https://platform.twitter.com/widgets.jsIf a deal is impossible, and no one wants no deal, then who will finally have the courage to say what the only positive solution is?
— Donald Tusk (@eucopresident) January 15, 2019
Brexit: Theresa May faces confidence vote amid deal defeat
Theresa May’s Brexit plan was defeated by a majority of MPs in Parliament on Tuesday, with Labour now launching a vote of no confidence against the government.
The Prime Minister’s Brexit deal was rejected by 230 votes, in a huge blow to the government given it has spent the last two years negotiating it.
After the defeat, May told the Commons that the vote “tells us nothing about what it does support, nothing about how or even if it intends to honour the decision that people took in a referendum”.
Nevertheless, she said she would respect the outcome of the vote. She also said:
“The house has spoken and the government will listen,” she told the Commons earlier today.
The vote is set to take place after Prime Minister’s questions today. Should Labour win the vote, an immediate election would not take place.
May’s government would have two weeks to attempt to regain confidence from MPs, or an alternative government would be allowed to form.
Nevertheless, both Tory rebels and DUP MPs have allegedly pledged to give their support to the Prime Minister, meaning a Labour victory seems unlikely.
Still, uncertainty about the road ahead remains. If May survives a no-confidence she will likely head back to Brussels to renegotiate.
Thus fur, however, the EU has dismissed the option of further talks.
The European Council Chief Donald Tusk took to twitter hinted that the only possible resolution would be to cancel Brexit.
He tweeted:
JP Morgan reports 18% fall in revenue
Following “challenging market conditions”, JP Morgan (LON: JMC) reported an 18% fall in revenue for the fourth quarter of 2018.
The group’s quarterly profit that was reported on Tuesday fell below analysts’ expectations for the first time in 15 quarters.
Despite the poor revenue results, the lender reported a 67% rise in profits to $7.1 billion. The rise in profit was a record for the fourth quarter.
Earnings also grew to a record of $32.5 billion, whilst fixed-income trading fell to $1.9 billion (£1.5 billion).
“Despite a challenging quarter, we grew markets revenue in the investment bank for the year with a record performance in equities and solid performance in fixed income,” said Jamie Dimon in a statement.
Dimon also warned against the political shutdown in the US and the effects it may have on results.
“We urge our country’s leaders to strike a collaborative, constructive tone, which would reinforce already-strong consumer and business sentiment,” he said.
“Businesses, government and communities need to work together to solve problems and help strengthen the economy for the benefit of everyone,” added Dimon.
Shares in JP Morgan fell 8.7% last year amid the concerns surrounding a US/China trade war. They are currently trading down 1.29% (1557GMT).
Dignity shares edge up on “stronger than expected” Q4 results
Dignity reported a “stronger than expected” fourth quarter on Tuesday.
Operating profit for the funeral provider expects to be £79 million, which is ahead of market expectation.
In their trading update, Dignity said the stronger than expected profit was due to a comparable market share remaining robust and showing small growth year on year; the funeral average income remaining higher than anticipated; and overheads being lower than expected, partly due to the timing of some marketing spend which will now occur in 2019.
“Good progress continues to be made on the Transformation Plan. Following the price reductions introduced in 2018, the Board continues to expect average funeral incomes to be lower in 2019 than in 2018 and there are therefore no changes to the Board’s expectations for 2019,” said the group in a statement.
The funeral provider has struggled over the past year, due to increased competition from rival Co-op funeral group. The price war between providers has hit profits for Dignity. In the three weeks to September 29, profits for the group took a 27% hit to £11.1 million.
In addition, the Competition and Markets Authority said in November that they would launch an investigation into the UK funeral market, which caused shares to slide.
“The scale of these price rises does not currently appear to be justified by cost increases or quality improvements,” said the CMA at the time of the news.
Analysts at broker Peel Hunt said on the trading update that it was “a pleasing surprise”.
Shares in the group (LON: DTY) are trading +0.49% at 723,50 (1440GMT).
Marks and Spencer names locations of store closures
Marks and Spencer (LON:MKS) have announced the names of the stores that are set to close as part of the high street chain’s restructuring plans.
The retailer announced the closure of 17 store locations last year, as it looks to streamline costs and revive its fortunes.
The closures are set to put as many as 1,000 jobs at risk, as the company looks to compelte the closure of 100 stores by 2022.
It also plans to cut the amount of space in stores dedicated to clothing, one of the worst performing divisions for the company.
Sacha Berendji, the M&S retail, operations and property director, commented on the closures:
“We’re continuing to transform M&S with pace and as part of this we are making good progress with our plans to close over 100 stores – radically reshaping our store estate to become more relevant for our customers.”
“Proposing to close stores is never easy, for our colleagues, customers or the local community, but it is vital for the future of M&S. Where we have closed stores, we are continuing to see an encouraging number of customers choosing other nearby locations and shopping on M&S.com.”
The stores named are as follows:
- Ashford
- Barrow
- Bedford
- Boston
- Buxton
- Cwmbran
- Deal
- Felixstowe
- Huddersfield
- Hull
- Junction One Antrim Outlet
- Luton Arndale
- Newark
- Northwich
- Rotherham
- Sutton Coldfield
- Weston-super-Mare
Ashmore Group shares fall amid “modestly negative” investment performance
Ashmore Group shares (LON:ASHM) fell on Tuesday after the company said its investment performance was “modestly negative” in q2.
Assets under management were up by 0.4% to £76.7 billion at the end of December from £76.4 million in September.
This was as a result of net inflows of $0.5 billion mitigating a negative investment performance of £0.2 billion.
According to the trading update, Ashmore said that ‘net inflows were delivered in the corporate debt, blended debt, equities, multi-asset and overlay/liquidity themes.’
Meanwhile there was a ‘small net outflow’ in the local currency theme, whilst external debt and alternatives themes remained flat during the quarter.
As a result, the company said investment performance proved ‘modestly negative’ for the period.
“Despite the more challenging markets experienced for much of 2018, client flows remain resilient reflecting investors’ very low allocations to emerging markets and recognition of the value available,” commented chief executive Mark Coombs.
“The effect of tax-related stimulus on the US economy and its support for the US dollar started to fade towards the year end, removing the main headwind for emerging markets outperformance.
“The reduction in emerging markets asset prices despite improving economic growth suggests underweight investors will continue increasing allocations to emerging markets, and a return to the positive market trends experienced in 2016 and 2017.”
Shares in Ashmore are currently -2.63% as of 11:44AM (GMT) as the market reacts to the update.
Persimmon annual profit set to be “modestly” ahead of market
Persimmon announced on Tuesday morning that it expected its annual profit to be “modestly” ahead of current market expectations.
Total group revenue was 4% higher than the year earlier, coming in at £3.7 billion. This compares to the £3.6 billion figure in 2017.
New housing revenues increased by 4% to £3.55 billion.
Additionally, legal completion volumes increased by 406 new homes, a 3% increase to 16,449, including private sales of 13,341 new homes.
Average selling price was roughly £215,560 for the year ended 31 December 2018. This price is 1% higher than the £213,321 recorded in 2017.
“The UK housing market has continued to benefit from robust employment levels, low interest rates and a competitive mortgage market, which has supported confidence and customer demand across the regions,” the house building company said.
The company has said that expects its pre-tax profits for 2018 to be “modestly” ahead of the current market consensus. Persimmon has benefited from the new developments opened throughout 2018.
The company concluded with a reflection on the current UK housing markets and the current economic uncertainty surrounding the UK’s departure from the European Union. Indeed, Brexit uncertainty has pushed UK house prices to a six-year low, as reported by Reuters.
“As we look forward to the 2019 spring season Persimmon is in an excellent market position. Whilst the future performance of the UK economy is currently subject to increased levels of uncertainty the Group is well positioned with its strong outlet network together with the availability of a range of attractive house types at affordable prices across the regions of the UK, supported by a high quality land bank and conservative financial structure.”
“We will give an update on our assessment of the housing market over the early weeks of 2019 when we announce our results for the year ended 31 December 2018 on Tuesday 26 February 2019.”
Amid a difficult climate for the UK property market, we took a look at whether London house prices would recover in the year ahead.
At 10:18 GMT today, shares in Persimmon plc (LON:PSN) were trading at -0.4%.
Gym group shares drop on weakened adjusted earnings
The Gym Group announced its pre-closure trading update for 2018 on Tuesday morning. Adjusted earnings are expected to be weakened from a lower opening programme and the impact associated with outlet conversions from its Lifestyle Fitness acquisitions. Shares in the group dropped by almost 5.5% this morning on the back of the announcement.
Total revenue has grown 35.6%, increasing to £123.9 million for the year ended 31 December 2018.
Year-end net debt was recorded at £46 million as a result of the easyGym acquisition and investment in 17 new openings.
The company has released an expected full year adjusted earnings for 2018 to be roughly £37 million.
In 2017, the company opened a new 16,000 square feet outpost on White Hart Lane, just moments from Tottenham Hotspur FC’s new stadium.
CEO of The Gym Group, Richard Darwin, commented on the announcement:
“The Gym Group continues to deliver strong, profitable growth whilst also establishing the platform for a bigger business in the future. The pace of expansion was significant in 2018: we opened 17 new gyms, converted the acquired Lifestyle sites, acquired easyGym and over the last 30 months have doubled the number of gyms in our estate. We have recently reached the milestone of 750,000 members, demonstrating the ongoing appeal of our business model.”
“Looking forward we have a good pipeline of new sites and expect to open a further 15-20 gyms in 2019. We are well placed to continue to generate high levels of growth whilst maintaining strong returns on capital. We are confident that in 2019 we will continue to develop and build the business to deliver another year of profitable growth for shareholders.”
The group reported that its total year-end membership numbers were ahead by 19.3%, to 724,000. This figure compares to the 607,000 recorded in December 2017. Additionally, it posted its average members of 693,000, which is up 31.2%.
Elsewhere on the stock market today, Boohoo revised its full-year sales outlook following a strong Christmas sales period.
At 09:48 GMT today, shares in GYM Group plc (LON:GYM) were trading at -5.42%.
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.
Flybe announced that shareholders will not be given the chance to vote on the deal.
David Madden, an analyst at CMC Markets, told the Evening Standard: “The sale of assets and the bridge loan give the company some much-needed breathing space.” In October last year, the airline released a profit warning. The profit warning was announced following declining consumer demand, higher fuel prices and a weakening British pound, according to Reuters. Indeed, the airline had been suffering from lower consumer demand for British and European travel. When combined with increasing fuel prices and a decreasing sterling value, the airline’s performance was considerably damaged. The rescue deal comes following the collapse of Monarch and Primera Air. For Monarch, hundreds of thousands of people lost bookings with the airline. As for Primera Air, all operations were ceased in October, leaving passengers stranded abroad following its prompt closure. Flybe is a British airline based in Exeter, England. It is the largest independent regional airline in Europe. Its estimated carry is roughly 8 million passengers per year, operating between 81 airports across the UK and Europe. It offers 210 routes across 15 countries. At 13:46 GMT today, shares in Flybe Group plc (LON:FLYB) were trading at -43.20%.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%.