DPD and Kingfisher to hire 7,500 to cope with online demand
Delivery firm DPD and B&Q owner Kingfisher are hiring thousands of new employees to cope with the surge in online shopping over the lockdown period.
Both companies will hire a total of 7,500 new staff members including drivers, warehouse and management roles.
DPD, which works with companies including John Lewis, Marks & Spencer, Morrisons and Asos, is investing £200m this year in order to expand its next-day delivery service.
“We are experiencing the biggest boom in online retailing in the UK’s history,” said Dwain McDonald, DPD boss. “Since this began, we have been handling parcel volumes more akin to the festive seasonal peak than this time of year.”
“I do think the High Street will bounce back from where things are now, but we have to base our modelling on our conversations with retailers and their projections.”
“But what we have seen in recent months is potentially a much more significant shift in behaviour, and we believe elements of it will be permanent,” he added.
Kingfisher has announced plans to hire an extra 3,000 to 4,000 employees as the group saw online sales surge during April and May.
These roles are to be temporary over the summer period, said chief executive Thierry Garnier. However, he will “watch what happens” over the next few months.
The news from DPD and Kingfisher comes following weeks of companies announcing wide-scale job cuts. British Gas owner Centrica, BP, and British Airways have announced redundancy plans that will affect thousands across the UK and globally.
Shares in Kingfisher (LON: KGF) are trading -1.25% at 213.20 (1018GMT).
Tensions, stimulus and Coronavirus leave global equities caught in two minds
On the one hand stimulus hopes and Coronavirus treatments, on the other hand geopolitical tensions and a looming second wave. Global equities certainly weren’t short of things to consider on Wednesday, but rather had trouble dealing with contradictory news and mixed sentiments.
On one side, markets were running off of the steam of Tuesday’s Fed-based recovery. They were also buoyed by the news that an inexpensive steroid can be used to treat the Coronavirus, and potentially lower death rates by up to a third.
Further – and following the Fed‘s action on Tuesday – analysts expect that the Bank of England will extend its bond-buying programme by an additional £100 billion, and this should provide (the UK at least) some momentum during Thursday trading.
On the other side, equities still have to contend with the awkward reality of a Coronavirus second wave. As shops reopen, people scramble for a return to normal life and Beijing reports a resurgence in COVID cases, investors will begin to come to terms with the fact that a second round of lockdown – and poor industrial and consumer activity – may be just around the corner.
In addition, following the news that Chinese and Indian troops clashed on the border, concerns mount over a potential dispute for the Himalayan territories. Beijing officials have so far seemed keen to de-escalate the incident, though their live-fire artillery tests in the area would speak to the contrary. Similarly, riding a wave of inflammatory nationalist rhetoric, Narendra Modi’s political clout is contingent upon his ability to save face, which will mean some harsh and perhaps unhelpful words are still to come.
While this clash in and of itself may not escalate any further, it should remind us of two inconvenient truths. First, as seen with today’s news, the trade wars with the US and threats to the UK over intervention in Hong Kong – China are willing to assert their position as a domineering force, even at the expense of short-term prosperity. Second – and equally – India has similar ambitions to China, though not yet the same resources at its disposal. These growing and hungry neighbours will struggle to contain themselves – both in terms of their ambitions and geographies – as they continue to pronounce themselves outside of their own borders. These large and appetitive players brushing shoulders seems like an inevitable source of friction, and you’d be surprised if the recent skirmish was the last of its kind.
With this mixture of happy news today and the worries of tomorrow, equities really seemed to question where they belonged as trading progressed on Wednesday.
The CAC led the way with a 1.3% increase towards the end of the day, before revising this down to a 0.88% or 43 point increase, up to 4,995. Following behind were the DAX with a 0.54% or 66 point rise, to 12,382, and the FTSE gingerly increasing by 0.17% or 10.46 points, up to 6,235.
After a rough start to June, equities (and central banks) seem keen to find any reason they can to climb slowly back to their Valentine’s Day highs. Today, Eurozone equities were able to claw back some ground, however the Dow Jones lagged behind slightly with a 0.12% dip, down to 26,259 points.
Despite a glum day, the general feeling is that things could’ve been worse for the Dow:
“It arguably would’ve been even lower without the buffer of the recent stimulus reports, given the apparent severity of the new outbreak in China, and the seemingly uncontained covid-19 situation in the US itself.” stated Spreadex Financial Analyst Connor Campbell.
Immunodiagnostic Systems boasts 26% earnings growth
Immunodiagnostic Systems (AIM:IDH) posted healthy full-year results on Wednesday, despite reduced lab testing capacity.
The group booked revenue of £39.3 million, up 2% year-on-year. More impressively, though, the company’s adjusted shares jumped from £4.8 million to £6.1 million, up 26% on-year.
The situation was equally positive for Immunodiagnostic Systems shareholders, with adjusted EPS hiking 208%, from 2.4p to 7.4p. Similarly, the dividend per share jumped from 0.7p to 1.9p year-on-year.
Looking ahead, the company noted that FY2020 was the second consecutive year of LFL revenue growth, and their ability to improve ‘several operational key performance indicators’ suggests positive momentum going forwards. That being said, The Coronavirus pandemic will somewhat dampen the company’s trajectory, as they noted a ‘significant’ decline in demand for in-vitro testing during April.
However, the company plan to commercialise their Coronavirus antibody testing kits this month, and once the impact of the virus diminishes, they will look to ‘harvest the benefits of the actions taken in FY2020’ to help spur forward-looking growth.
Responding to the update, Immunodiagnostics CEO Jaap Stuut, commented:
“During FY2020 we delivered a second consecutive year of like for like revenue growth, with revenue increasing by 2% to £39.3m. We also increased the number of analysers sold or placed to 150, compared to 127 in FY2020. Adjusted EBITDA improved to £6.1m from £4.8m in the prior year. Our results in Q1 of FY2021 will be significantly impacted by reduced laboratory testing volumes, however once the pandemic subsides, we believe we are in a strong position to continue our revenue growth. Additionally, we have an opportunity to commercialise our range of automated and manual SARS-CoV-2 antibody testing kits, which we plan to launch during June 2020“.
Following the positive results, the company’s shares bounced 4.29% or 11.80p to 286.60p per share 17/06/20 16:01 BST. The group’s p/e ratio is 114.58, their dividend yield is modest at 0.25%.“Debt nightmare” brewing for families on Universal Credit
A “debt nightmare” is brewing for UK families, according to a survey by the Joseph Rowntree Foundation (JRF) and Save the Children. The report revealed that 60% of families on universal credit have been forced to borrow money due to the impact of the coronavirus pandemic, resorting to payday loans or credit cards to cover costs.
The findings also outlined how 70% of British families have cut back expenditure on food and other essential items, while half have struggled to pay rent and household bills as record numbers of employees have been furloughed or dropped from payrolls altogether.
Earlier this month, it was reported that UK household debt had risen to £6 billion amid mounting credit card payments and utility bills. The JRF survey found 86% of those with children on universal credit or child tax credits have faced additional household costs due to the pandemic.
In a joint statement, the JRF and Save the Children commented:
“Parents with children who were caught in poverty pre-crisis are around 50% more likely to have lost their jobs than parents who were better off, and the long-term effects on childhood and family life could be significant”.
Both organisations are calling for the UK government to extend an “urgent lifeline” by way of a £20 increase to universal credit and child tax credit. The demands come in light of the widely-publicised U-turn on free school meals following footballer Marcus Rashford’s open letter to MPs, urging an extension of the coronavirus meal voucher scheme for vulnerable children.
Since the beginning of the coronavirus pandemic, the Department for Work and Pensions has received more than 2.3 million new applications from families for universal credit – on top of 2.6 million from before, out of which almost 1.2 million were families with children.
Acting director of the JRF, Helen Barnard, commented on the concerning figures:
“Providing an urgent uplift of £20 per week to families with children claiming Universal Credit or Child Tax Credits can keep many from being pulled into poverty, especially where parents have lost work as a result of the pandemic. By taking action now, we can ensure that the human suffering of this tragic pandemic is not compounded by rising child poverty, damaging life chances and holding a generation back in the years to come”.
SSE receives go-ahead for 103-turbine Shetland wind farm
Scottish energy giant SSE (LON:SSE) announced on Wednesday that it had approved a final investment decision to build a 103-turbine 443MW Viking onshore wind farm, which the company said would help ‘drive forward a green economic recovery after Coronavirus‘.
The Viking project is located in Shetland and is wholly owned by SSE Renewables, having been developed in partnership with Viking Energy Shetland. The project, upon completion, will be the UK’s largest onshore windfarm.
The company said Viking will harness Shetland’s excellent wind conditions, and expects to generate around 1.9TWh of electricity each year towards the UK and Scotland’s net-zero targets.
Terms and conditions
SSE now has to wait for the outcome of the consultation of Ofgem’s minded-to position to approve a 600MW transmission connection from Shetland to the UK mainland, with completion anticipated for July 2020. Approval was subject to the Viking wind farm reaching a positive final investment decision – which it now has done. However, SSE’s decision today is conditional on the outcome of ongoing industry code modifications, which include those which facilitate, “the contribution from the Distribution Network Operator, SHEPD, to the cost of the transmission link”. Ofgem is expected to announce their decision on these before the decision on the Needs Case.What it means for Shetland
The company stated that their capital expenditure on the project is expected to be around £580 million. It said that construction on the enabling works for the transmission link had started and that works on the wind farm would commence in the latter stages of summer.It added that the Viking project was the anchor that commercially underpins the transmission link with the UK mainland, and that it will play a ‘critical’ role in Shetland’s security of supply needs. SSE stated that both the wind farm and the link will be socio-economically beneficial for the islands, and will provide ‘much needed and sustainable diversification of the Shetland economy.’
SSE response
Managing Director of SSE Renewables, Jim Smith, commented on the announcement:
“Viking wind farm will help kickstart the green economic recovery, bringing much needed low-carbon investment to Shetland. In doing so, it will trigger the building of the associated transmission connection to the islands, which will itself help resolve longstanding security of supply issues on the island”.
Scottish Government Energy Minister, Paul Wheelhouse, added:
“This is excellent news for Shetland, and for Scotland’s renewable energy and climate change ambitions. The Viking wind farm project is also a great symbol for the green recovery that the Scottish Government is determined to foster and encourage, as we move through and beyond the current Coronavirus pandemic.” “This decision is of sufficient scale to act as the trigger to unlock the much anticipated major investment in a high voltage connection from Shetland to mainland Scotland, subject to a final decision by Ofgem which we expect shortly. It is essential that the community of Shetland benefits from this project and we look forward to further news of contracts being awarded to local businesses, as well as Scotland as a whole, during the construction phase.” “I am determined that this excellent outcome should be a starting point for similar investments and connections to unlock equivalent potential and benefits on the Western Isles and in Orkney.”
Following the update, SSE shares boasted a strong 8.79% or 111.53p rally, up to 1,380.53p per share 17/06/20 12:56 BST. The SSE p/e ratio is currently 18.91, their dividend yield is generous at 7.08%.UK inflation slips to four-year low in May
The UK’s annual inflation rate tumbled to a record four-year low to 0.5% in May this year, driven by falling fuel and clothing prices as demand dwindled during the height of the coronavirus pandemic. According to the Office for National Statistics (ONS), plummeting fuel prices – down 16.7% in May – pushed Britain’s Consumer Price Index (CPI) down to the lowest level since the infamous Brexit referendum in June 2016.
The biggest impact is likely to have come from the transport sector, which has suffered a double-blow of lockdown measures and a record slump in oil prices. Ryanair (LON:RYA), easyJet (LON:EZJ) and British Airways (LON:IAG) are among a number of airlines that have raised concerns for the future of the aviation industry, calling for a judicial review of the UK government’s new quarantine rules.
Inflation is now well below the Bank of England’s 2% target, and the central bank’s Monetary Policy Committee (MPC) is expected to respond with an announcement tomorrow which economists polled by Reuters are predicting will announce an extra £100 billion of bond purchases. The finance institution already purchased £200 billion worth of bonds earlier this year in March.
The drop in inflation will likely have a knock-on effect on interest rates, as it is one of the main factors that the MPC considers when setting the “base rate” which banks use to charge people for borrowing money or pay on top of their savings. Unsurprisingly, the UK’s interest rates currently stand at 0.1% – the lowest level in the entirety of the Bank of England’s 325-year long history.
The ONS reportedly encountered some difficulty collating the figures necessary for the May inflation report, as a total of 14% of the total items needed were entirely unavailable due to lockdown measures.
Deputy national statistician Jonathan Athow commented on the figures:
“The growth in consumer prices again slowed to the lowest annual rate in four years. The cost of games and toys fell back from last month’s rises, while there was a continued drop in prices at the pump in May, following the huge crude price falls seen in recent months”.
These figures mark the last major data set release ahead of the next interest rate decision by the MPC that is expected this Thursday. Recent speculation is that the Bank of England could set its core rate at a negative level for the first time in British history in an attempt to boost economic activity.
Trades Union Congress general secretary Frances O’Grady also weighed in on the ONS’s report, remarking:
“This fall in inflation shows the fragility of the economy in lockdown. But with strong action now, we can prevent lasting damage and build back better. The priority must be to protect and create jobs. The more people in work, the faster we can work our way out of recession”.
Boohoo shares bounce 8.3% on acquisitions and 45% sales growth
Online fashion retailer Boohoo (LON:BOO) saw its shares rally on Wednesday, as the company posted strong results for the three months to 31 May, and and announced the acquisition of fashion brands Oasis and Warehouse.
Strong trading for online fashion
Regarding the company’s quarterly performance, the early stages of the calendar year saw strong trading for Boohoo, with sales jumping 45% year-on-year for the three month period, up to £367.8 million. The company added that it saw ‘strong’ underlying growth across its Boohoo, Pretty Little Thing and Nasty Gal businesses, with its newer brands – Karen Millen, MissPap and Coast – also trading strongly.The group said it began the year with strong momentum, which was somewhat stifled due to changes in consumer habits and logistical difficulties during March and early April. This was followed by a marked improvement towards the end of April and ‘robust’ performance in May.
Boohoo said that its gross margin performance was strong, up 60 basis points year-on-year to 55.6%. It added that its test and repeat model allowed its teams to support the categories and trends which developed through the three month period, with areas such as loungewear and athleisure performing well.
Boohoo expanding the fleet
On Wednesday the company also announced the acquisition of the online businesses and intellectual property of online fashion businesses Oasis and Warehouse, for a combined cash sum of £5.25 million from Hilco Capital Limited.The company said that its new acquisitions would be integrated into the Boohoo model, and would benefit from the company’s insight, infrastructure and supply chains – having already achieved aggregate unaudited revenue of £46.8 million for the financial year ended February 2020.
The Group added that it had successfully completed the purchase of the remaining 34% minority interest in prettylittlething.com Limited and expected the acquisition to be ‘significantly earnings enhancing’. It continued, saying that the acquisition represents an important step in its ambition to lead the fashion e-commerce market globally.
Commenting on the update, company CEO John Lyttle stated:
“During unprecedented and challenging times, the Group has delivered a very strong trading and operational performance. I am proud of how our colleagues and business partners from around the world have responded to ensure that we can safely bring to our customers the latest fashions, great value, fantastic prices and best in class service. Whilst there is a period of uncertainty within the markets in which we operate, the Group is well-positioned to continue making progress towards leading the fashion e-commerce market globally.”
Following the update, Boohoo shares bounced 8.32% or 32.40p, to 421.70p per share 17/06/20 12:19 BST. This is upwards of the consensus target share price of around 400.00p posted last week. The company’s p/e ratio stands at 64.67.HSBC pushes ahead with plans to cut 35,000 jobs
In a memo sent to the group’s global staff, HSBC’s chief executive has confirmed plans to continue plans to cut 35,000 jobs.
Despite the Coronavirus putting the huge redundancy plans on hold, the banking group is set to push ahead with the job cuts over the medium term.
A memo sent round to global staff by chief executive, Noel Quinn, also explained plans to freeze worldwide recruitment.
“We could not pause the job losses indefinitely — it was always a question of ‘not if, but when’,” said Quinn.
“I wish I could say that the next few months will see a return to normality, but that is unlikely to be the case. The reality is that the measures and the change we announced in February are even more necessary today,” he added.
“Since February we have pressed forward with some aspects of our transformation programme, but we now need to look to the long-term and move ahead with others, including reducing our costs,” Quinn said in the memo sent to all 235,000 members of staff.
“Against this backdrop, I am writing to let you know we now need to lift the pause on job losses. I wish I could say that the next few months will see a return to normality, but that is unlikely to be the case. The reality is that the measures and the change we announced in February are even more necessary today,” he added.
The job cuts were originally planned for February but were put on hold during the pandemic.
Since the start of the year, HSBC (LON: HSBA) has seen shares fall by 27%. On the news this morning, shares in the group rose by 0.5% and are currently trading at 387.50 (0928GMT).
FTSE 100 gains in risk-on rally spurred by Fed action
The FTSE 100 surged on Tuesday after the Federal Reserve said it would start buying individual corporate bonds in the primary market, a move that triggered a wave of optimism through markets.
The move followed sharp declines in equities on Monday caused by fears over a second wave of coronavirus.
Some analysts were sceptical about the Fed timing and pointed to a market that was now, more than ever, driven by central bank actions.
“What seemed like a significant turn lower for equities has turned into another bounce, with the Fed and BoJ actions overnight providing the catalyst for the revival in risk appetite,” said Chris Beauchamp, Chief Market Analyst at IG.
“While the timing of the Fed’s moves will be viewed as somewhat suspect, given that it comes just as the Vix spikes and equities take a dive, the reality is that activist central banks are a feature, not a bug, and will remain the driving force for markets thanks to the boost to liquidity and confidence that these provide.”
“When, as now, economic and corporate data is so dire, then it is up to central banks to step in to bridge the gap in economic activity. Equity rallies are a side effect, and not the chief object, of these central bank moves, but the mantra ‘do not fight the Fed’ is still as powerful as it ever was,” Beauchamp said.
Ashtead
Plant hire company, Ashtead, was one of the FTSE 100’s best performers after it released earnings and maintained the dividend. “While recent performance has been mixed, the firm will be key beneficiary of a sustained recovery in activity in the US, although a rise in virus cases will certainly provide a cause for concern in the near term,” said Chris Beauchamp. “But as one of the big winners of the last few years, Ashtead should remain near the top of UK investor watchlists.” Travel shares were the among the other top risers that rebounded after a sharp fall yesterday, demonstrating the whipsawing nature of some stocks that has led commentators to coin the phrase ‘Kangaroo’ market, due the frequency of stocks bouncing up and down.Rashford letter sees government u-turn on free school meals for 1.3m pupils
England and Manchester United footballer Marcus Rashford sent an emotive open letter to MPs, urging them to ‘protect the vulnerable’ by extending the Coronavirus meal voucher scheme over the summer.
The 22 year-old Tweeted out to his 2.7 million Twitter followers:
Naturally, a high profile figure raising the issue of child poverty gained a lot of traction – and a mixed reception. While many supported the points raised by Rashford, and related to his family’s plight, the seemingly out-of-touch Therese Coffey pulled an absolute howler, with what must have been one of the most ill-conceived and callous Tweets of the year so far. Since deleted, Coffey responded to Rashford’s personal account:1. When you wake up this morning and run your shower, take a second to think about parents who have had their water turned off during lockdown #maketheuturn
— Marcus Rashford (@MarcusRashford) June 16, 2020
“Water cannot be disconnected though”Later, the Secretary of State for Work and Pensions changed her tune:
This half-baked back-track neither goes the full way towards an apology, nor does it actually do the job of satisfying what Rashford was calling for. Coffey even went as far as to cite the Conservative’s success in protecting families versus their Labour party rivals. It’s fair to say her footing in the debate wasn’t strengthened by her efforts to dig herself a deeper hole – and Twitter was happy to oblige her, with one user citing her unsavoury voting record, while another simply replied, “A cab for Mrs Coffey”.Hi @MarcusRashford, I welcome your passion for supporting children and the most vulnerable in society – a passion we share. We are working to the same aim. I & this Govt will continue to actively help and support families and businesses through this emergency and beyond
— Therese Coffey #ProtectEachOtherSaveLives (@theresecoffey) June 16, 2020
Meal voucher u-turn
In the end, though, and after mounting pressure on social media, the government made a notable u-turn on its free school meals policy on Tuesday. The prime minister welcomed Rashford’s contribution to, “the debate round poverty”, before announcing a Covid summer school fund. The new initiative will extend the £15 per week voucher scheme for those eligible for free school meals, for an additional six weeks (until the start of the new school term). While summertime provision of lunchtime meal subsidies was already in place in Scotland and Wales, the scheme was originally due to end at the start of the summer holidays in England. It is estimated some 1.3 million children are eligible for free school meals in England, a number which accounts for 15.4% of state school pupils. According to figures published in 2019, the need is greatest in parts of London, the North and Midlands, where up to a third of all pupils were receiving free school meals. In response to the policy change, the man of the hour responded:After herd immunity and visas for NHS staff amongst other issues, today’s policy shift represents yet another change of heart, for a PM who seems to come undone when things don’t fall neatly into place.I don’t even know what to say. Just look at what we can do when we come together, THIS is England in 2020.
— Marcus Rashford (@MarcusRashford) June 16, 2020