JD Sports’ Footasylum deal under additional investigation
JD Sports (LON:JD) said on Tuesday that its £90 million deal to acquire Footasylum (LON:FOOT) will undergo an additional investigation.
The leading trainer and sports fashion retailer in Britain agreed to purchase Footasylum earlier this year in a £90 million deal as its smaller rival struggled for survival amid a gloomy trading environment.
The Competition and Markets Authority claimed earlier this month in a Phase 1 decision that the acquisition of Footasylum would “give rise to a realistic prospect of a substantial lessening of competition”.
JD Sports said that it believes there is “clear evidence” that the deal would not lead to a substantial lessening of competition in the sports clothing and footwear retail market.
However, the Competition and Markets Authority confirmed on Tuesday that the deal will now be referred to a Phase 2 investigation.
In response, JD Sports has agreed to co-operate fully with the Competition and Markets Authority in its review to ensure that both retailers will continue to trade in a competitive environment following the deal.
JD Sports highlighted the challenging trading conditions to hit the UK retail market. It emphasised that its rationale behind the deal was “to retain Footasylum’s position as a multichannel retailer, both on the UK high street and online”.
“The CMA has referred their review of this acquisition to Phase 2 on the basis that it could be bad for competition and may have an impact on price,” Peter Cowgill, Executive Chairman of JD Sports Fashion Plc, said in a company statement.
“I strongly disagree with this. This transaction will not result in any price increases or a reduction in product ranges or service quality,” the Executive Chairman continued.
“The focus of all of our Group businesses is to ensure we deliver a best in class, multichannel experience to our consumers by offering a compelling product proposition.”
Shares in JD Sports Fashion plc (LON:JD) were trading at -0.98% as of 12:05 BST Tuesday.
Greggs on a roll in Q3
Greggs said in a Tuesday trading update that it has continued to trade “very strongly” during the third quarter.
For the 13 weeks to 28 September, total sales were up 12.4% and company-managed shop like-for-like sales increased by 7.4%.
The British bakery chain added that its autumn menu is now available in stores. It features new additions to its hot sandwich range, such as Chipotle Chilli Steak and Hot Peri Peri Chicken Baguettes.
Its autumn menu also welcomes the return of its popular Spicy Chicken and Pepperoni Bake, in addition to its Pumpkin Spice Latte.
Greggs added that it is preparing for the potential impact of the UK’s exit from the European Union by stockpiling ingredients and equipment.
Meanwhile, its expectations for the full year remain unchanged.
Earlier in May, the British bakery chain Greggs raised its profit forecasts for the third time this year, driven by the popularity of its vegan sausage roll.
“With over 2,000 Greggs outlets now under its belt, the bakery-turned-food on the go chain, is still on a roll and very much on track for a strong year,” Emma-Lou Montgomery, associate director from Fidelity Personal Investing’s share dealing service, commented on Greggs’ third quarter trading update.
“On its new autumn menu are some seasonal favourites among Greggs customers, like Pumpkin Spice Latte, alongside new offerings such as hot sandwiches and a post-4pm meal deal, as part of the chain’s expansion into all-day dining,” Emma-Lou Montgomery continued.
“Brexit also pops up as an item. But Greggs says it continues to build stores of key ingredients and equipment to ensure its operations aren’t disrupted. This is a company that has its costs under control and its plans in the pipeline, ready to serve up another year of growth.”
The British bakery chain said, however, that it sees food prices going up and sales growth slowed compared to the first half, largely down to the vegan sausage roll being introduced in January. Shares have currently fallen over 5%.
Shares in Greggs plc (LON:GRG) were trading at -6.75% as of 11:18 BST Tuesday.
Shares in Greggs (LON:GRG) are up heavily over the last year.
The British bakery chain said, however, that it sees food prices going up and sales growth slowed compared to the first half, largely down to the vegan sausage roll being introduced in January. Shares have currently fallen over 5%.
Shares in Greggs plc (LON:GRG) were trading at -6.75% as of 11:18 BST Tuesday. Nationwide: September house price growth remains subdued
Nationwide said on Tuesday that house price growth remained subdued in September.
Indeed, Nationwide’s House Price Index revealed that UK annual house prices grew by 0.2% in September. This marks the tenth consecutive month in which annual price growth has been below 1%.
As for the month of September itself, house prices saw a monthly change of -0.2%, after considering “seasonal factors,” Nationwide said.
“Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensification of Brexit uncertainty,” Robert Gardner, Nationwide’s Chief Economist, commented on the data.
Indeed, as the nation has now entered the month of the extended Halloween Brexit deadline, the only certainty that remains now is additional uncertainty.
Just last week the Supreme Court ruled that Boris Johnson’s prorogation of Parliament was not only unlawful but also ineffective and non-existent.
“However, the slowdown has centred on business investment – household spending has been more resilient, supported by steady gains in employment and real earnings,” Nationwide’s Chief Economist continued.
“The underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years. Healthy labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook.”
According to the data, London was the weakest performing region in the third quarter, followed closely by the surrounding Outer Metropolitan region, with annual price declines of of 1.7% and 1.5% respectively.
This marks the ninth quarter in a row where prices have dropped in the capital city.
Meanwhile, Northern Ireland remained the strongest performing home nation in the third quarter, but Nationwide’s Chief Economist did note that annual price growth moderated to 3.4%.
Homebuyer demand drops in Q3, study finds
New data revealed on Monday that buyer demand dropped in Q3, though Glasgow remains the most highly demanded homebuyer location in the UK.
Springbok Properties released its latest Property Hotspots Index for Q3, looking at buyer demand levels across 100 spots in the UK and how this differs from Q2.
The data shows that UK homebuyer demand is at 39.5%, dropping by 2.8% since the last quarter, with the uncertainty surrounding the UK’s departure from the European Union continuing to “cloud the market”.
Indeed, the nation is just a day away from entering the month of the Brexit deadline and the only certainty that remains is additional uncertainty.
Meanwhile, Springbok Properties said that Glasgow remains the hottest spot in the UK for property demand in the quarter at 59.5%
Though there has been a wider slowdown across the nation, demand in London has risen slightly from 29.2% to 29.5% in the quarter, the data shows.
“In the current political climate, it would seem that the further you move away from Westminster the more appetite there is amongst UK homebuyers and while demand continues to decline, on the whole, the aspiration for homeownership is alive and well in many areas of the UK,” Founder and CEO of Springbok Properties, Shepherd Ncube, commented on the data.
“Those areas that will feel a direct consequence as a result of our European departure, such as the City of London, prime central London, and Northern Ireland, are certainly the areas feeling the brunt of market uncertainty at present,” the Founder and CEO continued.
“The likelihood is that come the fourth quarter of this year, we will see a further decline in demand levels as a mix of seasonality and a brace for impact cause many to wait until the dust has settled next year before looking to buy.”
CAA set to launch largest ever ATOL refund programme
The Civil Aviation Authority said on Monday that it is launching a new process for what is set to be the largest ever ATOL refund programme for Thomas Cook customers.
The Civil Aviation Authority added that it will begin focusing on refunding 360,000 ATOL protected holidays booked for the future with Thomas Cook. This is three times greater than any refund programme it has managed in the past.
Last week, the Civil Aviation Authority launched the largest peacetime repatriation, “Operation Matterhorn”, to bring over 150,000 people back to the UK following the collapse of Thomas Cook which left thousands of British holidaymakers stranded abroad.
Many took to Twitter to send their thoughts to Thomas Cook staff and customers.
In the first seven days, 106,000 people were flown back to the UK. Roughly 94% of people have flown back on the original day of their cancelled flight with Thomas Cook.
“We are now also turning our attention to the challenge of refunding 360,000 ATOL protected future Thomas Cook holidays that have been cancelled,” Richard Moriarty, Chief Executive at the UK Civil Aviation Authority, said in a statement.
“This will be three times larger than any refund programme we have managed before, and we are implementing new systems to enable us to process these refunds as quickly as possible,” Richard Moriarty added.
“For around 100,000 bookings made by direct debit we hope to refund these within the next 14 days. Refunds of bookings made by other payment methods will take longer as we do not yet have all of the information we need from Thomas Cook.”
Consumers will be able to access an electronic refund form and the Civil Aviation Authority hopes to pay refunds within 60 days of receiving a valid refund form.
“We have returned over one hundred thousand people to the UK, but there are still over 43,000 people on holiday abroad due to return on or before 6 October. The scale and complexity of this operation will inevitably cause some inconvenience and disruption and I would like to thank holidaymakers for bearing with us,” the Chief Executive said.
Trump distraction tactics and FTSE bouncing on an ailing Pound, a lacklustre Friday
As the week drew to a close, the populist double-threat both welcomed a weekend of respite following their blunders. On one side of the Atlantic, Donald Trump insisted his innocence, before being incriminated, and responded with yet another hollow promise of trade war progress. A promise which the European indices gladly lapped up and the Dow Jones largely ignored. On home soil, prime minister Boris Johnson shrugged off another defeat imposed by Parliamentary checks and balances, and responded by complaining that checks and balances were undemocratic, before continuing his divide-and-conquer tirade. Thankfully, while the Pound Sterling continued to quake, FTSE seemed to ignore the political fiasco; no doubt bouncing on the back of foreign investors enjoying the UK’s weak currency.
Speaking on the market’s movements on Friday, Spreadex Financial Analyst Connor Campbell stated,
“Europe kept a smile plastered on its face this Friday; the Dow Jones, however, was slightly more reticent.”
“The Dow’s unwillingness to do anything more than add 0.1% is perhaps well-founded. Donald Trump is facing impeachment over allegedly seeking aid from Ukraine to impact the 2020 election. That not long after he was claiming a US-China trade deal could arrive sooner than people think stank of distraction tactics, meaning that, after an initial rise following those comments earlier in the week, the Dow hasn’t really moved from 29600.”
“With reports Germany might be open to boosting public spending in order to tackle lacklustre growth, and impending European Commission economic chief Paolo Gentiloni arguing for just that, the Eurozone indices were keen to end a week that began with some disastrous PMIs on a positive note. The DAX rose 0.6%, while the CAC climbed 0.2% (admittedly down on its earlier growth).”
“Though, of course, it helped that its commodity and banking sectors were firmly in the green, it seems only one thing really matters to the FTSE at the moment: watching sterling squirm. The pound remained under pressure on Friday, fears of a general election keeping it at 3-week and 2-week lows against the dollar and euro respectively. In response the UK index jumped 50 points, pushing it past 7400 for the first time in almost 2-months.”
More of the same mess, it would seem. The UK market will be doing smug victory laps as its furniture is being bought up from around it by willing opportunists, Europe’s answer remains ‘throw money at it’, in hopes liquidity in industry will somehow kick-start positive consumer sentiment. Elsewhere in political and macro economic news, there have been updates from; the Supreme Court’s ruling, the collapse of Thomas Cook (LON: TCP), ECB stimulus, the bid for the London Stock Exchange (LON: LSE), Lloyds Banking Group PLC (LON: LLOY), Jo Johnson quitting, Hilary Benn’s Brexit delay bill, Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).