What to watch: Cineworld shares dive on losses, Harvester owner sales slump, FTSE slides

Here are the top business, market, and economic stories you should be watching on Thursday in the UK, Europe, and around the world:

Cineworld warning as it slides to £1.3bn loss

Cineworld (CINE.L) has warned it could be forced to close cinemas or push back film releases if coronavirus restrictions are tightened further in the UK, as it reported a $1.6bn (£1.3bn) pre-tax loss in the first half of the year.

The company’s shares plunged 13.9% in morning trading in London on Thursday, as investors took fright at its interim results for the six months to 30 June.

The cinema chain had made a $139.7m profit in the same period a year earlier. The pandemic wiped out more than two-thirds of its revenues, which slid from $2.15bn in the first half of 2019 to $712.4m in the first half of this year.

“There can be no certainty as to the future impact of COVID-19 on the group,” it said. “If Governments were to strengthen restrictions on social gathering, which may therefore oblige us to close our estate again or further push back movie releases, it would have a negative impact on our financial performance and likely require the need to raise additional liquidity.”

The group would risk breaching financial covenants in December in a “severe but plausible” scenario of further prolonged shutdowns in the US, UK and other markets, it said. Options include note only requesting extensions of existing loans, but also raising equity.

Harvester, Toby Carvery and All Bar One owner sees sales slump 35%

One of the largest UK restaurant, pub, and bar owners — Mitchells & Butlers (MAB.L) — said sales cratered by 35% in the 51 weeks ending 19 September 2020.

The owner of famous UK brands, such as Harvester, Toby Carvery, and All Bar One, said in a pre-close trading update that while the government funded Eat Out to Help Out scheme plus a temporary reduction in the rate of VAT helped to return like-for-like sales growth of 1.4%, the whole year was significantly hit by the prolonged lockdown period.

“After a difficult period of closure, we have been delighted to welcome back our guests with the vast majority of our sites open and trading again under COVID-secure procedures. I am particularly impressed by the way in which our teams have made this possible by responding to the challenge of our new operating environment with energy and enthusiasm,” said Phil Urban, CEO of Mitchells & Butlers.

DfS: Brits rushed to buy new sofas as soon as lockdown lifted

The boss of DFS Furniture (DFS.L) said that Brits rushed to buy new sofas as soon as the strict coronavirus lockdown measures were lifted in the UK, leading to a “significant proportion” of profit recovery in the last few months.

In the group’s preliminary results statement, DFS CEO Tim Stacey said: “While the reported decline in profit is undoubtedly disappointing in headline financial terms, a significant proportion of this profit has already been recovered in the current year as we resumed customer deliveries.”

DFS reported group revenue for its full financial year to the end of June 2020 at £724.5m ($919.7m), down £271.7m on the same period a year earlier.

European stocks slide after Wall Street sell-off and new curbs in France

European markets fell on Thursday, after another sharp sell-off on Wall Street and as France followed Britain in imposing tighter coronavirus restrictions.

Britain’s FTSE 100 (^FTSE) and France’s CAC 40 (^FCHI) both lost 1.2%, while the Europe-wide Stoxx 600 (^Stoxx) lost 1.1%, and Germany’s DAX (^GDAXI) dropped 1%.

It followed heavy losses in the US on Wednesday. Federal Reserve chair Jerome Powell said the central bank had done “basically all of the things that we can think of,” and was joined by other bank policymakers in calling for fiscal stimulus despite the political deadlock.

The S&P 500 (^GSPC) lost 2.4% with almost every industry in the red, while the Dow (^DJI) lost 1.9% and tech-heavy Nasdaq (^IXIC) shed 3%.

The declines in Europe also came as new curbs to tackle rising COVID-19 cases were announced in France. Restaurants and bars in major cities will have to shut at 10pm as in Britain, while attendance caps at major events and small gatherings have been lowered.

Stocks also slid overnight in Asia. Japan’s Nikkei (^N225) lost 1.1%, Hong Kong’s Hang Seng (^HSI) fell 1.8%, and China’s Shanghai Composite (000001.SS) was down 1.7%. The KOSPI (^KOSPI) in South Korea suffered steep declines, down 2.6%.

What to expect in the US

US futures were pointing to further declines on Thursday. S&P 500 futures (ES=F) and Dow futures (YM=F) were 0.4% lower, and Nasdaq futures (NQ=F) were down 0.7% as European markets opened.