Eddie Stobart shares rise as group returns to profitability
Eddie Stobart Logistics (LON: ESL) said on Monday that the group has returned to profitability, leading shares to jump over 12% on opening.
The group’s holding company said that it has seen customers increase over the course of the pandemic as well as ended loss-making contracts.
Revenues of £416.5m are broadly in line with the same period last year and the group expects further profitability and a positive cash flow.
William Stobart, the executive chairman of GWSA, said:
“I am pleased to be back leading the GWSA Group. These results show we have put past challenges firmly behind us. The past six months have shown the strength of our differentiated business model which has allowed us to grow existing customer relationships, win new business, return the GWSA Group to profitability and overcome challenges presented by Covid-19.
“Looking ahead, we are confident that our renewed focus on our historic core capabilities as transport and logistics services provider for the FMCG and grocery sectors, and as a leading player in e-commerce logistics and fulfilment, will allow us to drive profitable growth going forward,” he added.
Eddie Stobart Logistics shares (LON: ESL) are trading 15.07% higher at 7.65 (0904GMT).
Cake Box Holdings shares surge 5% on strong sales
Cake Box Holdings shares (LON: CBOX) jumped 5.45% on Monday morning as the group shared a trading update for the six months ended 30 September 2020.
The update included six-weeks when all stores had closed over lockdown, which impacted sales. Total sales over the six months dipped 2% to £8m.
In the 20 weeks to September 30, however, the group experienced strong trading with like-for-like sales increasing 12% and total sales rising 23% thanks to delivery platforms including Uber Eats.
Cake Box Holdings have opened six new stores bringing the total number of stores to 139.
Sukh Chamdal, co-founder and chief executive, said: “This result is testament to the dedication, agility and entrepreneurial spirit of the Cake Box family, particularly our franchisees and their employees.
“We continue to see strong momentum across the business both in store and online, with like-for-like sales of 12.1% since reopening the business. We have received a record number of new store applications, giving us confidence that the momentum in our national rollout will return to pre-COVID levels.
“Despite the wider environment, our unique proposition for customers and potential franchisees remains highly attractive and we are confident of further progress in the second half,” Chamdal added.
Cake Box Holdings shares (LON: CBOX) are trading +2.55% at 169.20 (0852GMT).
British Airways boss, Alex Cruz, to step down
The British Airways chief executive, Alex Cruz, is stepping down from the airline with immediate effect.
The airline’s parent group, International Airlines Group (IAG), said on Monday that Cruz will be replaced by Sean Doyle from Aer Lingus.
IAG boss, Luis Gallego, said that the sector is currently facing “the worst crisis faced in our industry”.
“We’re navigating the worst crisis faced in our industry and I’m confident these internal promotions will ensure IAG is well placed to emerge in a strong position,” said Gallego.
He added: “I want to thank Alex for all that he has done at British Airways. He worked tirelessly to modernise the airline in the years leading up to the celebration of its 100th anniversary. Since then, he has led the airline through a particularly demanding period and has secured restructuring agreements with the vast majority of employees.”
“Sean Doyle has extensive experience at British Airways having worked there for 20 years before moving to head Aer Lingus nearly two years ago where he has done an excellent job. I am confident that will continue at British Airways.”
Doyle, British Airways’ new boss, worked at the airline 20 years ago before moving to the Irish carrier, Aer Lingus.
British Airways has faced criticism from unions and MPs as the group has undergone a drastic cost-cutting scheme and cut thousands of jobs.
A total of 13,000 employees are expected to lose their roles at the airline this year.
Barnier ready to compromise on fishing in return for state subsidies concessions
Having stated that negotiations might surpass Boris Johnson’s October 15 deadline, EU Chief Negotiator, Michel Barnier, has said he is ready to “move away” from the demands that the bloc retain the same access to Britain’s coastal waters and fishing rights, in exchange for concessions in the UK’s state subsidies policies.
One senior source to the Express: “It’s one of the realities of Brexit, let’s say an unpleasant change for us, but we understand how the British fishermen on the other side of the Channel think.”
European Council President, Charles Michel, added that: “We need significant steps to be made by our British friends in the coming days, not only on fisheries but also on the level playing field and governance.”
“Nothing is agreed until everything is agreed, the coming days are crucial – this is the moment of truth.”
In return for offering wiggle room on British fishing rights, Barnier has said he requires the UK’s Brexit envoy, Lord Frost, to offer reassurances about the future of the UK’s state subsidies policy.
Charles Michel echoed this sentiment, hinting at compromise by saying a fair fisheries deal is “important”, but that the level playing field is “key” for EU member states.
What are state subsidies according to the EU?
The EU’s foundational treaty defines state aid – or state subsidies – as spending that potentially distorts trade between countries, for instance, tax advantages offered only to a small subset of businesses. The definition is similar to the one issued by the WTO, though two differences include that fact that the EU term covers ‘virtually any kind of government spending’, and outlaws potential harms, instead of actual harms. While the definition may sound broad-reaching, it actually has a large number of exemptions. For example, the General Block Exemption Regulation means that spending on regional aid, training, SME subsidies, R&D, environmental aid and public infrastructure aid are all permissible. Further, the ‘de minimus’ rule means subsidies under €200,000, over three consecutive years and to one company, do not require sign-off by the European Commission.What opposition will the Barnier concessions face?
Indeed, Britain’s Internal Market Bill will not directly align with the EU’s state subsidies regulations. However, the main opposition is likely to come from EU member states. Barnier and his colleagues have allegedly already begun drawing up plans to ease opposition from French President, Emmanuel Macron, with the expectation being that northern French fishing communities will blame the President for loss of business incurred by any concessions. One source told the Express that: “If there is no deal, he will be made responsible – and it’s even worse for French fishermen.” The initial impression, though, is that the French will not back down quickly. Indeed, the European affairs minister, Clement Beaune, stated: “Our fishermen will not be a bargaining chip for Brexit, they will not have to pay the price for Britain’s choices.” He said a deal “remains possible” but “certainly not by sacrificing the interests of our fishermen”. “A bad deal would be the worst outcome. And so we are ready for a no-deal scenario, and we will not accept a bad compromise.” he added. The Dutch foreign minister, Stef Blok, stated that it was “not to late for a deal” but reiterated concerns around fishing rights He continued: “To succeed for our fishermen, for everyone, it is enormously important that France, the Netherlands and all of Europe stay united.” So, even if Barnier convinces the UK, he may yet be saddled with turning stubborn EU member states, before any deal comes to fruition. An unenviable task, it would seem.Nasdaq at five-week high with Fed stimulus likely to extend beyond airlines
American indices led global equities optimism at the end of the week, with the Nasdaq, Dow Jones and S&P 500 all hitting five-week highs, as Speaker Nancy Pelosi tried to pressure Donald Trump into committing to a more comprehensive stimulus package.
Pelosi’s spokesperson, Drew Hammill, stated that Mnuchin had “made clear the President’s interest in reaching” an agreement on a comprehensive stimulus for the US economy, following Pelosi’s declaration on Thursday afternoon, that she would not support a standalone proposal offering aid only to airlines.
https://platform.twitter.com/widgets.js There is still no guarantee that a comprehensive stimulus package will be delivered, with Trump and White House spokespeople seeming offering contradictory suggestions in favour and opposing comprehensive support. However, for today, the mere insinuation of generous stimulus on the horizon was enough to keep the ball rolling on Friday. Speaking on the likelihood of generous support, LPL Financial Equity Strategist, Jeffrey Buchbinder, told Yahoo Finance: “A compromise on a big stimulus package in Washington could potentially deliver another October surprise, but the odds are against it as Election Day approaches,” “The optics of getting nothing done aren’t great on either side, and there are a lot of close Senate races right now, suggesting there still may be a glimmer of hope for a deal by November 3.” And this glimmer was enough to see US indexes put the other segments of global equities to shame on Friday. The Dow Jones and S&P 500 were up to their highest points since the start of September, up 0.83% and 0.96%, to 28,662 and 3,480 points respectively. Leading the charge, though, was the Nasdaq composite, up 1.24% to 11,562 points. With the Nasdaq being a big tech-laden index, a 1.92% rally from Microsoft, 1.10% gain from Apple, and a 2.72% rally by Amazon, all served its cause well. Speaking on next week’s outlook, Spreadex Financial Analyst, Connor Campbell, said: “Looking ahead to next week, and investors will likely remain preoccupied with the state of play regarding US stimulus and, somewhat related, any election headlines. Complicating matters is the October 15 Brexit ‘deadline’, a potential source of anxiety for the pound and FTSE.”The Speaker pointed out that, unfortunately, the White House Communications Director contradicted that assertion during their call. The Speaker trusts that the Secretary speaks for the President. (2/2)
— Drew Hammill (@Drew_Hammill) October 8, 2020
Peacocks owner on brink of collapse, risking 24,000 jobs
Peacocks owner, Edinburgh Woollen Mill, is on the brink of collapse.
The group has appointed administrators in an attempt to rescue the struggling business, which has been hit by the “brutal” trading conditions.
Over 24,000 jobs are at risk if the owner of the Peacocks brand goes under.
Edinburgh Woollen Mill (EWM) has 1,100 stores for brands including Peacocks, Bonmarché and Austin Reed.
“Like every retailer, we have found the past seven months extremely difficult,” said chief executive, Steve Simpson.
“This situation has grown worse in recent weeks as we have had to deal with a series of false rumours about our payments and trading which have impacted our credit insurance.
“Traditionally, the group has always traded with strong cash reserves and a conservative balance sheet but these stories, the reduction in credit insurance – against the backdrop of the lockdown – and now this second wave of Covid-19 and all the local lockdowns, have made normal trading impossible.
“As directors, we have a duty to the business, our staff, our customers and our creditors to find the very best solution in this brutal environment.”
“So we have applied to court today for a short breathing space to assess our options before moving to appoint administrators,” Simpson added.
Edinburgh Woollen Mill is owned by billionaire businessman Philip Day, who has a £1.14bn fortune.
The group has hired FRP to review the business. A spokesperson from FRP said: “Our team is working with the directors of a number of the Edinburgh Woollen Mill Group subsidiaries to explore all options for the future of its retail brands, including Edinburgh Woollen Mill, Jaeger, Ponden Mill and Peacocks.”
With hospitality facing another lockdown, how can the industry survive?
The hospitality sector is again in dire straits, with the slow creep of targeted lockdowns being implemented across the UK.
The most notable of these shutdowns has been in the central belt of Scotland, where Nicola Sturgeon has kiboshed evening trading for hospitality venues for more than two weeks.
Scotland’s first minister said that new measures were being implemented to reduce the R rate in Scotland, with new cases rising throughout the last fortnight. They include all bars and restaurants being closed to visitors for the next sixteen days, while cafes will only be allowed to open until 6pm, and not sell alcohol.
In return, the Scottish government announced a £40 million support package to get hospitality businesses through the tough fortnight ahead, and also said that businesses would be allowed to continue takeaway services.
Further, with regional lockdowns firmly in place and likely only to escalate in Northern England, it would appear the hospitality industry’s plight is set to worsen. As pressure mounts on the prime minister to enforce new lockdown measures to contain the spread of the virus, it begs the question of how many bar and restaurant staff will be considered viable work? And how many will be informal workers, and thus not entitled to any support?
For now, the government’s ‘traffic light’ system prevails as a yardstick for regional lockdowns. However, despite strong resistance, it would be prudent for hospitality businesses to ready themselves for lockdown part two, and that means making the most of their takeaway offering.
This will mean not just devising a takeaway-suitable set of products, but marketing and packaging these products in such a way that they don’t appear like last-minute, desperate attempts to hawk off wares. Further, it will involve implementing the necessary infrastructure to put products in front of consumers’ eyes – and this means tech.
Enlisting with a takeaway and delivery service, offering discounts and deals, these are all vital and tried-and-tested ways of drumming up support in what could be a frigid lockdown trading environment.
Commenting on the need for pubs and restaurants to implement tech solutions in order to remain a viable option for customers, the CEO of online food ordering service NOMM, Will Broome, states:
“The Coronavirus pandemic has undoubtedly left a lasting impact on every sector of British business, and the hospitality industry stands to be one of the hardest hit sectors, with the possible closure of bars, pubs and restaurants once again.”
“As Covid cases surge, it is of paramount importance that these hospitality businesses are able to continue to trade, whilst still maintaining hygiene and safety standards and offering a quality customer experience. Mobile technology represents a key solution to a number of the challenges posed by increased safety and hygiene measures, by enabling features such as in-app payments and remote ordering which can dramatically cut down on person-to-person contact, overcrowding and potentially dangerous interactions in the venue. “Ultimately, tech-based solutions such as NOMM will help bars, pubs and other hospitality venues to dramatically improve the convenience, speed and safety of their customer experience, leading to increased popularity, success and growth beyond the Coronavirus crisis.”
Stagecoach shares fall as pandemic hits demand
Stagecoach shares (LON: SGC) fell almost 4% on Friday morning.
The bus and rail company said in a trading update that the pandemic had impacted demand.
Stagecoach said that passenger demand had been steadily recovering since April, however, the continuing uncertainty around the pandemic means it is difficult to predict financial performance.
The group said in a statement: “The recent government announcements to impose further restrictions may discourage public transport use in the short-term. We are grateful for the measures put in place by the respective governments in England, Scotland and Wales, and by our local authority partners, to protect the continuity of local bus services throughout this period.
“In August, the Department for Transport confirmed that payments for the provision of these essential services by regional bus operators in England would continue until no longer required. These COVID-19 Bus Services Support Grant Restart payments are continuing, with an eight week notice period. While this and similar arrangements are in place, we expect to continue to generate positive EBITDA and avoid significant operating losses.”
Since full-year results in July, Stagecoach has seen further positive cash flow and is in a financially strong position.
Chief Executive, Martin Griffiths, said:
“The safety and well-being of customers and our people remains our absolute priority as we continue to navigate the uncertainty from COVID-19. While the situation remains fluid, we have made progress in the restoration of our networks to close to pre-COVID levels and in growing passenger volumes safely within the current restricted environment.
“We have a strong business, with good liquidity, devolved operating companies closely focused on our customers and local communities, good financial discipline and a supportive relationship with government and our local authority partners. As well as continuing to provide vital connections to jobs and public services during the current pandemic, our sustainable public transport services are central to long-term plans for a greener, smarter, safer, healthier and fairer country.”
Stagecoach’s next update will be interim results for the half-year ended 31 October 2020 on 9 December 2020.
Stagecoach shares (LON: SGC) are trading -2.43% at 40,92 (1036GMT).