Boohoo shares bounce 8.3% on acquisitions and 45% sales growth

Jamie Gordon
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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

Safiya Bashir
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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

UK Investor Magazine
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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

Jamie Gordon
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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:
“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”.

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.

Ilika reopens Stereax battery facility at University of Southampton

Jamie Gordon
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0
Ilika reopens Stereax battery facility at University of Southampton
Innovator in solid-state battery technology, Ilika (AIM:IKA), announced on Tuesday that it would reopen its Stereax pilot line at the University of Southampton.

The company said that until the 15 June, it had closed the facility as part of its push to protect its staff and customers, and to observe the UK Government’s directives to avoid non-essential travel.

Following on from its prediction on the 9 June, the company announced on Tuesday that the Stereax pilot line facility for miniature cells would reopen shortly. It said that it was deploying similar measures at its Stereax facility to those at its Romsey-based HQ, which include risk assessment, ‘enhanced’ cleaning and hygiene procedures and social distancing.

Ilika stated that it would communicate with its customers regarding the measures it had put in place, and how these would impact on delivery times of evaluation samples. It continued, stating that it was pleased to announce that it had not received any order cancellations, and that its expectations for the FY21 remained unchanged.

The company’s HQ remained open during the lockdown period, for the employees who needed access to its Goliath large format cell development facilities. The group stated that it had not any potential COVID-19 related sickness since March.

Responding to the update, Ilika CEO Graeme Purdy commented,

“Our proactive approach to managing the operational risks posed by COVID-19 have been successful to date. We intend to remain vigilant to the risks and are working with our customers, partners and suppliers to ensure we implement our business strategy as effectively as possible. I would like to thank our staff, partners, advisors and shareholders for their continued support.”

Following the update, the company’s shares rallied 5.61% or 2.75p, to 51.75p per share 16/06/20 13:22 BST. This is up from the June nadir of 36.50p seen at the start of the month, and down from the 57.00p high on the 11 on June.  

Bidstack encourages big brands to look towards in-game advertising

Jamie Gordon
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1
Bidstack encourages big brands to look towards in-game advertising
Native in-game advertising platform Bidstack Group PLC (LON:BIDS) announced on Tuesday that it had been awarded the Internet Advertising Bureau’s Gold Standard Certificate 1.1. This award stands as a credit to the way Bidstack conducts its operations, and opens the company to the possibility of big brands calling on Bidstack services for in-game advertising. The IAB launched the Gold Standard Certificate in 2017 to improve standards in digital advertising, and is focused on rewarding companies which satisfy three tenets; reducing ad fraud, improving the digital advertising experience and increasing brand safety. The Gold Standard 1.1 is a more exacting accolade, created by IAB in 2019, its purpose was to commend the most noteworthy adherents to stricter and more prescriptive criteria. According to the IAB UK and PwC Digital Adspend study for 2019, the IAB Gold Standard certificate comprised 73% of the display advertising market in 2019. However, the more exclusive list that have been awarded the Gold Standard 1.1 certification include Amazon (NASDAQ:AMZN), Hearst, Twitter (NYSE:TWTR), DAZN, YouTube (NASDAQ:GOOGL) and Verizon Media (NYSE:VZ). In their statement on Tuesday, Bidstack were confident the award would give additional confidence to global advertising agencies to the new ‘native in-game’ digital advertising category.

Commenting on the news, company CEO, James Draper, stated:

“The IAB has […] confirmed that we are the first multi-device in-game advertising platform to be awarded the IAB Gold Standard certification.” “For many brands and agencies, being IAB Gold Standard certified is a prerequisite for inclusion in media planning. As advertisers look increasingly to new and emerging channels for inspiration and innovation, having the option of including fraud free and brand safe activations in AAA video game titles which can enhance the user experience is an enticing addition to their repertoire.” “The certification should further enhance demand side activity as, alongside giving users a better experience, it will give further confidence for brands and advertisers to continue to spend with Bidstack. I look forward to reporting further on our efforts in the months ahead.” Following the update, the company’s shares rallied 1.92% or 0.080p to 4.25p per share 16/06/20 12:11 BST. This is down from its 9.25p high for the calendar year thus far, seen on 06/04/20, but up from the 3.25p nadir on 18/03/20.  

Labour urges Sunak to deliver emergency budget

Bronte Carvalho
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Labour urges Sunak to deliver emergency budget
The Labour party has called for an emergency budget to be released this summer in anticipation of soaring unemployment levels once the government’s furlough scheme is fully terminated in October. Shadow Chancellor Anneliese Dodds has urged Rishi Sunak to deliver a “full budget” aimed at preventing unemployment, improving skills training and giving more substantial support to the unemployed. UK unemployment rates rose by 612,000 between March and May – the largest quarterly decrease in job vacancies since records began – as the economy struggled to offset the impact of the coronavirus pandemic lockdown measures. The Coronavirus Job Retention Scheme currently permits the government to pay 80% of wages for furloughed employees, but businesses are expected to start paying National Insurance and tax contributions for their staff as of August. Criticising the government’s plans to end its furlough scheme in October, Dodds stated: “To not have any linkage of the removal of these schemes to the removal of the lockdown […] will lead to additional waves of unemployment so that is an enormous concern”. “We’ve been slow to react as a country compared to other nations […] we saw a package from Germany two weeks ago. Unless we see action relatively soon in these areas then we will be reducing the confidence of many employers that they will be able to maintain their workforce into the future”. Dodds is not the only Labour MP to have raised concerns. On Sky News this morning, Shadow Work and Pensions Secretary Jonathan Reynolds commented, “We were too slow into lockdown, let’s not be too slow dealing with this mass unemployment crisis”. He continued in an article for Labour’s press journal, “The Government has been slow at every stage of this crisis – they cannot afford to be slow again in responding to this threat. There must be urgent action from the Govt to assist the hardest hit regions and specific support for sectors particularly exposed to the nature of the Covid crisis. It must prevent additional unemployment, support those who become unemployed and enable the creation of new jobs. This is why Labour is calling for a Back to Work Budget that has one focus – jobs, jobs, jobs”. In order to keep the economy afloat once the furlough scheme comes to an end, Dodds has suggested that the government offload some of the £100bn of capital spending it has pledged for over the next five years. “I have been suggesting to government that it should bring forward expenditure where it can […] in a way that can still be value for money”. Fiona Hyslop, Cabinet Secretary for Economy, Fair Work and Culture in the Scottish Parliament, added that the government should be considering putting in place a long-term approach to support businesses through the period of uncertainty that will inevitably arise beyond October. Hyslop is one among many who have raised concerns for the future of the UK economy, stating that businesses may be forced to reopen under unsafe conditions to make ends meet – and risk causing a second wave of coronavirus infections – or shut altogether. For this reason, the British economy appears in dire need of some additional measures come October to avoid skyrocketing job losses and company closures. Hyslop concluded, “The failure to do this will put the UK economy at a competitive disadvantage in recovering from this crisis and will result in hundreds of thousands of additional job losses”.

Greggs to reopen 800 stores for social distancing sausage rolls

Jamie Gordon
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1
Greggs to reopen 800 stores for social distancing sausage rolls
The UK’s largest bakery chain Greggs (LON:GRG) announced that on Thursday, it would be expanding the number of its site reopening for takeaway services to 800, alongside publishing the rest of its provisional plan of action. The company said that recent trials of gradual shop reopenings had been successful. Their trials included operational changes such as new work-wear, equipment and social distancing measures, which the company said would ensure the safety of its staff and customers as it continued with phased reopening.

Greggs continued by posting a bare-bones version of its reopening plan, which enclosed:

  • Trial of reopening a small number of outlets with new measures in place – Early May.
  • Larger scale reopening of selected shops with new procedures and equipment – Mid-June.
  • Opening of remaining outlets – Early July.

In response to the existing social distancing situation, the company’s outlook was more reserved. Its statement read:

“We are not able to predict the impact of social distancing on our ability to trade or on customer demand. However, our capacity to operate will be restricted by size of shop and we must anticipate that sales may be lower than normal for some time.”

“This will require us to maintain a proportion of our colleagues on furlough, either fully or partially, until sales levels begin returning to normal. In anticipation of lower sales, we have limited our initial product range to our best sellers and therefore a number of our manufacturing operational teams will remain furloughed until demand reaches a level that justifies the addition of remaining product lines.”

It added that across its 2,009 outlets, its staff would be trained in new safety and hygiene procedures, including; floor markings and signage, protective screens at counters, protective work-wear, more frequent cleaning, hand sanitiser availability and encouragement of contactless card payments.

Strategically, the company said that it had suspended its shop opening programme (with the exception of legally binding arrangements), and in turn it would open 60 shops and close 50 during the full-year.

It continued, stating that it planned to accelerate the development of its delivery and click-and-collect transactions , and would continue to invest in its robotic frozen logistics facility in the North East.

Commenting on the update, Greggs Chief Executive Roger Whiteside OBE, commented,

“Looking forward, although great uncertainty remains, we are excited to be resuming our service for many customers this week. We are confident of our ability to adapt to market conditions in the short term while continuing to invest in the long-term growth of our business. I want to thank all of our 25,000 colleagues for their support in getting us to this point.”

Following the positive update, the company’s shares bounced by an impressive 6.65% or 109.92p to 1,761.92p per share 16/06/20 11:27 BST. The consensus target price for the stock, among brokers, sits at around 2,100p per share. The company’s p/e ratio is 18.15, its dividend yield stands at 1.88%.

Ashtead shares jump 12pc, despite fall in profits

Safiya Bashir
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1
Ashtead shares jump 12pc, despite fall in profits
Shares in Ashtead spiked 12% on Tuesday morning as the construction equipment rental group announced plans to maintain its dividend to shareholders. Despite being hit by the Coronavirus pandemic and profits for the previous quarter being halved, the group said results proved a “resilient” performance at a time when construction activity was halted. Pre-tax profit in the three months to 30 April fell by 52% to £98mn. In the full year to 30 April, pre-tax profit was down 7% to £983mn. Ashstead has said that shareholders will receive the proposed final dividend of 33.5p that was agreed on a year ago. The total payout for the full year is 40.65p, up 1.6%. Brendan Horgan, the groups chief executive, said in a statement: “Looking forward, we believe that the impact of the COVID-19 pandemic will continue to give rise to market uncertainties over the coming months.” “However, with strong market positions in all our markets, supported by good quality fleets and a strong financial position, we believe that we are well-positioned to respond to this market uncertainty and continue to support our customers and team members.” Head of markets at Interactive Investor, Richard Hunter, has said that “Ashtead has so far seen off most of the pandemic challenges with aplomb.” “Given the company’s exposure to the US in particular, the fragility of the construction market is of some concern not only in the present but potentially further out as the speed and the breadth of easing restrictions come through at an uneven pace.” Shares in the group (LON: AHT) are trading 9.43% higher at 2,645.00 (1203GMT).

BP to slash $17.5 billion off oil and gas assets

Bronte Carvalho
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3
BP to slash $17.5 billion off oil and gas assets
BP plc (LON:BP) is to slash $17.5 billion off the value of its oil and gas assets following grim projections of the impact of the coronavirus pandemic on global oil demand. Just last week, the company announced plans to cut up to 10,000 jobs by the end of the year, representing nearly 15% of its global workforce. In the wake of a historic few months in the oil industry – with the market trading negatively for the first time on record during April – BP has been forced to cut price forecasts by around 30% and is expecting Brent crude to average at about $55 per barrel until 2050, dropping from $70 this time last year. Responding to the news, BP has suggested that it may have to leave some of its oil and gas discoveries in the ground if demand does not recover to previous levels. The company also plans to review future projects in light of a “growing expectation” that the coronavirus pandemic will “accelerate the pace of transition to a lower carbon economy and energy system”. Chief executive Bernard Looney described the company’s plans to “reinvent itself” into a “leaner, faster-moving and lower carbon company” as it emerges from the crisis, citing plans to reduce operating costs – currently standing at $22 billion a year – by $2.5 billion in 2021. Reflecting on the impact of the coronavirus pandemic in a note to employees, Looney said: “The oil price has plunged well below the level we need to turn a profit. We are spending much, much more than we make – I am talking millions of dollars, every day. And as a result, our net debt rose by $6 billion in the first quarter”. Looney concluded that the company is working towards “greater efforts to ‘build back better’ towards a Paris-consistent world”. BP’s plans to streamline their system are part of a wider scheme to achieve net zero ambitions by 2050. In February, BP chairman Helge Lund commented on the company’s long-term goal: “Aiming for net zero is not only the right thing for BP, it is the right thing for our shareholders and for society more broadly. As we embark on this ambitious agenda, we will maintain a strong focus on safe, reliable and efficient operations and on delivering the promises we have made to our investors”.

Investor Insight

BP’s share price has risen a modest 2.03% or 6.40 GBX to 322.45, as of BST 11:30 16/06/20. The company’s dividend yield stands at 0.10%.
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