbacks continuing to ease.”

FTSE flat in lunchtime trade

13:30 , Oscar Williams-Grut

The FTSE 100 has pulled higher to climb into positive territory this lunchtime: just.

The index is up 7 points, or 0.1%. Prudential is the top performer, up 2.7%, while BT is not far behind, up 2%. Reports overnight suggest the broadcaster is nearing a deal to sell its Sports business to streaming platform DAZN for a rumoured $800 million.

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

13:08 , Simon Freeman

 (Countryside)
(Countryside)

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.

Full story here

ASOS heading for the main market

10:51 , Simon Freeman

 (Instagram / ASOS)
(Instagram / ASOS)

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

10:05 , Simon English

City Comment:

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.

read more here

Mitchell & Butler sees sales of pints and meals hit by Omicron

10:03 , Oscar Williams-Grut

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

09:49 , Simon English

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%

08:29 , Graeme Evans

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

08:18 , Simon English

TESCO today said it had defied rising inflation and supply chain issues to ensure customers had a great Christmas, something reflected in booming sales.

Sales were well up on the pre-pandemic period and slightly up on a year ago, when there was panic buying and a lockdown that saw Christmas effectively cancelled for many.

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.

Read more here

Persimmon poaches Aviva CFO

08:10 , Oscar Williams-Grut

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.

Persimmon supports the government “aspiration” with its new cladding plans and says it “constructed only a very small proportion of buildings affected by this issue”.

Mitchells upbeat despite festive slowdown

08:08 , Graeme Evans

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.”

Countryside warns on trading, boss leaves

07:53 , Graeme Evans

Countryside Properties today revealed weaker-than-expected trading alongside the immediate departure of CEO Iain McPherson.

The FTSE 250-listed company, which is focused on delivering developments with local authorities and housing associations, reported 643 completions in its core Partnerships division compared with 984 for the quarter the year before.

Group-wide operating profits for the final three months of 2021 fell to £16.5 million from £36.6 million.

McPherson became boss at the start of 2020, having joined the company in 2014. Chairman John Martin is to be interim CEO.

He also announced the board appointment of a partner from Los Angeles-based hedge fund Browning West, which is one of Countryside's largest shareholders having been behind last year's calls for the company to focus on its urban regeneration division.

Tesco CEO ‘delighted’ by festive sales

07:49 , Oscar Williams-Grut

Tesco has defied inflation and supply chain issues to ensure customers had a great Christmas, something reflected in booming sales.

Sales were well up on the pre-pandemic period and slightly up on a year ago, when there was panic buying and a lockdown that saw Christmas effectively cancelled for many.

Tesco, the UK’s biggest grocer, now expects profits to be at the top end of a range from £2.5 billion to £2.6 billion.

Chief executive Ken Murphy said: “We are delighted that we were able to help our customers have a great Christmas.

“Despite growing cost pressures and supply chain challenges in the industry, we continued to invest to protect availability, doubled down on our commitment to deliver great value and offered our strongest ever festive range.”

Read the full story.

‘Strong’ Christmas for Marks & Spencer

07:41 , Oscar Williams-Grut

Marks & Spencer has become the latest retailer to report bumper festive trading, with growth across all divisions.

M&S said group sales were up 8.6% on pre-pandemic levels and 18.5% on 2021 levels at £3.27 billion. Sales rose by 8.9% in the core UK business to reach £3 billion in the 13 weeks to 1 January.

Every division enjoyed strong growth over Christmas including clothing and home, which has long been a thorn in the side for the retailer. Clothing and home sales were up 3.2% on pre-pandemic levels and 37.7% above last year’s total.

CEO Steve Rowe said: “Trading over the Christmas period has been strong, demonstrating the continued improvements we’ve made to product and value.”

M&S stopped short of another upgrade today but said it was now “more confident” of hitting its target of a £500 million profit for the full-year.

Shares in the retailer are up over 80% in the last 12 months and may well rise further again this morning.

Read the full story.

FTSE 100 set to hold gains, US dollar at one-month low

07:29 , Graeme Evans

The London market is set for a session of consolidation after the FTSE 100 index yesterday rose by more than 60 points to close at its highest level since January 2020.

The rally came as US inflation figures showed that the consumer prices index hit an annual rate of 7% in December, a level not seen since the summer of 1982.

The release was in line with expectations and came hours after the equivalent figure from China showed a bigger-than-forecast decline, fuelling investor hopes that global inflationary pressures are starting to diminish.

London-listed commodity stocks benefited the most from this economic optimism as the FTSE 100 index closed at 7551 to continue a strong start to 2022.

US markets had a more subdued session as attention turned to the forthcoming earnings season, which begins with results from a number of banks on Friday.

Michael Hewson, chief markets analyst at CMC Markets, said the improved sentiment owes much to Tuesday's comments from Federal Reserve chair Jerome Powell, who said that reducing the Fed's balance sheet won't be done in a way that is destabilising.

Hewson added: “It remains to be seen how long that line will hold in the face of continued rising prices, and calls from Fed officials that perhaps we could see four rate rises this year and not three as previously guided.”

The US dollar has weakened to a one-month low following this week's developments, with sterling now trading at 1.37 versus the greenback. Meanwhile, the FTSE 100 index is expected to open four points lower at 7547.

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