Michael Kors shares plunge 14%
Michael Kors shares plunged over 14% on Wednesday.
The US fashion firm missed analyst quarterly revenue expectations and the group recorded a 2.1% fall in sales and 7% fall in licensing revenue.
In the three months to 29 September, profits fell 37% to $137.6 million compared to the same period in 2017.
Chief executive John Idol said: “The consumer is absolutely responding to the brand.”
“We’ve got to get more inventory into the stores to be able to really build consumer demand,” he added.
Revenue was boosted by last year’s takeover of Jimmy Choo. Revenue increased 9% to $1.3 billion.
Kors’ recently announced plans to buy Versace and the group is “setting the stage for accelerated revenue and earnings growth”. The move will increase the company’s European presence.
Shares in Michael Kors (NYSE: KORS) are trading -14.62% (1746GMT).
FTSE 100 rallies following US midterms
Following the US midterms, the FTSE 100 are trading up 57.55 at 7098.23 (1547GMT).
US Midterms
Shares in the London Stock Exchange rallied in the wake of the US midterm elections. In the first half hour of trading on Wednesday, the FTSE increased by 71 points to 7,112.05. Neil Wilson of Markets.com said: “No blue wave, no surprise GOP [Republican Party] clean sweep; what we got instead was largely what the market expected,” “The Democrats have taken the House, whilst the Republicans control the Senate.”Marks & Spencer (LON: MKS)
Despite announcing lower food and clothing sales, the retailer saw shares creep up 4% in Wednesday’s trading. Lee Wild, head of the equity strategy at Interactive Investor, said: “The Marks & Spencer PR machine is in full swing and chief executive Steve Rowe is telling investors exactly what they want to hear.” “The company has been in desperate need of a major overhaul for years and, under a new and more dynamic leadership team, is getting just that. M&S is admitting its shortcomings and promising to deliver what investors have been screaming at it to do for years.” “Modernising the clothing range, focusing on good quality but affordable ‘must-haves’, and selling more of what people want is reassuring to hear.”ITV (LON: ITV)
ITV was today’s biggest faller after reporting flat advertising sales. The broadcaster blamed economic uncertainty surrounding Brexit as shares fell 4% this morning. Chief executive Carolyn McCall said: “We are very focused on executing our strategy to create a stronger, structurally sound business, building on our strong operating performance in the areas of the business which are under our control.”Wall Street Trading
US stocks also opened higher on the news of midterm elections. The Nasdaq gained 85 points to 7,463. Connor Campbell, a financial analyst at Spreadex, said: “Despite a whole lot of uncertainty in terms of what a split Congress actually means for the next 2 years of Trump rule, the markets continued to celebrate a broadly unsurprising set of results on Wednesday,” “Perhaps investors are just happy at the thought of a political deadlock in Washington, the kind which will prevent any apple-cart upsetting legislation getting passed (though there is the worry that a domestically frustrated Trump could now chase a US-China trade war even harder).”Wetherspoon shares dip with latest forecast
Pub chain JD Wetherspoon Plc (LON:JDW) has announced a forecast of weaker performance amid ‘tougher comparisons’ and the announcement of a health scare for company chairman Tim Martin.
The firm stated that its trading outcome would be slightly inferior to last year, despite continuing its trend of record sales and an impressive summer period.
The company warned of tougher ‘comparatives’ due to double-pronged factors raising input costs.
Firstly, the firm has had to absorb the cost of increasing wages following threats of industrial action by some of its staff, with a desire not to pass on these costs to consumers – in fear of hampering its ongoing prosperity.
Secondly, it has had to bear the brunt of strategic adjustment, opting for a switch to British alcoholic produce and soon discontinuing European brands, in the wake of possible tariffs and the company’s chairman having an outspoken position on Brexit.
Touching on Brexit, CEO Tim Martin said that a no-deal Brexit, “really means free trade.”
“The economic truth is that no deal/free trade will leave the U.K. better off on the day we leave the EU in March next year. The risk to the future lies in staying linked to the chaotic and undemocratic Brussels regime.”
Despite the positive outlook, Martin’s leadership will be missed in the coming weeks, with an operation to remove a burst appendix. The Wetherspoon chief will be home-bound “several weeks”, but has confidence in the capabilities of the company’s board members.
For the 13 weeks to the end of October, total sales were up 6.2%. The pub has opened two new pubs and closed three since the start of the financial year, with expectations to open another five to ten pubs before the close of the year.
The pub chain’s shares are currently trading down 11.78% or 154.5p at 1,156.5p 15:35 GMT. Analysts from both Peel Hunt and Liberum Capital have reiterated their ‘Hold’ stance on Wetherspoon stock.
Elon Musk bitcoin scam costs thousands of dollars
Elon Musk has hardly been left in want of Twitter (NYSE:TWTR) controversy in recent weeks, after his costly tweet and subsequent departure as Tesla (NASDAQ:TSLA) Chairman. However, this recent debacle only involved Musk in name.
This time around, Musk’s identity was hijacked in order to carry out yet another Bitcoin scam, adding to the ongoing narrative surrounding security concerns with cryptocurrency.
Hackers occupied several verified Twitter accounts held by corporations such as Matalan and Pantheon Books and then hijacked these accounts to carry out a scam whereby their details were replaced with the information and picture of the notorious entrepreneur. The following tweet was published:
“I’m giving 10 000 Bitcoin (BTC) to all community!” I left the post of director of Tesla, thank you all for your support,”“I decided to make the biggest crypto-giveaway in the world, for all my readers who use Bitcoin… To verify your [bitcoin] address, send from 0.1 to 2 BTC to the address below and get from 1 to 20 BTC back.” As reported by The Independent, one address alone received bitcoin from 400 sources, all of which were under the false pretence that they would receive a slice of the fabricated $64 million giveaway. Gross transactions reached 28.2 bitcoins, which equates to $180,000. The worst affected victims sent up to 0.9995 bitcoins, which is worth over $6,000. Musk is no stranger to cryptocurrency scams on Twitter, even going on to Tweet, “I want to know who is running the Etherium scambots!” in response to a scam in July, “Mad skillz.” Musk’s Twitter account is currently suspended after Tweeting last month:
“Wanna buy some bitcoin?”
William Hill acquires Mr Green for £242m
Bookmaker William Hill Plc (LON:WMH) may not be enjoying the same prosperity as their counterparts Paddy Power Betfair Plc (LON:PPB), but is reeling off the back of a successful round of negotiations to acquire Swedish-based online gambling group, Mr Green (SS:MRG).
After announcing its partnership with Eldorado Resorts earlier in the year, the firm announced on Wednesday that it had agreed to acquire Mr Green and Co for £241.8 million after successful negotiations that began last month.
The bookmakers offered SEK 69 (Swedish Krona) per Mr Green share, which represented a 48% premium on the firm’s closing price at the end of Tuesday trade – Mr Green’s then recommended to its shareholders that they accept the bid.
“This proposed acquisition accelerates the diversification of William Hill – immediately making us a more digital and more international business,” said William Hill chief executive Philip Bowcock said.
“Mr Green will provide William Hill with an international hub in Malta with market entry expertise and strong growth momentum in a number of European countries.”
“William Hill will move from a single brand to a suite of brands that can maximise growth opportunities moving forward in new and existing markets.”
The UK firm’s shares are currently trading down 3.91% or 7.85p at 192.85p 14:42 GMT, which is a modest blip in comparison to the drop after yesterday’s profit forecast.
Midterm results match predictions, markets rally
The Midterm election results have left the US with a Democrat majority in Congress, while Republicans maintain control of the Senate.
In real terms this has meant European stocks trading up and US stocks up sharply in pre-market trading – with the DOW Jones industrial average up more than 200 points in early-morning futures trading and US bond prices also on the rise.
The result however, was widely expected by Wall Street, who feared a ‘blue wave’ that would have upset President Trump’s economic policy package. Instead, analysts are saying that a policy ‘gridlock’ is to be expected and while Democrats will have trouble reversing Trump’s tax cuts and business deregulation, Bankrate.com senior economic analyst Mark Hamrick has said,
“House Democrats will turn up the pressure on President Trump through investigations and oversight”.Analysts from Rabobank stated that, “Foreign and trade policy is to a large extent the prerogative of the President, hence Trump will maintain considerable control, despite the Democratic majority in the House of Representatives. However, for the ratification of international treaties, he will need the approval of the House Democrats.” “In contrast, domestic policy is made in Congress, hence a Democratic majority in the House is likely to lead to gridlock. Infrastructure spending could be one of the few feasible policy options.” Overall, it is expected that the midterm election results will have a modest positive impact on markets, as the result was not only in line with market predictions, but past House gridlocks have not been detrimental to markets. Edward Jones Investment Strategist, Kate Warne, said that “a split Congress means that gridlock is more likely, and that’s been fine for markets in the past”. Further, elections are noted to be a time of market uncertainty and thus passing an election by relatively unscathed can only be good news.
US midterms: Democrats take hold of the House, Republicans make gains in Senate
The US midterms drew to a close during the early hours of Wednesday morning, with both sides claiming respective victories.
Whilst the Democrats ended the Republicans 8-year hold of the House of Representatives, Republicans made gains in the upper chamber of Congress.
President Trump took to twitter to announced a press conference to discuss ‘success’ in the midterms.
Marking a shift towards a more conciliatory tone, Trump also took the opportunity to congratulate Nancy Pelosi for becoming speaker of the house.
He tweeted:
https://platform.twitter.com/widgets.js Whilst perhaps not quite the ‘blue wave’ anticipated by Democrats, a House majority will enable greater checks upon executive power. This majority will make it significantly more difficult for President Trump to pass his legislative agenda through congress. Moreover, the House of Representatives can now also bring forward Impeachment proceedings against Trump, should they deem it necessary. Crucially, however, an Impeachment trial would be ultimately decided upon in the Senate, as was the case with Bill Clinton’s case in 1998. Overall, turnout proved unusually high for the midterms, with the Democrats gaining at least 26 House seats. Meanwhile, the Republicans gained at least 2 seats in the Senate. It also proved a good year for women in politics, with 92 women elected to the 435 member House. This beat a previous record of 84.In all fairness, Nancy Pelosi deserves to be chosen Speaker of the House by the Democrats. If they give her a hard time, perhaps we will add some Republican votes. She has earned this great honor!
— Donald J. Trump (@realDonaldTrump) November 7, 2018
John Lewis chairman announces 2020 departure
John Lewis chairman, Sir Charlie Mayfield, has announced his departure from the group in 2020.
The new chairman is set to be announced during the second half of 2019, and both internal and external candidates are being considered for the role.
Sir Mayfield has been in the role as of 2007. In 2014, he received his knighthood ‘for services to business’
Mayfield said: “Although my departure is still a considerable way off, the appointment of my successor is a key responsibility. It is for this reason I have decided to lay out the timetable now to enable an open and thorough process to select the next chairman of the partnership.”
It marks a difficult period for John Lewis. Last month the group reported a 99% fall in profits for the six months to July 28th.
The company blamed a turbulent economic environment for retail, largely in part due to Brexit uncertainty.
Due to the fall in profits over the course of the past year, John Lewis staff bonuses were cut for the fifth year in a row.
Elsewhere across retail, Marks & Spencer (LON:MKS) posted a 2.2% fall in sales on Wednesday, causing shares to fall.
In particular, clothing fell 1.1%, whilst food sales were down a further 2.9%.
Halifax cites house price growth at five-year low
Despite some signs of resurgence in the housing market, banking group Halifax (LON:HALP) have compounded ongoing woes for UK house prices in 2018, citing the lowest annual growth in the last five years.
The Halifax House Price Index is the UK’s longest-running series that compares house prices and property price movements on a like-for-like basis.
Though the last quarter (August-October) saw a 0.2% growth in house prices, today’s announcement echoed the figures delivered by financial services company Nationwide (LON:NBS), which noted that the annual 1.6% housing price increase through October was below the 2-3% range seen for the 12 months prior.
On-month, Halifax said that house prices had increased 0.7% in October, pushing the nationwide average property price to £227,869. However, Bank of England said the number of mortgages approved to finance house purchases fell by 1.3% month on month to 65,269 in September.
Russell Galley, the managing director of Halifax, said, “The annual rate of house price growth has fallen from 2.5% in September to 1.5% in October, which is the lowest rate of annual growth since March 2013. However, this remains within our forecast annual growth range of 0% to 3% for 2018.
“House prices continue to be supported by the fact that the supply of new homes and existing properties available for sale remains low. Further house price support comes from an already high and improving employment rate and historically low mortgage rates which are creating higher rates of relative affordability.
“We see this continuing to be the case over the coming months and we remain supportive of our 0% to 3% forecast range.”
North London estate agent Jeremy Leaf said that harsh realities are “hitting home ” with sellers, many of whom now appreciate that the first offer they receive “could very well be their only one, however unpalatable it may be”.
“However, listings are increasing and four out of five sellers are said to be buyers so there are some small grounds for optimism when the Brexit fog finally clears.”
House market growth has slowed since 2016 with many analysts having predicted it would plateau this year. Only last month the Royal Institution of Chartered Surveyors forecast the market to, “grind to a halt in 2018” amid a trifecta of low sales, homes on the market, and low consumer confidence.
In today’s report, Halifax cited the RICS as having said that, “Respondents to the RICS monthly UK Residential Market Survey continue to cite the mixture of affordability constraints, a lack of stock, economic uncertainty and interest rate rises as holding back activity to a certain degree”.
Chief Economic Adviser at EY Item Club, Howard Archer, echoed these sentiments and noted the detrimental effect that Brexit has had on market liquidity. However, he went on to say that the 0.7% month-on-month increase last month was likely a correction on the sharp 1.3% dip in September, which added to a string of consecutive price dips.
House prices look unlikely to spike amid ongoing market uncertainty and fraught consumer confidence, even with the addition of the Help to Buy scheme. In regard to housing market players, Redrow and Persimmon will face short-term uncertainty as both house-building firms face changes of leadership.
Lloyds questioned on restructuring and retraining
Banking group Lloyds (LON:LLOY) announced that they will be carrying out a drastic restructuring plan, which is centred around transferring a bulk of its operations to online and digital banking. Since the announcement, critics have called into question how realistic the retraining of staff will be, with over 6,000 earmarked for redundancy.
The announcement stated that 6,240 backroom staff would be axed and in exchange 8,240 opportunities would open up for digital coding and online banking products.
In what appears to be a silver lining amidst a storm, the banking group announced that it was committed to retraining as many of its soon-to-be redundant backroom staff as possible. It said that every effort would be made to minimise redundancies and “circa 75% of these new roles are anticipated to be filled by existing Lloyds colleagues”.
As part of the £3 billion purse committed to this restructuring, the company said a total of 4.4 million retraining hours would take place over the next three years.
However, compounding the woes of its backroom staff, the FT reported that Lloyds had amended its earlier announcement and that only 75% of the 6,240 staff could expect retraining – though this figure is still far-fetched.
A Lloyds spokesperson has said: “The group […] will refresh some existing roles and create new roles within its structure.”
It is perhaps unrealistic that after years of working in backrooms, staff can attend training sessions and come out as fully fledged banking app coders, the almost ironic euphemism of “refresh some existing roles”, perhaps speaks volumes about the realities of the firm’s strategic overhaul.
These measures come in response to the digitisation of its competitors, and IT glitches suffered by TSB and HSBC. With Wednesday’s announcement, Lloyds shares bounced 1.31% or 0.76p to 58.47p in morning trading 11:54 GMT.