British accessories brand Mulberry reported a fall in UK sales in the 10 weeks to June, but announced a new move into South Korea designed to take advantage of the Asian market.
Pre-tax profit fell 8 percent to £7.5 million, mainly linked to the startup costs of the group’s expansion in Asia, with revenue rising 1 percent to £169.7 million. Without these costs, pre-tax profit from existing business rose 36 percent to £11.3 million.
The UK market remained week, with the group reporting a 9 percent fall in sales on the back of “lower footfall and fewer tourists, as more widely reported”.
“We have made significant progress during the year on our international strategy, creating new Mulberry subsidiaries in China, Hong Kong, Taiwan and Japan,” chief executive chief executive Thierry Andretta said.
The group then announced its decision to merge with SHK in Korea to create Mulberry Korea.
“Our international business is growing and following the completion of this set up phase in Asia, we will focus on omni-channel, digital partnerships and marketing investment in the region.”
“Although the UK market remains challenging, we will continue to invest in our strategy to develop Mulberry into a global luxury brand to deliver increased shareholder value.”
Mulberry will own 60 per cent of the share capital of the newly created entity, with SHK owning the remaining 40 per cent stake, and it is expected to start trading by autumn of this year.
Sponsored by LendingCrowd
There’s no such thing as a risk-free investment. However, as all savvy investors know, diversification helps to manage risk and improve your opportunity for higher returns.
A typical portfolio might include a mix of cash savings, stocks and shares, bonds and property. Increasingly, investors are turning to peer-to-peer (P2P) loans to further diversify their holdings while achieving attractive returns.
The UK has a wide choice of P2P platforms, offering you the opportunity to generate inflation-beating returns by joining forces with other investors and lending to consumers, property developers and businesses of all sizes. Some providers let you choose individual loans to invest in, while others automatically spread your money across a variety of loans.
Consumer-focused P2P platforms lend to people who won’t – or can’t – get a bank loan, so you need to consider whether you’re comfortable with this lack of diversity. You’re probably already investing in the property market, either with your own home or through buy-to-let. Do you want even more exposure to this sector?
LendingCrowd believes that lending to creditworthy small businesses across a wide range of sectors gives you the best opportunity to diversify within the P2P asset class
LendingCrowd Growth Account returns
Annualised return for all current LendingCrowd Growth Accounts that have been open for at least three months
Liquidity – the ability to convert assets into cash – is another important factor to consider. As an investor, you’re aiming to generate a return on your money, either for a specific goal or for a rainy day. But what happens when that proverbial rainy day arrives?
Property can take months to sell, but if you invest in a property fund you may want – or need – to access your money within a few days. This isn’t normally a problem, because funds hold cash for this very reason. However, following the Brexit vote in 2016, a rush for withdrawals saw properties sold at knock-down prices, causing some fund managers to temporarily prevent investors from withdrawing their cash altogether.
A key benefit of LendingCrowd is that you’re not locked in when you invest. The platform offers a secondary market, enabling you to sell loan holdings to other investors. Under normal market conditions, even large portfolios are sold down in a week.
Investors also need to consider correlation. You don’t want the value of all your investments to fall at exactly the same time. That’s why fund managers often hold government bonds to provide a source of stable returns, as these tend to rise in value when equities fall.
However, in the current low interest rate environment, gilts and cash struggle to provide returns above inflation, while stocks and shares tend to follow the same global economic trends in these times of increasing globalisation.
Business debt funding represents an excellent way for investors to diversify into a new asset class that doesn’t correlate with the fluctuations of the global stock markets yet provides inflation-beating returns. With P2P platforms such as LendingCrowd, you can build diverse portfolios of business loans by investing as little as £1,000.
LendingCrowd gives you instant access to a diverse range of sectors, from agriculture and healthcare to retail and transport. Each borrower is carefully assessed by its expert Credit Team, who ensure only the most creditworthy businesses are approved for loans.
With a LendingCrowd Growth Account, you can earn a target return of 6%* a year by opening an account with as little as £1,000 to instantly create a diversified portfolio of secured business loans. Your capital and interest repayments are reinvested automatically, increasing your diversification over time.
Analysis of LendingCrowd’s current loan book shows that no one sector accounts for more than 15% of its total lending. For example, loans to agricultural business make up less than 3% of overall lending by value, while manufacturing and engineering accounts for 7.1% and healthcare 7.3%. By taking this diversified and balanced approach, Growth Account investors have achieved an average return of 8.5% over the past 12 months. Remember that past performance is not a guide to future returns.
You can hold all of LendingCrowd’s accounts within its Innovative Finance ISA for tax-free** returns.
Sign up as a LendingCrowd investor before 29 June 2018 and you can earn up to £500 cashback when you invest within 14 days. Terms apply – find out more at www.lendingcrowd.com*Capital at risk. Target rate is variable, net of ongoing repayment fees and bad debt and before the 1% capital withdrawal fee. The ability to sell your investments depends on other investors buying your loans.**Tax treatment depends on the individual circumstances of each investor and may be subject to change in future.
UK wage growth has unexpectedly slipped to 2.8 percent, falling short of analyst expectations.
The Office for National Statistics has reported the 0.1 percent fall for the first three months in April despite unemployment falling to 1.42 million.
Economists had predicted a steady wage growth for the three months to April
The decline in wage growth has raised doubts over whether the Bank of England plans to raise interest rates over the coming summer.
The Bank of England has previously suggested that it will raise rates this year if the economy bounces back as it has expected.
The hike is increasingly unexpected following the slowing wage growth and poor manufacturing data for April.
Howard Archer of the EY Item Club said: “Strong employment but softer earnings growth will likely keep uncertainty high about the prospects of an August interest rate hike by the Bank of England.”
“We suspect that there is an increased chance that the Bank of England will hold fire on interest rates until November given that the MPC wants to see clear, sustained evidence that the UK economy has improved from its first quarter relapse before hiking,” he added.
The Bank of England remains optimistic and is expecting wage growth to pick up and reach 3.5 percent by the end of 2020.
“Wage growth is stuck in the slow lane. At this rate pay packets won’t recover to their pre-recession levels for years,” Frances O’Grady, the TUC’s General Secretary.
“We need to speed things up. Extending collective bargaining would boost living standards and help workers get a fairer share of the wealth they create.”
The slowing wage growth is partly due to the lack of investment in new machinery and technology since the financial crisis and the public sector pay freeze followed by the 1 percent pay cap.
The FTSE 100 opened higher on Tuesday morning, before sinking to trade down around 0.20 percent.
This is in contrast to European markets, which have broadly had a positive start to the day, with the DAX Index up 0.15 percent and the IBEX up 0.066 percent.
Fiona Cincotta, Senior Market Analyst at City Index, commented:
“The FTSE opened higher but quickly started losing ground in early trade with Admiral Group, Barratt Development and Anglo American leading the way lower.
“In contrast, European markets were on the rise benefiting from a major divestment by the French hotel chain Casino and plans by food retailer Carrefour to work with Google on online shopping plans.”
The event on everyone’s lips is the meeting between President Trump and Kim Jong-Un, a hotly anticipated event after months of tension between the two leaders.
“The long-awaited meeting between President Trump and North Korean leader Kim Jong Un ended up on a positive note with the two heads of state signing a document committing to the complete removal of nuclear weapons from the Korean peninsula. The agreement could pave the way for the opening up of the country to the rest of the world and building of new business and trade links in Asia”, Cincotta said.
Retail shares
Retailers had a surprisingly strong morning on Tuesday, with Marks & Spencer, Burberry, Kingfisher and Primark-owner ABP trading up around 1 percent in early trading.
But Aim-listed online retailer Boohoo reported a strong set of results, but shares fell 4 percent after the results were not quite as high as anticipated by investors.
Centrica (LON:CNA), Evaz (LON:EVR) and Reckitt Benckiser (LON:RB.) were the biggest risers on the FTSE 100, with Barratt Developments (LON:BDEV), Berkeley Group Holdings (LON:BKG) and Persimmon (LON:PSN) being the biggest fallers.
ONS employment figures
The latest employment figures from the Office for National Statistics came as a pleasant surprise on Tuesday, recording 32.39 million people in work in the February-to-April period. This is 146,000 more than the previous quarter, and 440,000 more than in the same period a year earlier.
However, wages continued to grow slowly in the three months to April, with average earnings – excluding bonuses – up by 2.8 percent. This is lower than the 2.9 percent growth rate between January to March.
Bellway shares fell over 2 percent on Tuesday morning, despite reporting an increase in sales for the current year.
The group reported robust demand for its affordably priced homes, seeing a 5.4 percent increase in the reservation rate to 223 per week in the period from 1 February to 4 June.
It said it was likely to sell around 600 more homes than last year at over £280,000 each, with an operating margin of around 22 per cent. However, the group said that it expected full year guidance to stay the same.
“Demand is most pronounced for affordably priced family homes countrywide, with divisions operating in locations as dispersed as Scotland, Essex and the Midlands all continuing to show strong performance,” the company said.
“This has been another successful trading period for Bellway, in which the demand for new build homes remained strong, enabling the group to continue delivering its long term and sustainable strategy of increasing shareholder value through responsible volume growth,” executive chairman John Watson continued.
Shares in Bellway (LON:BWY) are currently trading down 2.14 percent at 3,336.40 (0948GMT).
Online fashion retailer Boohoo (LON:BOO) reported another stellar set of of results on Tuesday, boosted by strong figures from recent acquisition PrettyLittleThing.
Group revenue rose 53 percent to £183.6 million in the half year to May, with the biggest source of growth coming from PrettyLittleThing, which saw a massive 158 percent sales boost.
UK revenues grew by 49 percent, growing even faster in the US by 75 percent. Boohoo itself reported a revenues of £97.2 million, up 12 percent on last year’s Q1 record growth, with PrettyLittleThing revenue hitting £79.2 million.
The group said it expects revenue growth for the full year to be between 35 percent and 40 percent, with adjusted EBITDA margin between 9 and 10 percent.
Mahmud Kamani and Carol Kane, Boohoo’s joint CEOs, commented:
“We are very pleased with the group’s results for the first quarter of the financial year. Our multi-brand strategy is delivering above-market rates of growth globally. Significant market share gains have been achieved in all of our key focus markets, with our compelling combination of the latest fashion at incredible prices, backed by great customer service resonating strongly with our customers.
“We remain highly encouraged by our performance in the first quarter and confident of our expectations for the remainder of the year and beyond as we continue to execute on our winning strategy.”
Shares in Boohoo (LON:BOO) are currently trading 4.22 percent down however, despite the strong figures, at 210.81 (0930GMT).
New Look became the latest store to fall victim to the high street crisis, after its worrying performance was exposed in its full year report on Tuesday.
New Look reported an underlying operating loss of £74.3 million for the full year period ending March 24th, compared to last year’s profit of £97.6 million. Even that was down from £174.7 million the year prior.
New Look’s UK sales plunged 11.7 per cent on a like-for-like basis, and website sales dropped by 19 per cent.
“Last year was undoubtedly very difficult for New Look, with a well-documented combination of external and self-inflicted issues impacting our performance,” executive chairman Alistair McGeorge said.
“Since November, we have focused on making the necessary changes to get the company back on track and reconnect with our customers.
“Our turnaround plan is now well underway, and we have already made substantial operational improvements to help stabilise the business, reduce our fixed cost base and put us in a better position to drive future full price sales.”
New Look has been on the high street since 1969, but has struggled in the recent climate to keep up with online-only stores. The group announced a series of store closures several weeks ago, and as part of its plan is aiming to sell 80pc of its clothes for under £20.
Phoenix Global Resources (LON:PGR) reported a slip in production in its first quarter, sending shares down in early trading.
The group said it had relinquished a drilling concession and switched its focus to new development drilling at another, sending first-quarter output down to 10,749 barrels of oil equivalent per day. This is down from 11,537 boepd in the fourth quarter of 2017.
The group reported an average Q1 production of 10,749 boepd, consistent with full year 2017 production, with operating costs of US$17.10 per barrel of oil equivalent.
Anuj Sharma, CEO said:
“Year to date we have made great progress in securing key unconventional acreage and operatorship positions giving us control over the work programmes and capital spend.
“Looking forward we have an exciting 2018 drilling campaign, focused on the appraisal of Phoenix’s significant unconventional Vaca Muerta acreage at Puesto Rojas and Mata Mora, including our first horizontal wells.”
Shares in Phoenix Global (LON:PGR) are currently trading down 1.78 percent at 22.10 (0845GMT).
Fashion retailer Ted Baker (LON:TED) defied recent high street gloom in its half year results on Tuesday, despite unseasonal weather throughout the period.
Revenue rose 4.2 percent in the half year to June 2018, despite the Beast from the East in the UK and severe storms in the US dampening footfall.
For the 19 weeks from 28 January to 9 June, Ted Baker saw sales grow by 7.5 percent in constant currency terms, with total retail sales, including e-commerce, increasing by 0.7 percent. Wholesale sales for the period increased by 14.2 percent.
“This performance was achieved despite the impact of unseasonal weather across Europe and the East Coast of America in the early part of the period and, as previously reported, external trading conditions remaining challenging across many of our global markets”, the company said.
Average retail square footage rose by 5.7 percent to 420,799 square feet, and both retail and wholesale gross margins came in in line with expectations.
Ray Kelvin CBE, founder and chief executive, said: “We have made significant investment in our flexible business model to ensure that the Ted customer has multiple channels to engage with the brand.”
Shares in Ted Baker fell however after the group warned on external trading conditions. Shares are currently trading down 2.18 percent at 2,334.00 (0830GMT).
British American Tobacco (LON:BATS) shares edged up slightly at market open on Tuesday, after it confirmed trading in line with expectations but warned on currency pressures going forward.
The group said it expected earnings growth to come under pressure amid a stronger pound going into the second half of 2018, with first half earnings per share also expected to be impacted by a currency translation headwind of 9 percent.
Lower industry volume in the US is also likely to hit revenue in the first half, despite the group setting to benefit from US tax reform.
The cigarette maker updated markets on Tuesday ahead of the release of its half year results on July 26. Looking ahead, it aims to grow its market share to next generation products (NGPs), aided by significant funding from US tax reform benefits.
Shares in British American Tobacco are currently 0.78 percent at 3,775.82 (0814GMT).
