Flybe shares remain low on improved deal
Flybe announced on Tuesday that it had reached an agreement with Connect Airways to sell its main trading company, Flybe Limited, and digital Flybe.com for £2.8 million. Shares in the company have crashed by over 43% during Tuesday trading on the back of the announcement.
Moreover, Flybe announced that it has agreed on a revised bridge facility of up to £20 million to provide funding to Flybe Limited. £10 million of this fund is set to be released today to support the airline. Furthermore, a range of improved agreements with banks has also been pursued in order to improve liquidity.
On Friday, the company was offered a deal between Virgin Atlantic, Stobart Aviation and US private equity firm Cyrus Capital Partners.
Boohoo rallies over Christmas, full-year sales outlook updated
Boohoo group announced on Tuesday that it has updated its full-year sales projection. This upgrade is following a strong set of sales over the Christmas shopping period.
For the four months ended 31 December, Boohoo group revenue increased by 44% compared to the same period a year earlier. Gross margins were up 170 basis points to 54.2%.
Full-year group revenue has been updated to fall between 43%-45%. This is above the previously predicted guidance of 38%-43%. Adjusted earnings (EBITDA) was previously guided between the range of 9%-10%, however this has been lowered to 9.25%-9.75%.
The group also posted a strong balance sheet with net cash of £189 million.
Boohoo started as boohoo.com, an online fashion brand targeting young customers.
As for its brands, PrettyLittleThing brought in a revenue of £144.2 million, which is up 95%. Year-to-date revenue is £312.8 million, a 114% jump. Gross margin for the four months is up 56.4%, climbing 110 basis points.
Nasty Gal, another of its brands, bought in £20.6 million, a 74% increase. Year-to-date revenue is £38.3 million, up 89%. Gross margins for the four months is recorded at 54.4%.
The boohoo brand bought in the highest revenue of £163.5 million, increasing 15%. Year-to-date revenue is £372.5 million, rising by 15%. Gross margins for the four months is 52.2%, an increase of 150 basis points.
Boohoo is not the only fashion brand to post strong sales over the festive period.
Luxury brand Ted Baker rallied following a strong Christmas trading period, as did Joules and Selfridges. Elsewhere in the fashion sector was not so positive, with brands such as Footasylum suffering over Christmas. The joint CEOs, Mahmud Kamani and Carol Kane, commented on the adjusted profit guidance: “We are delighted to be reporting yet another great set of financial and operational results and would like to say a very big thank you to all our team and customers. We remain firmly focused on continuing to provide our customers with great fashion at unbeatable value. The global growth opportunity is significant and we will be addressing it in a controlled way – investing in our proposition, operations and infrastructure to capitalise on the opportunity.” At 08:56 GMT today, Boohoo Group plc (LON:BOO) shares were trading at -2.2%.Dechra reports “strong” trading, shares rise
Dechra Pharmaceuticals (LON: DPH) has reported an 18% rise in revenue in the six months to 31 December.
The veterinary drugmaker said in an update on Monday that trading had been “strong” for the second half of 2018.
“We are pleased with the group’s trading in the period. Dechra continues to deliver above market revenue growth in our existing business and in our acquisitions, in line with the board’s expectations,” said Ian Page, the chief executive.
Shares edged up by 0.8% after the announcement. They are currently trading +1.05% at 2.306,00 (1349GMT).
The company also said that it expects Brexit contingency plans to be completed before the UK will leave the EU on 29 March.
When the group announced plans to carry out contingency plans in September, which would cost around £2 million, shares in the group tumbled over 20%.
London Property: Will house prices recover in 2019?
New data from Project Etopia has revealed that house prices fell in 85% of London’s boroughs.
Amid a difficult time for the UK property market, prices in the capital have slumped by an average of 7.6% over the past year.
The past year was the second year running that house prices in London fell, where in the 12 months to December, house prices in the capital fell by 0.8% to £466,988. House prices fell 0.5% in 2017.
“Brexit has smashed property market sentiment to smithereens. Buying and selling property requires confidence but confidence, as we edge closer to Brexit, is close to zero. For countless prospective buyers, Brexit has put everything on hold,” said Jonathan Samuels, who is the chief executive of Octane Capital.
“Borrowing rates may be low and the jobs market strong, but a deep undercurrent of uncertainty is causing the vast majority of people to sit on their hands. It’s about as good a buyers’ market as it could get,” he added.
Out of the 32 London boroughs, only five saw an increase in property prices and transactions, including the City of London.
The boroughs experiencing the worst falls were Tower Hamlets (22.5%), Westminster (14.4%) and Croydon (14.5%).
“Falling transaction levels in a city like London, where affordability is a critical problem, is a sign of a sick housing market that refuses to adjust,” said Joseph Daniels, the chief executive of Project Etopia.
“Options for those seeking to buy at fair value are thin on the ground. Sellers have been encouraged to see their home as a piggy bank because of the UK’s boom-and-bust property cycle.”
“Vendors need to moderate their expectations but more importantly, policymakers must start building a meaningful number of new homes so the accumulation of wealth ceases to be the market’s main driver in the long term.”
House prices are expected to increase again, although this is expected to take up to 18 months.
Debenhams may close a further 40 stores
Debenhams is reportedly planning to close 90 stores, according to the Daily Telegraph.
The struggling department store may axe 10,000 jobs as the chain battles against plunging profits and sales.
Shares in the group have fallen 90% over the past year and the chain reported a £491.5 million loss in October.
The department store already planned to close 50 stores over a five-year period, which was announced in November. A further 40 stores may be planned to close, which should “address the structural challenge and drive profitable growth”.
The news comes just days after scandal amid the board, where Mike Ashley voted against the chief executive and chairman of Debenhams, who were both ousted.
“The board believes that it is in the best interests of Debenhams plc that the executive team remains fully focused on delivery of the plan. In the meantime, the board remains open to constructive suggestions from shareholders that are in the interests of the business as a whole,” said the group in a statement.
Sports Direct (LON: SPD) owns almost 30% of shares in Debenhams.
Shares in the department store (LON: DEB) are down 7.57% (1102GMT).
New Look reveals restructuring plan, saving £1bn
New Look has announced a restructuring program that will cut debt by £1 billion.
The debt will be reduced from £1.35 billion down to £0.35 billion through a debt-for-equity swap proposal.
The retailer, which is owned by Brait, also plans to raise £150 million by issuing new bonds.
“Today’s agreement represents a critical step in our turnaround plans and lays the foundations to secure the future and long-term profitability of New Look by materially deleveraging our balance sheet and providing us with the financial flexibility to better attack our future,” said Alistair McGeorge, the executive chairman.
“Over the past year we have made significant progress with our wider turnaround plans to rebuild our position in the UK womenswear market and recover the broad appeal of our product whilst implementing significant cost savings and efficiencies.”
“However, it has been clear for some time that the Group’s existing level of indebtedness has been constraining our ability to accelerate our turnaround plans and would continue to limit our growth in the future.”
“Therefore, today marks an important milestone for the business, our colleagues, our suppliers and all our other stakeholders. A materially delevered balance sheet and a more flexible capital structure will allow us to better navigate the challenging market environment and create a stable operating platform so that we can achieve further progress against our turnaround plans.”
“Upon completion of the restructuring, our focus will be to enhance profitability by continuing to provide fantastic product for our customers, building brand equity and grasping new market opportunities,” he added.
New Look is closing 85 stores in the UK this year, whilst it is also negotiating the future of a further 13 stores with landlords.
Sales in December fell by 5.7%.
Shares in the South African investment firm Brait (JSE: BAT) are currently trading down by 6.22% (0946GMT).
Quiz issues profit warning, shares tumble 30%
With a weaker demand over Christmas, Quiz has issued its second profit warning in three months.
Down from the previous estimates of £11 million in October last year, the fashion retailer now expects 2019 profits to total £8.2 million.
Following the announcement, shares in Quiz tumbled 33%.
Tarak Ramzan, the group’s chief executive, said: “Against the backdrop of challenging trading conditions over recent months, Quiz has delivered further revenue growth over the Christmas period driven by the performance of our own websites. However, the growth and the margin achieved have been below our initial expectations.”
“Management’s utmost priority remains achieving further growth for the business and improving profitability in the future,” he added.
Quiz is a Glasgow-based retailer and has 70 stores and 148 concessions across the UK. The group also has stores in Ireland, Saudi Arabia, United Arab Emirates, Malaysia, Singapore, Cyprus, Egypt, Georgia and Pakistan.
Quiz floated on the Aim market in July 2017, where it attracted over £100 million from investors.
“Quiz became the latest High Street casualty as its shares plummeted on a profits warning. Overall performance isn’t bad at all – sales rose more than 8.4%, led by a 34.1% jump in online revenues. High Street sales held up ok, rising 1.6%,” said Neil Wilson, who is an analyst at Markets.com.
“But we got a bad profits warning. It looks like discounting is really killing retailers. There is just no way they can pass on higher costs by raising prices. Consumers are simply not prepared to pay more. The discounting vicious circle means shoppers are now expecting big price reductions. Margins at Quiz are like others coming under a lot of pressure from heavy discounting,” he added.
Shares in the fashion retailer (LON: QUIZ) are currently trading -29.73% (1110GMT).
Moss Bros shares edge up on positive trading update
Shares in Moss Bros rose on Friday morning after the group reported a better-than-expected Christmas trading update.
Sales were up by 0.6% in the period between 29 July to 5 January, however, were down by 1% on a like-for-like basis.
“Despite the improving trend in performance, we anticipate the period ahead will continue to be extremely challenging, as a result of the uncertain consumer environment, wider political backdrop and the significant cost headwinds that we continue to face from a weaker pound and further increases in business rates and employee-related costs,” said Brian Brick, the retailer’s chief executive.
“We remain debt free, with a strong balance sheet and are confident in our ability to deliver enhanced returns to our shareholders over the longer term,” he added.
The group has predicted a loss of £0.6 million, which meets the forecast.
“Moss engaged in higher levels of promotional activity than normal, impacting gross margins, although the hit was less than we had feared, meaning the outcome for the year will be better than our recent pre-emptive downgrade,” said Peel Hunt.
“We’re not going to crow about the downgrade being less than feared, but we are encouraged that Moss has been able to drive a significant acceleration in online sales and demonstrate the relevance of the offer and the Brand and see the shares responding favourably to today’s update.”
On Friday morning, shares in Moss Bros (LON: MOSB) increased by 3.2% to 27.06p. Shares are currently trading +2.67% (1035GMT).
Flybe shares crash 80% on rescue deal
Flybe shares have plummeted after the struggling airline was offered a deal just 1p-per share.
The deal made by Virgin Atlantic, Stobart Aviation and US private equity firm Cyrus Capital Partners values Flybe at £2.2 million.
The airline issued a profit warning in October, which wiped £20 million off its market capitalisation, causing shares to plummet from 48p in March to Thursday’s closing price of 16.38p.
Christine Ourmières-Widener, Flybe’s chief executive, said: “The industry is suffering from higher fuel costs, currency fluctuations and significant uncertainties presented by Brexit.”
“We have been affected by all of these factors which have put pressure on short-term financial performance. At the same time, Flybe suffered from a number of legacy issues that are being addressed but are still adversely affecting cashflows.”
“By combining to form a larger, stronger, group, we will be better placed to withstand these pressures,” she added. “We aim to provide an even better service to our customers and secure the future for our people,” she added.
Virgin Atlantic chief executive Shai Weiss, said: “Together, we can provide excellent connectivity to our extensive long haul network and that of our joint venture partner, Delta Air Lines, at London Heathrow Airport and Manchester Airport for the benefit of our customers.”
“In the near future, this will only increase, through our expanded joint venture partnership with Air France-KLM.”
The crash in Flybe shares comes following the collapse of Monarch Airlines and Primera Air.
If the takeover vote is supported by 75% of shareholders, the deal is expected to close during the second quarter of 2019.
Shares in the airline (LON: FLYB) are currently trading down 83.72% at 2,67p (1003GMT).
Supermarket Christmas sales: winners and losers
It’s been almost two weeks since we entered 2019 and the leading UK supermarkets have begun to announce their Christmas trading figures. With mixed results, what seems clear is that the British consumer has tightened their pockets this Christmas. As special sales offers drove sales for some supermarkets, and the discounters Aldi and Lidl seeing the biggest Christmas market share, the consumer is opting for the cheaper alternatives.