French Connection reduces losses, shares down
French Connection shares (LON:FCCN) dropped by over 12% on Tuesday following the release of a half-year update.
The UK-based retailer said that group revenue for the six months to 31 July amounted to £51 million – a 12.2% decline compared to the £58.1 million figure from 2018.
French Connection said that the decline in group revenue was driven by “the ongoing reduction of the store portfolio and a shift in timing of wholesale shipments into the second half of the year”.
The company added that operating loss from continuing operations improved to £3.7 million compared to £5.5 million from the year prior.
“I am pleased that the changes we have made to the business over the last few years continue to move us forward,” Stephen Marks, Chairman and Chief Executive, commented on the results.
“There is no doubt that progress has not been helped by the trading conditions in which we operate in the UK, although our retail performance has been resilient, overall the wholesale business is strong and we continue to see good stability in the licence income,” the Chairman and Chief Executive continued.
Indeed, retailers across the UK have been struggling for survival amid the gloomy trading conditions to have hit the UK high street.
“The order books we have provide a clear outlook for the second half of the year in wholesale but it appears that retail conditions will continue to be challenging. Underpinned by these results we remain fully on track to achieve our expectations for the financial year.”
After speculation, French Connection confirmed last October that it may be up for sale.
French Connection added that it initially expected the strategic review and formal sale process to end during the first half of the year, but has extended the period given the “active ongoing discussions”.
“Discussions are still ongoing with a number of parties,” French Connection said.
Shares in French Connection Group (LON:FCCN) were trading at -12.37% as of 09:00 BST Tuesday.
Ocado retail sales surge
Ocado Retail (LON:OCDO) posted an 11.4% rise in retail revenue on Tuesday in its third quarter results.
Shares in Ocado, which has faced two fires this year alone, were up during trading on Tuesday morning.
The British online supermarket said that, for the 13 weeks to 01 September, retail revenue amounted to £386.3 million, compared to the £346.9 million figure from the same period a year prior.
Average orders per week grew 12.1% to 314,000 and average order size was down by 0.8%, which the company said reflects a slightly greater frequency of purchase.
Ocado Retail is a joint venture between Ocado and Marks & Spencer (LON:MKS), which was completed in August.
“These first set of results from the joint venture between Ocado Group and M&S show the resilience of Ocado following the Andover fire and the momentum the business now has,” Melanie Smith, Ocado Retail’s Chief Executive Officer, said in a company statement.
“As we continue to enhance our offering and add more capacity in the UK, our leading partnership will deliver the very best experience to an ever-growing number of customers,” Ocado Retail’s Chief Executive Officer continued.
“Bringing Ocado and M&S together on-line will give UK consumers even greater choice, value and service and will create important new opportunities for our colleagues, suppliers, and other stakeholders. These are really exciting times for Ocado as we prepare to launch the full M&S food range online for the first time ever, which customers will be able to buy alongside their other favourite products on Ocado.com from September 2020 at the latest.”
Elsewhere in the supermarket sector on Tuesday, latest Kantar data revealed that the UK grocery market returned to growth, and Ocado was the retailer to grow the fastest.
Shares in Ocado Group plc (LON:OCDO) were trading at +0.74% as of 10:16 BST Tuesday.
Shares in Marks and Spencer Group plc (LON:MKS) were trading at -0.73% as of 10:19 BST Tuesday.
UK grocery sales up 0.5%, Kantar study
The UK grocery market returned to growth amid ongoing Brexit uncertainty, latest data reveals.
New data published by Kantar shows that year-on-year supermarket sales grew over the 12 week period.
Overall sales increased by 0.5% and volume sales were flat, Kantar said.
In its report, Kantar added that there is little evidence of stockpiling at the moment in the lead up to the Brexit deadline.
The August Bank Holiday provided some relief, Kantar added. Retailers have struggled with last year’s comparisons as this year’s poor weather was no match for 2018’s summer heatwave. That said, the August Bank Holiday was one of the hottest ones yet and shoppers spent £1.3 billion across the weekend.
“Lidl reached a new record high market share and has crossed the 6% market share line for the first time,” Kantar said in its report.
Lidl unveiled a £500 million London investment earlier this year in June.
“An additional 618,000 shoppers visited the retailer compared with last year, helped by store openings, refurbishments and its newspaper voucher deals. Having moved through the 5% barrier as recently as May 2017, the retailer has taken just over two years to add another percentage point to its market share – one that’s worth £1.2 billion annually,” Kantar continued.
Additionally, Aldi increases its sales by 6.3% and its strongest growth came from the south of England where sales grew by almost 9%. Aldi’s lowest market share, however, continues to be in London.
For Sainsbury’s (LON:SBRY), the 12 weeks were its strongest period since last October – it was the best performing out of the big four retailers for the second consecutive month.
Asda (NYSE:WMT) and Tesco (LON:TSCO) saw a sales decline of 1% and 1.4% respectively, according to Kantar.
Ocado (LON:OCDO) was the retailer to grow the fastest and only one year remains until it begins to sell products from M&S in addition to its own lines and national brands.
Shares in J Sainsbury plc (LON:SBRY) were trading at -0.5% as of 09:25 BST Tuesday, Tesco plc (LON:TSCO) shares were also down, trading at -0.38% as of 09:26 BST. Shares in Ocado Group plc (LON:OCDO) were trading at +1.11% as of 09:29 BST Tuesday.
Eagle Eye Solutions enjoys increased revenue from tier 1 clients
Retail focused Saas technology provider Eagle Eye Solutions Group (LON:EYE) recorded a 23% increase in revenue as released final results for the year to 30th June on Tuesday.
The increase in revenue was achieved as a result of greater sales of their Eagle Eye AIR platform and growth in their Tier 1 customer base including clients such as Waitrose.
The Eagle Eye AIR platform allows retailers to target with promotions to drive sales and now accounts for 95% of Eagle Eye Solutions revenue.
Their solution allows retailers to target customers individually using customer data and their interaction habits to create millions of bespoke promotions.
Eagle Eye’s largest customer is Canadian retail and pharmacy group Loblaw Companies Limited which delivers 150 million individually tailored promotions per week through theirs brands including Loblaws and Shoppers Drug Market.
Despite substantial revenue increases and a swing to a EDITDA profit of £700,000 the group recorded a £2.3m loss for the year as Eagle Eye implement and number of cost saving and efficiency strategies such as a move to Google’s Cloud Platform.
The group has guided the combination of cost efficiencies and further revenue growth will produce further EDITDA growth in FY 2020.
Tim Mason, Chief Executive of Eagle Eye, commented:
“I am delighted to report a year of continued growth; in revenues, capabilities and market reach, delivering a breakthrough into EBITDA profitability. However, we believe that we are just at the start of our journey. Our customers see the Eagle Eye AIR platform as key to competing in today’s digital retail environment and we are confident that the drive to digital is only going to increase in the years ahead.
“We enter the current financial year with a rapidly expanding pipeline of both UK and international opportunities, and the enhanced ability to service them through our powerful and more scalable new Google Cloud environment. Our expanded geographic reach, increasing base of recurring revenues, blue chip customers and strengthened financial and operational position, means that we look to the future with confidence.”
Shares in Eagle Eye Group (LON:EYE) rose over 5% in early trade on Tuesday following the release.
Griffin Mining shares dip as fundamentals worsen
Metal mining company Griffin Mining Ltd (LON: GFM) saw its share price dip on a consistent deterioration across its financial fundamental.
On a year-on-year comparison of the first half, the Group’s revenues contracted from US$54.1 million to US$38.6 million. This led a dip in operating profits from $21.1 million to $6.0 million, and a drop in profit after tax from $15.3 million to $4.1 million, for the period ended June 30.
The state of play fro Griffin Mining shareholders was similarly downbeat, with basic EPS following other fundamentals, and falling from 8.95 cents to 2.36 cents.
The Company’s production volumes weren’t as downtrodden but neither were they entirely positive. While lead volumes increased from 459 to 494 tonnes and silver rose from 132,689 to 141,306, zinc fell from 16,873 tonnes to 16,692 and gold decreased from 9,492 ounces to 9,099 ounces.16,692 tonnes of zinc (30th June 2018 – 16,873 tonnes);
Griffin Mining comments
Chairman Mladen Ninkov stated, “Although all stakeholders in the Company will be disappointed with the financial results for the first half of 2019, they are directly, and practically solely, attributable to the fall in the zinc price and the tremendously higher smelter treatment charges in the first 6 months of the year. Operations and metal production were generally in line with budget. As is often said, mining is a fixed cost business and, as such, a reduction is sales revenues has a direct and significant effect on the margin of profit. We continue to hope for a higher zinc price and lower treatment charges for 2019 into 2020.”Investor notes
Following the update, the Company’s shares dipped 4.14% or 3.75p, down to 86.75p per share 16/09/19 11:06 BST. The Group’s p/e ratio is 7.63, their dividend yield is not available. Elsewhere in the mining and minerals sector, recent updates have come from; Alien Metals Ltd (LON: UFO), Highland Gold Mining Ltd (LON: HGM), Kavango Resources PLC (LON: KAV), URU Metals Ltd (LON: URU), Resolute Mining Limited (LON: RSG), Bisichi Mining PLC (LON: BISI) and Glencore PLC (LON: GLEN).Markets respond to an eventful weekend: Hulk Boris, Saudi oil and China slumps
Though perhaps one of the few yet to turn green at the sound of the name ‘Boris Johnson’, the prime minister decided the weekend was not for resting, and chimed in to tell the UK he would be like the Incredible Hulk and free the UK from the EU’s grip. On a slightly less amusing note, the drone strike on Saudi Arabia, and a disheartening set of fundamentals in China jammed the emergency break on last week’s rally across markets. Though not as disastrous a turnaround as one might expect, the news was enough to see Brent crude take an 8% hike and stutter growth across indices.
Speaking on the morning’s developments, Spreadex Financial Analyst Connor Campbell stated,
“There was a lot going on this Monday, the markets fighting fires on a few different macro-fronts.”
“The drone attack on Saudi Arabia’s biggest oil production facility, reportedly taking out 5% of the world’s supply, strapped a rocket to Brent Crude. At one point the black stuff had risen from $60.24 to $71.88 in one super-surge, before settling back at $65.29 – still an 8%-plus climb after the bell.”
“This proved to be crucial to the FTSE’s early performance. With Shell and BP rising 3% and 4% respectively, the UK index’s losses sat at 0.5%, allowing it to remain above 7340. In comparison, the DAX dropped 0.7%, leaving it back at 12400, while the CAC shed 0.8%.”
“That’s because overnight investors were served up a reminder that all is not well over in China. Fixed asset investment slipped from 5.7% to 5.5%, while retail sales missed out on the expected bounce to instead fall from 7.6% to 7.5%. Worst of all, industrial production slumped to 4.4% against the previous month’s 4.8% and the forecast 5.2%, doing a number on the FTSE’s mining sector in the process.”
“While the indices dealt with the oil/China news, the pound was somewhat tempering its recent optimism. The Sunday papers were full of reports suggesting the EU and Boris Johnson are perhaps not reading the same book, let alone on the same page, especially with the Prime Minister comparing himself to the Incredible Hulk as he promised to break free of Brussels’ ‘manacles’. Though still near last week’s highs, sterling dipped 0.2% against the dollar and 0.3% against the euro.”
Elsewhere in markets and macro economic news, there have been updates from; ECB stimulus, Lloyds Banking Group PLC (LON: LLOY), Jo Johnson quitting, Hilary Benn’s Brexit delay bill, Parliament being prorogued, Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).Housing market autumn bounce snuffed by Brexit says RIghtmove
According to the UK’s largest property website, Rightmove Plc (LON: RMV), the UK housing market suffered its first price dip for September for eight years (since its last dip in 2010).
The announcement came as average property prices dipped 0.2% or £730 in comparison with August; an irregular shift from the expected trend of a September housing rally which normally christens the start of Autumn.
Rightmove director Miles Shipside said the change owed to (are you tired of hearing it yet?) ongoing Brexit uncertainty with both buyers and sellers waiting to see how Boris Johnson’s refusal to take a No-Deal Brexit off the table plays out.
Shipside commented in today’s release,
“Many have got used to living in the jaws of uncertainty since the referendum over three years ago, and have been getting on with their lives and housing moves,” Shipside said.
“However, as we approach yet another Brexit deadline, there are signs that the increasing gnashing of teeth is causing some to hesitate.”
The Company said new properties entering the market were down 7.8% and 5.5% across all regions on a year-on-year comparison for September.
“In August, we reported a pre-Brexit buying spree with the number of sales agreed up by over 6% compared [with] the prior year, as buyers and sellers decided to get deals secured well before the next Brexit deadline,”
“But a month later, as the deadline gets closer and tensions heighten, there has been a big swing the other way with sales agreed numbers now over 5% below those of a year ago.”
The drops in activity were seen across the country but felt most acutely with a 20% dive in new properties entering the London market.
Speaking on housing trends, accountancy and auditing firm KPMG said that house prices could collapse by 20% should Boris Johnson pursue a No-Deal Brexit outcome, with the greatest decline being borne by Northern Ireland and London and the South East. KPMG added that in the same scenario it would envisage a 6% nationwide decline in 2020, with weak market sentiment meaning a 10-20% drop would “not be out of the question”.
Elsewhere in property development and estate agency news, there have been updates from; Berkeley Group Holdings Ltd (LON: BKG), Redrow plc (LON: RDW), U+I Group PLC (LON: UAI), Hunters Property PLC (LON: HUNT), GCP Student Living plc (LON: DIGS), Barratt Development Plc (LON: BDEV) and Belvoir Group PLC (LON: BLV).
Rightmove shares are currently trading down 1.01% or 5.50p at 536.60p per share 16/09/19 08:10 BST. Peel Hunt reiterated their ‘Reduce’ stance on the Company’s stock. The Group’s p/e ratio stands at 29.57, their dividend yield is 1.20%.
Sterling ends week on a high following Irish border rumours
After weeks of the Pound Sterling and FTSE taking turns grabbing gloomy headlines, this week has been a refreshing change of tune. Lead by encouraging economic performance, ECB stimulus and Benn’s bill, Sterling enjoyed a largely positive week and the FTSE floated higher above its 7200 benchmark. Both British performance indices ended the week with a smile, on rumours that the DUP were willing to soften their position on the Irish backstop. Substantiated or not, the developments were enough to guide the pound to a positive close.
Speaking on index movements on Friday, Spreadex Financial Analyst Connor Campbell stated,
“Sterling’s renewed optimism held strong on Friday afternoon, while the European indices saw a second day of mild post-ECB stimulus growth.”
“It’s been quite the week for the pound. Even with the prorogation of Parliament factored in, it has benefited from the Benn bill’s royal assent, better than forecast jobs and GDP data and, now, a report that the DUP are ready to ‘shift red lines’ regarding the Irish backstop. And while Arlene Foster’s party have denied any such softening, that hasn’t stopped the currency climbing 0.6% against the dollar and 0.8% against the euro, taking it to 7- and 12-week highs respectively.”
“Normally such a sharp rise from sterling would spell trouble for the FTSE. However, the lingering goodwill in Europe following Mario Draghi’s parting QE and rate cut-shaped parting gift allowed the UK index to cross 7350 with a 0.2%. The CAC, interestingly, only added 0.1%, with the DAX more upbeat as it climbed 0.4%.”
“Eyeing its own central bank meeting next week, the Dow Jones was on the timid end of the spectrum. Nevertheless, growth of 0.2% out it above 27230, maintaining a level last seen at the end of July, in the process hopefully putting behind it a traumatic August.”
Elsewhere in large financial player and macro economic news, there have been updates from; ECB stimulus, Lloyds Banking Group PLC (LON: LLOY), Jo Johnson quitting, Hilary Benn’s Brexit delay bill, Parliament being prorogued, Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).