“That a storied retailer, once at the pinnacle of the industry, should collapse in such a shabby state of disarray is both terrible and scandalous.”
“The brand is now tarnished just as the economics of its model are firmly stacked against its future success,” he added.
Nicola Sturgeon calls for Brexit delay
Nicola Sturgeon has called for an extension of the Brexit transition period.
Scotland’s first minister has said that it is “time to compromise” to find a “common sense” solution to Brexit.
“If the last two years have shown us anything, it is surely that more time will inevitably be needed to agree the future relationship, and so being able to extend the transition period will be vital to avoid another cliff-edge scenario,” she said.
In a speech in London, Sturgeon called on Theresa May to reconsider the decision to withdraw the UK from the customs union and single market.
The Scottish first minister said that staying in the customs union and single market would be the only option that could potentially command a Commons majority.
“[Chequers] is not a serious and credible option. And the only reason it is the only option on the table is because the UK government has refused to countenance any others,” she said.
Sturgeon also said that nothing would be gained from the rushing of the UK’s departure from the EU, which so far “lacks precise detail.”
“For MPs to support a bad or blindfold Brexit – a cobbled-together withdrawal agreement and a vague statement about our future relationship – would in my view be a dereliction of duty,” she said.
“It is my strong view that such a deal should be rejected – not in favour of no deal as some will try to suggest, but as a way of getting a better deal back on the table,” she added.
In response, the prime minister has said that a delay is “not an option”.
A spokesman for the UK government’s Department for Exiting the European Union (DExEU) said: “We will have an ambitious course outside of the EU that enhances our prosperity and security and that genuinely works for everyone across the UK.”
“We have put forward a precise and credible plan for our future relationship with the EU and look forward to continuing to engage with the EU Commission on our proposals.”
EY Item Club: UK set for three years of low growth
EY Item Club have warned that the UK is set for three years of lagging growth.
Previously, The EY Item Club forecast GDP growth of 1.3% for 2018, and 1.5% in 2019.
This marked a downward revision from 1.4% and 1.6% projected in its previous outlook three months ago.
However, the economic forecasting company said that should no Brexit deal be reached, this would prove “significantly weaker”.
“The EY Item Club suspects that the Bank of England will want to see sustained evidence that the UK economy is holding up relatively well after Brexit occurs in late March, before hiking interest rates,” the findings stated.
EY chief economist Mark Gregory also commented: “The UK economy is going to experience a period of low economic growth for at least the next three years, and businesses need to recognise this and adjust accordingly.”
“They should also consider a sharp downside to the economy in the event of a no-deal Brexit and make preparations for such a scenario.”
“Even if the Brexit process goes smoothly, the cyclical risks to the UK economy mean this would still be a worthwhile exercise. Now is the time to start to think about the future shape of any UK business after 2020,” Gregory warned.
The downbeat EY Item Club forecast comes after Brexit talks over the weekend hit a standstill over the Northern Ireland border.
With the deadline for withdrawal fast approaching and no sign of a discernible trade deal on the horizon, a no-deal scenario is becoming increasingly likely.
Various companies have warned the government that a no-deal would severely impact business in the UK.
Just recently, the chief executive of the Royal Bank of Scotland (LON:RBS) said that a lack of deal could lead the UK into another recession.
Prime Minister Theresa May is set to update the commons on Brexit negotiations later this afternoon.
Royal Mail employees lose out after share price tumbles
Royal Mail (LON: RMG) employees have lost about £850 each following a sharp fall in share price two weeks ago.
Staff were waiting for Monday to sell the free shares they received five years ago when the group was privatised.
On October 1, the company issued a profit warning, sending shares down almost 30% to 338p. Before the profit warning, shares were trading at 477p and previously peaked at 631p in May.
Following the profit warning, analysts at The Share Centre said the company faced the risk of falling out of the blue-chip FTSE 100 index at the next quarterly reshuffle.
Helal Miah, an investment research analyst at The Share Centre, said: “After only a few months in charge the new chief executive of Royal Mail has issued a shocking trading update to the market, which was certainly unexpected.”
“Having been hovering around the FTSE 100 relegation lists in the last few quarterly reviews, the shares are now more than ever at risk of dropping out of the prestigious top 100 in the next reshuffle.”
Employees have expressed frustration and some have accused the company of deliberately issuing a profit warning just two weeks before many were planning to sell shares.
Des Arthur, a postman from Coventry, told the BBC: “The timing of it could be viewed as extremely cynical. It’s going to look like it’s not right.”
Terry Pullinger, deputy general secretary of the Communication Workers Union (CWU), said: “Our members certainly believe it’s just been done to deflate what they would get if they sold their shares.”
“You know what people are like; people in some ways have already spent that money in anticipation,” he added.
The fall in share price has led to some Royal Mail employees to cancel holidays as well as delay payments such as debt repayments.
The group’s spokesperson said: “We were very disappointed that we had to issue a trading update last week. We know and understand this is disappointing for those colleagues who had been planning to sell some of their free shares. But we have to comply with stock market disclosure rules, which required us to make an announcement as soon as possible.”
Claire’s considers UK closures
Accessories chain Claire’s is considering store closures in the UK.
The company is the latest to show signs of the difficult trading conditions and is reportedly in talks for a number of options, including a Company Voluntary Arrangement (CVA).
A spokesperson for the retail group said closing underperforming stores was “part of normal business practice”.
If Claire’s goes ahead with the CVA, hundreds of jobs could be at risk. The retail chain has over 350 stores in the UK and dozens of concessions.
The news has come just days after Claire’s US parent company emerged from bankruptcy protection.
The parent company emerged from Chapter 11 protection after restructuring almost $2 billion (£1.5 billion) worth of debt.
The company could be the latest retailer to be hit by the difficult high street trading conditions, which have led to the administration of Toys R Us and House of Fraser.
Other retailers to be affected have been Carpetright (LON: CPR), Mothercare (LON: MTC) and New Look, which have all used CVAs to close stores and cut jobs.
Ron Marshall, the group’s chief executive, said Claire’s is now “a healthier, more profitable company”.
Monday also saw Superdry announce a profit warning, sending shares down 20%.
House prices: which major global cities are struggling?
Since the financial crisis of 2008, housing markets across the world have begun to show signs of recovery.
Nevertheless, some of the world’s biggest and most popular cities property markets are continuing to cool.
So, which cities are struggling to sell?
London
Whilst previously consistently ranked as one of the leading prime luxury property markets, these days the London market is considerably more subdued.
In fact, owners of expensive property in the capital are set to see limited improvement over the next few years, with Brexit uncertainty proving a major factor, Savills recently said.
Moreover, stamp duty surcharges of between 1 and 3 percent for overseas buyers, looked also set to impact the market over the next few years.
Whilst property in other parts of the UK show signs of promise, London house prices have continued to decline over the last few years.
Investors will be looking to the chancellor’s upcoming Autumn Budget Speech in October, to see if Hammond is set to address any additional measures directed at the property market.
Sydney
It seems stagnating house prices are not limited to Europe, with Sydney’s property market also continuing to decline.
According to figures, Sydney’s median home value has fallen 4.4% since the beginning of the year.
By individual capital, listings in Sydney and Melbourne have also surged by 19.5% and 18.4% over the past 12 months, pushing down demand.
Moreover, recent research from the ABS regarding residential housing prices, also shows signs of a cooling market.
The latest residential property price index data indicated that house price in Sydney in the June quarter, marking the fourth consecutive quarter of decline.
Specifically, Sydney prices fell 1.2% in the period, with prices in Melbourne also down 0.8%.
New York
Over in the states, some of the countries largest cities have shown signs of recovery since the housing bubble burst back in 2008.
Nevertheless, whilst cities such as New York prove more resilient, the Big Apple isn’t necessarily the best place to consider investing.
According to Trulia, New York City house prices are behind the national average.
Home appreciation value in New York increased 31% between 2012 and 2018.
This proved significantly behind cities such as Los Angeles, which witnessed a rise of 68.4 percent across the same period.
If the marked decline of house prices across these metropoles are anything to go by, looking beyond major cities may be key for investors going forward.
How to make an investment on Crowdcube
Crowdcube is the UK’s leading equity crowdfunding platform with 600,000 registered members and over £500,000,000 invested in pitches through their platform.
To help our readers understand the process of registering with Crowdcube, we have compiled a 5-step guide to using the platform.
1. Register for an account to become a member
You can also use your email or an existing Facebook or Linkedin profile to create an account. This will give you access to the full details of the opportunities on Crowdcube and allow you to request restricted documents such as business plans.
2. Request restricted documents
Once registered, you’re able to request documents relating to a pitch including full business plans and executive summaries. These documents are key to understanding a business and outline the firm’s value proposition. At the top of the pitch you will be able to see if the company has advanced assurance from HMRC for any tax benefits for investors in the form of The Seed Enterprise Investment Scheme (SEIS) or Enterprise Investment Scheme (EIS).
3. Review rewards and share classes
Many companies conducting a fund raising round will offer rewards for making different levels of investment, these are accessible at the bottom the page. Also in this area, you will find the different share classes available to investors. Companies will set a certain level for which investors will receive ‘Investment’ shares. Investment shares give investors the same rights for dividends and capital distribution as ordinary share holders, but do not have voting rights or pre-emptive rights. ‘Ordinary’ shares will give investors voting rights and pre-emptive rights.
4. Make an investment via the ‘Invest Now’ function
When you have decided to make an investment, you can simply enter the amount you would like to invest and click ‘Invest now’ to complete your investment. There is a minimum of just £10.
5. Confirm you investment
Funds are not taken from your account until the raise hits the target. The money will be taken from your account once the pitch has fulfilled its target, however, you still have 7 days to review your investment. If the pitch does not secure its target amount, the funds will not be taken from your account.
Remember as with all investment, investing in company shares through Crowdcube means your capital is at risk.
The publisher of UK Investor Magazine, Investment Superstore, is now crowdfunding on Crowdcube, please click here to view our pitch.
ConvaTec shares plunge after profit warning and CEO departure
ConvaTec shares (LON:CTEC) plunged on Monday, after the company warned on profits and announced the departure of its chief executive.
The international medical and technologies company announced the retirement of Chief Executive Paul Moraviec, with immediate effect.
Moraviec is set to be replaced by Rick Anderson, who will assume the role of interim chief executive officer.
The company said that the board has asked Rick Anderson, who was a Non-Executive Director of ConvaTec and previously Group Chairman of Johnson & Johnson, to assume the position on a full-time basis until a permanent replacement is found.
Sir Christopher Gent, Chairman of the firm, said:
“I would like to thank Paul for leading ConvaTec through an important phase of the Company’s development and the first period of being a public company. Paul leaves with the Board’s best wishes for his retirement. I am grateful to Rick for agreeing to take on executive responsibility as Interim Chief Executive Officer and I am sure the Company will be in very good hands until Paul’s replacement has been appointed.”
Paul Moraviec said:
“We have made significant progress during my time as Chief Executive Officer and I am confident that ConvaTec now has the strong platform, infrastructure and leadership to enable the business to flourish. I would like to thank all my colleagues across ConvaTec for their hard work and dedication, they have taken ConvaTec to a leading position in the MedTech industry and I look forward to watching the Company’s future success.”
ConvaTec was founded back in 1978 and is listed on the London Stock Exchange. The firm is a constituent of the FTSE-250 Index.
Its products include products and services relating to wound care, ostomy as well as infusion devices.
The company has 9,000 employees, with operations in over 100 countries.
Shares are currently trading -30.55% as of 11.47AM (GMT).
Velocys shares rally amid trading update
Shares in Velocys (LON:VLS) continued to rally on Monday after the company issued a trading update to investors.
The company, which specialises in renewable fuels, acknowledged the recent share price movement in the statement, updating investors on progress.
Specifically, Velocys said that it continues to drive ‘strong progress’ with its Bayou Fuels biorefinery project in Mississippi.
In addition, the firm said that discussions had been progressing with various strategic investors to invest in the project to fund further development.
Furthermore, the company said it was continuing to collaborate with the ENVIA board to develop options at the project.
The company also continued to talk with insurers, should a resolution be found with ENVIA.
Velocys also said it remained optimistic for future growth, particularly in light of growing demand for renewables.
In recent years, countries have stepped up global efforts to tackle climate change, driving up demand for renewable fuels.
The firm confirmed it is currently partnered with British Airways and Shell in their UK waste to jet fuel project.
The statement also stated that Velocys has cash resources of over £10 million, after the implementation of various cost-saving initiatives.
Due to the ENVIA decision to suspend operations, the company successfully slimmed down costs by £5 million to ensure that its projects remain on budget.
Back in September, the company updated the market on its interim results for six months until 30 June 2018.
Ultimately, company losses deepened during the period, with pre-tax losses rising from £25 million compared to £10.6 million a year previously.
Profits were hit by £15.1 million in exceptional costs during the period, up from £701,000 during the same period a year previously.
Underlying loss, excluding exceptional costs, remained at £9.9 million.
At the time of the interim results announcement back in September, shares were down over 4%.
Shares in the renewables company are currently trading +26.32% as of 10:50AM (GMT), following the most recent company update.
Superdry shares fall after profit warning
Superdry shares (LON:SDRY) fell almost 30% on Monday, after the company issued a profit warning.
The clothing retailer blamed ‘unseasonably hot weather conditions in the UK, continental Europe and the USA’ for the disappointing sales.
Moreover, an additional bout of warmer weather in October has also affected sales of jumpers and jackets.
Superdry also said that it would be also affected by £8 million in additional foreign exchange costs.
Superdry chief executive officer Euan Sutherland said: “Superdry is a strong brand with significant growth opportunities, backed by robust operational capabilities, but we are not immune to the challenges presented by this extraordinary period of unseasonably hot weather. We are well prepared for peak trading, but the second half of financial year 2019 presents both risks and opportunities.
“We continue to focus on delivering efficiencies and cost savings to meet the current challenges and have confidence in our strategy for growth and so are accelerating investments in our future.
“There are significant opportunities ahead for Superdry in terms of geographical market expansion, category extensions and growth and the ability to leverage its multi-channel operating model in a digital world to deliver to customers in whichever way suits them best.”
Superdry’s profit warning follow news that another high street retailer has collapsed.
Last Thursday, Coast announced the closure of its stores amid persistently difficult trading conditions.
However, in a last-minute deal, Karen Millen partially rescued the retailer to allow trading to continue.
PriceWaterhouseCoopers is set to handle the administration process.
Superdry is a branded clothing company that started in Cheltenham.
It is listed on the London Stock Exchange and is part of the FTSE-250 Index.
Shares in the company are currently trading -20.49% as of 10:22AM (GMT).
Sears files for bankruptcy
The US retailer Sears has filed for bankruptcy.
Sears Holdings (NASDAQ: SHLD) suffered from the competition of growing online retailers and on Monday filed for Chapter 11 bankruptcy protection.
“Over the last several years, we have worked hard to transform our business and unlock the value of our assets,” said the chairman of Sears Holdings Edward Lampert in a statement.
“While we have made progress, the plan has yet to deliver the results we have desired.”
“As we look toward the holiday season, Sears and Kmart stores remain open for business and our dedicated associates look forward to serving our members and customers. We thank our vendors for their continuing support through the upcoming season and beyond. We also thank our associates for their hard work and commitment to providing millions of Americans with value and convenience,” he added.
The group has a debt of over $5 billion and has closed stores and sold properties to try and keep afloat.
The company has 90,000 employees and for a long time, was the US’s biggest retailer. It was overtaken by Walmart (NYSE: WMT) in the 1980s.
Neil Saunders, the managing director of GlobalData Retail, said the group’s problems stretched back to the 80s when it became “too diversified and lost the deftness that had once made it the world’s largest and most innovative retailer”.