Primark owner warns of “challenging” retail environment
The company behind Primark has warned of a tough market for retail, which will lead to “challenging” sales in the build-up to Christmas.
At the annual general meeting today the chairman of Associated British Foods (ABF), Michael McLintock, will say that “during November Primark trading was challenging, in a tough retail market, but with careful inventory management and improved margins, our expectation for the increase in Primark profit is unchanged.”
“At this early stage in our new financial year, sales and profit for the first eight weeks of trading for the group were in line with expectations.”
Neil Wilson, the chief market analyst at Markets.com, said: “We know it’s tough out there and share prices across the piece reflect that already to a large degree.”
“But Primark has done better than most and the fact that it too is facing severe headwinds is a concern for the sector as a whole. ABF shares shipped 2.5% on this and we are seeing some read across to other retail stocks.”
“If Primark is struggling, what chance does the rest of the high street have? Some of the weaker high street stocks are sliding even as the broader market climbs.”
“M&S (LON: MKS) shares are down 0.5% on the read across from this – we know that Marks and Spencer is facing a bit of make or break Christmas.
“Debenhams (LON: DEB), another one on the ropes and needing a big uplift from this holiday season, has dropped 2%.”
Shares in the group (LON: ABF) are currently trading -4.55% (1358GMT).
Nissan announces 150,000 vehicle recall
Nissan (TYO: 7201) said on Friday that it will recall 150,000 cars from Japan due to concerns of improper tests carried out.
The Japanese car manufacturer said in a press release that improper inspections may have been carried out on vehicles before they were shipped from plants in Japan.
“Strict adherence to compliance is a top priority for Nissan’s management, and if issues are discovered, appropriate measures will be taken,” said the group.
“Nissan is committed to promoting and enforcing compliance and awareness thereof in all operational areas.”
“Through the steadfast implementation of these initiatives, Nissan will work diligently to regain the trust of its valued customers and stakeholders in Japan.”
The car manufacturer had a similar recall issue in September when the group recalled over 165,000 cars from Canada and the US.
Nissan is amid a scandal involving the former chairman, Carlos Ghosn who was arrested for alleged financial misconduct.
Both Nissan and Mitsibushi (TYO: 8058) fired Ghosn, “based on the copious amount and compelling nature of the evidence of misconduct presented.”
The chairman has denied allegations of financial misconduct but is yet to speak publicly.
Kana Sasakura, a criminal law professor at Kobe’s Konan University, said on Ghosn’s silence: “Usually a good criminal defence lawyer would advise the client to remain silent. If they talk, it might become detrimental.”
It was reported that he and colleague Greg Kelly understated Ghosn’s income by about 5 billion yen ($44 million) over a five-year period ending in March 2015.
Housebuilder Abbey shares fall 5% despite rise in revenue
Shares in the Housebuilder Abbey fell this morning after the group warned of rising costs and “uncertain external conditions”.
The group issued a trading update on Friday, revealing a rise in pre-tax profit from €23.42 million last year to €23.93 million.
Abbey’s year-on-year revenue rose 22% in its first half-year results from €90.4 million to €110.7 million.
Charles Gallagher, the group’s chairman, said: “Whilst our UK forward sales position gives confidence that a reasonable result for the year will be achieved the continuing uncertain external conditions are cause for concern.”
“The group will continue to progress all its activities but intends to be cautious about new investments in the months ahead,” he added.
In a statement, the group said: “Trading in the UK has held up well over the six months. Margins, as previously guided, have reduced in line with our expectations. Forward sales continue to be encouraging. In particular our projects aimed directly at first-time buyers are selling well. Production continues to be impacted by tight labour and materials markets and some delays have been experienced.”
Shares in Abbey (LON: ABBY) are trading 5.43% lower (1112GMT).
In other property news, housebuilder Berkeley Group (LON: BKG) announced on Friday that it will raise its profit guidance for the year by over 5%.
This is despite pre-tax profit for the first of the year falling from £539.9 million a year ago to £401.2 million.
AJ Bell shares soar 33% on debut
AJ Bell began trading on Friday, with shares surging over 30% to 213p.
The investment firm’s price was set at 160p this morning, valuing the group at around £651 million.
AJ Bell floated 108,264,032 ordinary shares – 26.6% of its issued share capital.
“The IPO is a significant milestone for the business and I see it as firing the starting gun on our next phase of growth, which I’m massively excited about leading the business through,” said founder and boss Andy Bell.
“The demand for our IPO from both blue-chip institutions and our own customers was a real endorsement of our business and the market opportunities that lie ahead of us, and I’m pleased to welcome our new shareholders on board.”
The company reported revenues of £89.7 million, up 19% last year. Pre-tax profit was up 31% to £28.4 million.
London has had several disappointing London listings this year including Aston Martin and Funding Circle amid market volatility and Brexit fears.
A banker who did not want to be named said of the Aston Martin and Funding Circle debuts: “This is brutal. The IPO market stinks for growth stocks which do not have an earnings track record.”
Shares in AJ Bell (LON: AJB) are currently trading +33.63% at 216p (1049GMT).
Bitcoin hits fresh lows, falling below $3,300
Bitcoin has fallen to a record low for 2018, falling below $3,300 on Friday.
According to CoinDesk, bitcoin price data plummeted 11% in the past 24 hours dropping to lows of $3,293.31.
The cryptocurrency has fallen over 80% from all-time highs of almost $20,000.
Naeem Aslam, the chief market analyst at Think Markets, said: “The price of bitcoin has crippled on the back of this and I think it is likely that the price may not only drop below the $2,000 mark but with this kind of momentum behind it, the price can test the $1,500 level.”
“Simply put, the bad news keeps coming just like cockroaches coming out of a hole.”
Cryptocurrencies are a controversial form of currency since their entrance into the mainstream finance scene, given their unregulated nature.
Government officials and financial institutions have expressed concerns over its decentralised nature.
JP Morgan Boss (NYSE: JPM) Jamie Dimon famously said that it was a “fraud” only fit for use by drug dealers, murderers and “people living in places such as North Korea”.
Bank of England Governor Mark Carney has also called for a crackdown, saying: “Authorities are rightly concerned that given their inefficiency and anonymity, one of the main reasons for their use is to shield illicit activities. This cannot be condoned. Anarchy may reign on the dark web, but in the UK it’s just a song that your parents used to listen to.”
Following the fresh low, it seems that the so-called ‘Bitcoin Bubble’ has well and truly burst.
Berkeley Group raises profit guidance, shares rise
Berkeley Group announced on Friday that it will raise its profit guidance for the year by over 5%.
The housebuilder will raise profit forecast after a “resilient” start to the year. This is despite pre-tax profit for the first of the year falling from £539.9 million a year ago to £401.2 million.
Revenue also fell from £1.66 billion to £1.65 billion.
Chief executive Rob Perrins said: “With the resilient start to the year, Berkeley is increasing its pre-tax profit guidance for the current year by at least 5% and now anticipates a similar split between the first and second half to last year when 55% was earned in the first six months of the year.”
“This is in the context of a short-term outlook that is clearly uncertain due to the ongoing Brexit process and a number of headwinds in the operating environment in London and the South East. This uncertainty affects sentiment and confidence which has a consequential adverse impact on investment levels and transaction volumes with a number of developers withdrawing from these markets.”
George Salmon, who is an equity analyst at Hargreaves Lansdown, said: “Upgraded profits and a balance sheet that looks even more resolute has given the group the confidence to promise a steady flow of shareholder returns all the way out to 2025.”
“However, there’s only so much the group can do to look after its share price. Sentiment will remain closely tied to the Brexit barometer, since London could well be in the eye of the storm should a disorderly departure trigger a housing meltdown.”
“While the shares remain something of a binary bet on Brexit in the short-term, looking further afield Berkeley’s niche operating model and enviable track record mean we think it should be a long-term winner,” he added.
Shares in Berkeley Group (LON: BKG) are trading +3.04% (1006GMT).
Halifax: House price growth is slowest in 6 years
New figures from Halifax have shown that UK house prices are growing at the slowest rate in six years.
The figures released today reveal house prices grew just 0.3% in the three months to the end of November compared to the same period last year.
This is compared to the 1.5% annual growth that was recorded in October.
The average house in the UK will now set you back £224,578.
“House price growth has slowed as we approach the end of the year, falling from 1.5% in October to 0.3% in November, with the average cost of a home now £224,578. While this is the lowest rate of growth in six years, it remains within our forecast range of 0% to 3% for 2018,” said Russell Galley, the managing director at Halifax.
“High employment, wage growth and historically low mortgage rates continue to make home ownership more affordable for many, though the need to raise a significant deposit still acts as something of a restraint on the market. This is largely offset by a relatively limited supply of new and existing properties for sale, which continues to sustain house prices nationally.”
October also saw the number of mortgage approvals grow the highest level since January 2018.
The UK housing market has significantly cooled over the year, particularly in London and the south-east.
Last week saw the Bank of England’s Brexit analysis, which warned that a no-deal scenario could lead to house prices plunging by 30%.
FTSE 100 continues to slide to lowest point since Brexit vote
The FTSE 100 sunk to its lowest point in two years on Thursday, hit hard by the arrest of Huawei’s Meng Wanzhou and fears surrounding the US/China trade war.
At its lowest, the blue-chip index was down 191 at 6,730 – its lowest since the EU referendum in 2016.
Connor Campbell from Spreadex said: “Perhaps embarrassed by their overly positive reaction to Monday’s trade truce news, the markets nosedived on Thursday, with the US open only serving to exacerbate what was already a nasty set of losses.”
“The Huawei arrest appears to be the straw that broke the camel’s back. The rapidly dwindling good-feeling towards the US and China’s vague trade war ceasefire turned actively hostile on Thursday, investors fearing that, 90-day truce or not, the relationship between the two superpowers might be about to take a turn for the worse,” he added.
Once again, one of the biggest fallers of the day was Thomas Cook (LON: TCG). Shares plunged 13.6% at 29.72p despite regaining value this week. The FTSE reshuffle also sent shares down after groups including Royal Mail (LON: RMG) and Just Eat (LON: JE) were relegated. Shares in Just Eat fell over 5% whilst Royal Mail shares fell almost 1% after Deutsche Bank cut target price by 16%. In more positive news, shares in Ted Baker (LON: TED) were up rose 63p to 1,530p after a trading update amid a dispute over workplace culture. Nick Bubb, the independent retail analysts, said: “Ahead of the much-awaited Ted Baker Q3 update today (for the 16 weeks to Dec 3rd), we flagged that the better than feared trading update from Joules yesterday provided some encouragement that Ted Baker’s trading update might also not be as bad as some had feared, despite the recent share price slump…And the headline of the statement is bullish.” Shares in Paddy Power (OTCMKTS: PDYPY) also fell over 6% on Thursday on the news that UK’s biggest gambling firms have agreed to stop advertising during live sports broadcasts.Just Eat shares down 5% on FTSE 100 relegation
Just Eat shares fell 5% on Thursday after the group was dropped from the FTSE 100.
The reshuffle was announced on Wednesday’s close, where the food delivery company was relegated following a torrid six months with profit warnings and a drop in share price.
The share price in the group since July has fallen from 883.4p to a November-low of 533.8p.
Analysts have cut their forecasts from by around 28% this year due to heavy investment carried out by Just Eat.
Since falling off the FTSE 100, Barclays (LON: BARC) has also cut its price target.
“We see limited macro risk for Just Eat. In our view, while some customer might forego ordering takeaway food to save costs, others might trade down from higher segments to Just Eat for the same reason,” said Barclays.
“The underlying marketplace business is performing well and earnings upside/downside into the coming years will largely be driven by discretionary investments into marketing and logistics.”
“To reflect updated guidance, and as we expect those investments to continue, we reduce our earnings estimates for 19/20 by [around] 16%.”
The food delivery company, which is now part of the FTSE 250, was replaced by engineering firm Spirax-Sarco (LON: SPX).
With no surprise to many, the Royal Mail (LON: RMG) was also relegated from the FTSE 100 after its share price more than halved since its peak in May.
Replacing the Royal Mail was the insurance company Hiscox (LON: HSX). The share price has more than doubled in the past five years and the group was won the insurance company of the year at the City A.M. awards.
Shares in Just Eat (LON: JE) are currently trading -5.13% at 536,00 (1607GMT).
Lyft announces IPO registration
Lyft has filed a draft registration with US authorities for an initial public offering (IPO).
According to a statement released on Thursday, the ride-hailing app has begun the process to go public ahead of Uber.
The price range or the number of shares that will be put on offer has not yet been determined.
“The initial public offering is expected to commence after the SEC completes its review process, subject to market and other conditions,” said Lyft in a statement.
A person familiar with the matter said in October that Lyft will be working with JPMorgan Chase & Co., Credit Suisse Group AG and Jefferies Financial Group Inc. or organise the IPO for the first half of 2019.
A spokesperson from the group said earlier this year: “A variety of factors will determine if and when Lyft goes public, but in the meantime, we are focused on building our business, which continues to grow.”
If the company is to go public at the start of 2019, it would go public before rival Uber.
Uber’s chief executive, Dara Khosrowshahi, has confirmed that his company are still planning for a planned public offering in the second half of this year.
Lyft was launched in 2012 by John Zimmer and Logan Green. It is thought to be worth about $15 billion (£11.75 billion). Uber is valued at approximately $120 billion.