Inflation rate falls amid lower clothing prices

Safiya Bashir
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Inflation rate falls amid lower clothing prices

UK inflation rate fell from 0.7% to 0.3% in November amid Black Friday sales.

New figures from the Office for National Statistics (ONS) showed the dip in inflation rate and said it was due to retailers slashing the prices of clothing and footwear throughout the second wave of the pandemic.

Whilst spending and prices would usually see an increase in the run-up to Christmas, retailers slashed prices in an attempt to clear stock before a second lockdown.

Jonathan Athow, ONS deputy national statistician, said: “With significant restrictions in place across the UK, inflation slowed, predominantly due to clothing and food prices. Also, after several months of buoyant growth, second-hand car prices fell back a little.”

Food and drink prices fell at their fastest rate since 2017, however the inflation rate was partly offset by ising prices for games, toys and hobbies.

Ruth Gregory is a senior UK economist at Capital Economics. She commented on the inflation rate:

“What we hadn’t anticipated was the slump in food inflation from 0.6% to -0.6%, which came despite the boost to demand for food in the supermarkets during the second Covid-19 lockdown.”

“This does not change the big picture that inflation will start to rise more sharply from April when the temporary VAT cut for the hospitality sector is reversed and the downward drag from the previous plunge in fuel prices drops out of the annual comparison.

“Together these forces could lift inflation to 2% by the middle of next year. But given there will still be some spare capacity in the economy, there seems little danger of inflation rising sustainably above the 2% target unless there is a no-deal Brexit,” she added.

The pandemic has changed the way we are spending our money. Figures from the British Retail Consortium have shown that whilst people are spending more amid the second wave, it is less on the highstreet and more online.

Gold rallies on hopes of Fed stimulus

Jamie Gordon
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Gold rallies on hopes of Fed stimulus

Having fallen on Monday, the price of gold rose by 1.25% on Tuesday, as traders reacted to a weakening dollar and expectations of a compromise-ready Fed meeting on Wednesday.

With Fed stimulus coming at some point (hopefully soon), and talk of negative rates being floated around again following the latest London lockdown announcement, there is some hope that gold – and precious metals as a whole – will go on another bull run, or at least bounce back somewhat from the climbdown it has seen over recent months.

As said by IG Chief Market Analyst, Chris Beauchamp: “The rally in gold from its five-month low appeared to have stalled last week, but it appears a fresh move higher is underway, fuelled by expectations of more central bank action to help prop up economies around the globe.”

What has stood in gold’s way, though, is the news of vaccine breakthroughs and roll-outs, with the first Pfizer-BioNTech dose being delivered on Monday seeing the precious metal push downwards. As the vaccine roll-out continues over the middle-term, a potential risk-on climate could see a greater shift back towards equities.

However, in the short-term, precious metals may rally as European countries re-enter their respective iterations of lockdown, and the initial giddiness of vaccine roll-outs wears off.

As stated by OCBC Bank in Singapore economist, Howie Lee: “But gold could rally in 2021 when the vaccine optimism dies down and investors’ focus returns to rising inflation expectations due to the large swathe of monetary and fiscal stimulus the US economy still requires.”

Also worth noting is that despite a recovery from gold on Tuesday, it was far out-performed by silver, which posted a 2.74% rally. On Tuesday evening, gold sits at 1,850.48 USD per ounce, level with where it was at the start of June – during its long rally. Meanwhile, silver sits at 24.50 USD per ounce, where it sat at the end of July, and not far off where it spent most of September to November.

Redrow posts optimistic 2021 projection

Bronte Carvalho
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Redrow posts optimistic 2021 projection

Leading UK home builder Redrow (LON:RDW) published its market predictions for the next year on Tuesday morning, projecting a “strong” 2021 and a steady housing demand despite the ongoing coronavirus pandemic.

Matthew Pratt, CEO of Redrow, commented: “We are very excited about 2021. We entered our new financial year in a position of strength and, buoyed by the anticipation of the COVID-19 vaccine roll-out, we remain optimistic about ongoing housing demand and consumer confidence”.

In November, Redrow polled 2,000 UK adults to measure their views on their own homes in the aftermath of the pandemic and their desires as they enter 2021. James Holmear, Redrow’s Group Sales Director, commented on the survey’s results and the buyer preferences trends that he expects to see emerge over the next year.

Working from home infrastructure

Broadband speed was the “most challenging aspect” of being at home during lockdown for 50% of respondents, crucially jeopardising the nationwide work from home scheme as employers increasingly look to expand remote working.

More than half (56%) agree that having a separate study (or at least an area “dedicated to homeworking”) will be an important factor in deciding on their next home.

“There has been resolute demand for homes with more space to live and work as customers reflect on their lockdown experiences,” Holmear explains. “With more people expected to work from home regularly, even after the worst of the pandemic is over, space to work from home has rocketed up the list of priorities for buyers.

“We are also now more reliant than ever on broadband and along with water, gas and electricity, strong internet connection is now seen as the fourth utility. For many this year, a robust connection has been the only way to maintain both their professional careers and social entertainment and poor access can be frustrating, impact quality of life and even lead to isolation and loneliness. Today, broadband connectivity is one of the first things potential buyers want to discuss with us when they come to visit one of our new developments”.

Space in the home

Almost half of respondents (44%) said that the amount of outside space is their “biggest priority” when moving to their next home, with a further third stating the importance of floor space.

Building on the greater demand for space and a generous garden, almost half (48%) see a ‘detached’ property as being their “forever home” moving into 2021.

“With more time spent at home, gardens are becoming increasingly important and are now the top priority for many buyers when searching for their next home.” Holmear states.

“While this trend is one that has largely been bought on by Covid-19 and lockdown scenarios, we can expect to see this last for the long-term as Britons became increasingly aware of how important access to fresh air is for health and wellbeing. In the colder months, we’re seeing high demand among residents for gardens that offer the potential to provide snug entertainment spaces that can be quickly equipped with fire bits and outdoor kitchens”.

Longer commutes

With working from home becoming the new normal for many UK professionals during the pandemic, less than 10% are looking to live closer to their workplace in the future. Almost half of respondents (49%) actually stated that are happy to move further away. 2 in 5 (20%) Londoners would be happy to live an additional 45 minutes from their place of work under the assumption that office attendance will gradually diminish in the coming years.

Holmear adds, “This year, city-dwellers have seen the benefits of living away from traffic pollution and crowds, and are now in search of a healthier lifestyle – even if this means looking further afield where they can find attractive price differentials that will enable them to afford the extra room they crave. There is now less need to live near a place of work, encouraging a general movement away from cities, and a willingness to commute further and less frequently.

“Our research found that a quarter (23%) would be happy to spend an extra 30-minutes travelling to their place of work and we’re anticipating a big rise in the ’90 minute commute’ which in future is only done a few days a week”.

Technological revolution

Redrow reported that technology in the home buying process will “become more prevalent” in the near future due to increasing demand for buyers. The pandemic has also accelerated the existing trend towards online ‘hybrid’ models of home viewing.

“Housebuilding has traditionally been stuck in the dark ages when it comes to technology, but buyer demand is pushing the industry further into the ‘digital’ space and we can expect to see further advancements over the next year. Last year Redrow launched its online reservation service, which is accessed via our online member’s area, My Redrow. It allows buyers the opportunity to legally complete the reservation of their new home online and means that COVID-19 aside, our customers no longer need to visit our sales centres for a long reservation meeting.

“We couldn’t have predicted that the ability to look around plots and reserve homes virtually would be as important as it is today, but our investment in technology has meant that we have been well placed to support our customers who have still wanted to progress with their move during lockdown”.

Redrow’s credentials

Established more than 45 years ago, Redrow has earned a reputation for building quality, beautiful homes and “creating a better way to live”. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 index. For the year ending 28 June 2020, Redrow reported revenue of £1.3 billion.

In Q3 2020, Redrow achieved the Global Good Company of the Year Silver award in recognition of its social impact and launched its ‘Nature for People’ biodiversity programme, established as part of a long-standing partnership with charity The Wildlife Trusts.

Over the course of 2020, despite the pandemic Redrow has consistently been rated as “excellent” on Trustpilot and achieved the Five Star Customer Satisfaction award from the Home Builders’ Federation (HBF) for a consecutive year.

The company is also one of only eight UK construction companies to be named a Diversity Leader in the Financial Times’ inaugural list of European leaders for workplace diversity and inclusion.

According to Hargreaves Lansdown, Redrow has a market capitalisation of £1.83bn, a dividend yield of 5.96% and a P/E ratio of 15.35.

Chemring posts 20% rise in revenue

Safiya Bashir
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Chemring posts 20% rise in revenue

Chemring shares were over 10% up on Tuesday after the group posted strong results for the year ended 31 October.

The aerospace and defence company posted a 20% increase in revenues to £402.5m and a 31% growth in underlying profit before tax to £51.7m.

Chemring lifted its dividend and cut net debt thanks to good progress made on securing new business in the UK.

Michael Ord, Group Chief Executive, commented: “Our focus in recent years has been on putting in place the foundations on which to build a stronger, higher quality business. The resilience of the Group in response to the coronavirus pandemic is a consequence of the dedication and commitment of all our people and clearly demonstrates the significant progress that we have made. We set ourselves demanding goals and our teams across the Group have risen to those challenges, delivering a financial performance that was ahead of the Board’s expectations.

“Trading since the start of the current financial year has been in line with expectations. With 78% of 2021 expected revenue covered by the order book, the Board’s expectations for 2021 performance remain unchanged. Chemring is well placed, with a robust strategy, market-leading positions across different geographies and sectors, and with products and services that are critical to our government and blue-chip customers. Chemring’s long-term prospects remain strong,” he added.

Broker Peel Hunt said: “Management has made a lot of headway tidying the business up over the last couple of years – for example, we note this is the second year running with no exceptional charges and operating cash conversion (of EBITDA) above 100%.”

“We think that with the good growth potential from both Roke and Sensors & Information sitting over the solid long-term outlook for Countermeasures, the shares are looking increasing attractive on less than 20x FY22E.”

Chemring shares are trading +9.59% at 297.00 (1335GMT).

Greatland Gold appoints new CEO

Safiya Bashir
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Greatland Gold appoints new CEO

Greatland Gold has appointed Shaun Day as its new chief executive, sending shares up 2.3% to 33.2p.

Shaun Day will succeed current chief executive, Gervaise Heddle, who is leaving the group to “pursue other interests”. Shaun Day will take up the position of chief executive and join the Board on 8 February 2021.

Heddle will remain a part of the executive team until March 12, 2021 to ensure a smooth transition.

Day said: “I am delighted to take on the role of Chief Executive Officer of Greatland. Under the leadership of Gervaise, the remarkable progress at the Havieron Joint Venture over the past two years has created a strong platform for future growth. I look forward to working closely with the Board, the Greatland team and our key partners as we continue to drive forward a multi-pronged growth strategy and realise further value for shareholders.”

Day is currently chief financial officer of AIM-listed miner Salt Lake Potash. When he starts his new role, he will be granted 5,000,000 performance options on commencement of employment.

Alex Borrelli, Chairman of Greatland Gold plc, said: “On behalf of the Board, I would like to thank Gervaise for his tireless commitment and outstanding contribution to the development and success of Greatland. Gervaise joined the business in May 2016 and was instrumental in the acquisition of the Havieron project and securing the subsequent Farm-in and Joint Venture Agreements with Newcrest. Under his leadership, the team at Greatland has delivered exceptional value creation for shareholders.

“It is a measure of our growing reputation as a business that we are able to attract high-quality people to Greatland, and I am delighted to welcome Shaun to our Board as our Chief Executive Officer. Shaun brings extensive industry and regional experience as well as capital markets expertise and is a great addition to our strong management team. During his five years at Northern Star, one of Australia’s largest gold miners, Shaun helped take the company from a similar size as Greatland to an approximate A$8bn market capitalisation, demonstrating his all-round expertise and suitability for the role. We look forward to working with him and benefitting from his extensive experience.”

Greatland Gold shares (LON: GGP) are trading -1.35% at 32.06 (1314GMT).

Purplebricks shares surge on strong trading

Safiya Bashir
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0
Purplebricks shares surge on strong trading

Purplebricks shares opened 16.53% higher after the group said in a trading update that it expected to beat full-year profit forecasts.

The AIM-listed firm revealed Half Year Results for the six months ended 31 October 2020, where total fee income rose 6% to £49.1m, while instructions increased 8% to 35,387, and instructions had surged 20%.

Operating profits jumped from £200,000 losses a year ago to £6.9m, whilst revenues fell 6% to £44.2m.

Vic Darvey, Chief Executive Officer of Purplebricks, commented :

“Purplebricks has delivered a strong performance in the period with instructions up 8% and total fee income growth of 6%, despite the UK housing market being disrupted through the height of COVID-19. This continued momentum demonstrates the strength of our technology-led business model and our ability to adapt quickly to a changing market.

“We are now emerging from the pandemic in a very strong competitive position. As a result of continued financial discipline and operational excellence across the business we have experienced strong growth in adjusted EBITDA, up 110%, and a significant improvement in cash generation compared to last year.

“Purplebricks focus for 2021 will be to re-accelerate the growth of our core business by continuing to enhance our digital innovation, our virtual capabilities and increasing agent productivity through automation and efficiency. This period has shown that our technology-led business model is now more relevant than ever, as customers continue to shift to being more comfortable buying and selling their homes digitally.”

Purplebricks has adjusted EBITDA for the full year to exceed the upper end of the current range of consensus.

“The business has performed strongly in the period since the market shutdown ended, with buoyant trading supported by strong market recover,” said the group in a trading update.

Shares in Purplebricks are trading 16.62% at 88.17 (1211GMT). In the year to date, shares are down from highs of 93.98.

LoveHolidays to refund £18m to 40,000 customers

Safiya Bashir
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0
LoveHolidays to refund £18m to 40,000 customers

LoveHolidays will have to refund £18m to more than 40,000 customers amid Coronavirus disruptions.

The group is one of the UK’s biggest online travel agents and was ordered by the Competition and Markets Authority to issue refunds after the holiday operator received hundreds of complaints from customers.

Andrea Coscelli, chief executive of the CMA, said: “Travel agents have a legal responsibility to make prompt refunds to customers whose holidays have been cancelled due to coronavirus.

“Our action today means that LoveHolidays’ customers now have certainty over when they will receive their money back and they will receive this without undue delay.

“We are continuing to investigate package travel firms and where we find evidence that businesses are breaching consumer law, we will not hesitate to take enforcement action to protect consumers.”

LoveHolidays has said that it will repay customers in full by March 2021. So far it has refunded £7m to 20,000 customers.

So far it has refunded over £205m owed to more than 180,000 customers, which, is the equivalent of 10 years’ worth of refunds in just eight months.

The Package Travel Regulations states that online travel agents are legally bound to refund customers for package holidays cancelled due to the pandemic. This is regardless of whether the holiday operator has received refunds from suppliers, such as airlines.

The latest news is following action by the CMA in investigating holiday cancellations by a number of operators. It has written to over 100 package holiday firms about their obligations to comply with consumer protection law. The CMA has already secured refund commitments from Lastminute.com, Virgin Holidays, TUI UK, Sykes Cottages and Vacation Rentals, explains the CMA in a press release.

Shaftesbury swings to £700m loss

Safiya Bashir
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0
Shaftesbury swings to £700m loss

Shaftesbury has posted a £700m loss after the group was hit by Coronavirus restrictions.

The group, owns parts of Chinatown, Soho and Covent Garden, saw a dramatic reduction in footfall due to the lack of tourists and office workers coming into the centre.

In the second half of the year, Shaftesbury only collected 53% of the rent due, which led to an annual loss after tax of £699.5m. This is compared to the £26m profit in the previous year.

“Rarely in history has the world seen such widespread disruption to normal patterns of life. Only now are we seeing the first positive signs that conditions will begin to improve in the year ahead,” said Brian Bickell, the Shaftesbury chief executive.

“In the year ahead, the widespread distribution of effective vaccines will bring a gradual return of confidence and activity across the West End and, a recovery in domestic footfall and spending to our villages.

“At the present time, it is not possible to predict at what point conditions will improve but it is likely social distancing and other restrictions, with the risk of further lockdowns, will continue into the spring and possibly early summer, putting further financial strain on many of our occupiers.”

Net assets at Shaftesbury were down by 18% and as of September, wholly-owned EPRA vacancy was 10.2%. Shaftesbury has not declared any dividends for the year.

AJ Bell investment director, Russ Mould, commented: “Unlike some other parts of the real estate market it’s hard to see a swift recovery in valuations and rental income for Shaftesbury because of the reliance of that part of London on tourism.

“Even in the most optimistic ‘reopening’ scenario, international travel at scale could be one of the last things to make a comeback. Global roll-out of a vaccine could be patchy and different countries could face very different experiences with the pandemic next year.”

Shaftesbury shares are trading -4.83% at 522.50 (1133GMT).

JD Sports shares surge on Shoe Palace deal

Safiya Bashir
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0
JD Sports shares surge on Shoe Palace deal

JD Sports has bought sportswear brand Shoe Palace in a deal worth $325m (£243.7m).

On the news, shares in JD Sports (LON: JD) surged 5% as the group shares its plans to extend presence in California and other US states including Texas, Florida and Nevada.

The deal is all in cash and the owner of the retailer, Genesis, will then have 100% of both Shoe Palace shares.

JD Sports chairman Peter Cowgill commented: ‘’We are delighted to have completed the acquisition of Shoe Palace. The Shoe Palace team are ambitious, have great energy and pride themselves on their consumer connection and we welcome them to the group.”

“We are confident that our combined fascias will provide us with the flexibility and expertise to fulfil our mutual ambition of becoming a prime customer destination for sneakers and lifestyle apparel in the US.”

Shoe Palace was founded in 1993 by four brothers from the Mersho family. Pretax profits were $52m last year. The retailer has 167 stores across southern states and strong online sales.

Peel Hunt analysts commented on the deal: “It’s a great fit for JD: Finish Line has a weakness on the West coast and doesn’t really connect with the shoppers SP is close to.”

The retailer pulled out of talks earlier this month to buy Debenhams triggering the collapse of other High Street retailers including Arcadia. In a statement to the City, JD Sports said: “JD Sports Fashion, the leading retailer of sports, fashion and outdoor brands, confirms that discussions with the administrators of Debenhams regarding a potential acquisition of the UK business have now been terminated.” If a buyer is not found, the department store could go into liquidation.

JD Sports shares (LON: JD) are 3.82% higher at 820.80 (1058GMT). In the year to date, shares are down from highs of 850.20.

FTSE falls as unemployment hits new highs

Safiya Bashir
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0
FTSE falls as unemployment hits new highs

The FTSE was in the red on Tuesday morning after new data showed record redundancies for the three months to October.

The blue-chip index was down 0.3% as the Office for National Statistics revealed the UK’s unemployment rate was up to 4.9%.

In the last quarter, unemployment hit 370,000. This is an increase of 241,000 on the previous quarter and 411,000 more than the same period a year ago.

“The latest data confirms that coronavirus continues to weigh heavily on the UK labour market. The re-introduction of tighter restrictions and the expected cliff edge caused by the original furlough scheme end date in October helped drive record redundancies,” said Suren Thiru, the BCC head of economics.

“While the furlough scheme will help safeguard many jobs over the winter months, with businesses facing the prospect of further restrictions and a messy end to the Brexit transition period, major job losses remain probable in the near term.”

Employment Minister, Mims Davies, has said there is hope yet as the vaccine rolls out.

“It’s been a truly challenging year for many families but with a vaccine beginning to roll out with more perhaps to follow and the number of job vacancies increasing there is hope on the horizon for 2021.

“Our Plan for Jobs is already helping people of all ages into work right across the UK, with increased Jobcentre support, new retraining schemes, new job placements like Kickstart for our young people and more to come as we are determined to build back better,” she said.

On the FTSE this morning, Rolls Royce was down 2.9% on opening after the group said it would take five years to recover from the pandemic. Rightmove was down 1.8% whilst JD Sports gained 3.7% after the retailer announced plans to buy US sportswear brand Shoe Palace in a $325m deal.

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