UK Retail Sales fall the most in seven years
The UK economy was dealt a severe blow in March as retail sales fell 1.8%, the biggest drop in seven years.
Not only was the drop the biggest since 2010, it capped the weakest quarter since 2013.
“This is the first time we’ve seen a quarterly decline since 2013, and it seems to be a consequence of price increases across a whole range of sectors,” said the ONS.
Inflation is being blamed for the drop in consumer activity as the rising cost of everyday goods is reducing household spending power.
“Families are facing the fastest rise in living costs for over three years and they are reining in their spending rapidly,” Richard Lim, of the Retail Economics consultancy said to Reuters.
The large drop suggests economic weakness could be finally creeping in after the UK remained robust after the decision to leave the UK last June.
In a immediate reaction, the pound fell 40 pips against the dollar before recovering.
Premier League revenues soar – but clubs still struggle to profit
Premier League football clubs saw revenues reach record highs last season, but still recorded some of the biggest losses in their history.
Revenues reach £3.6 billion in 2015-16 season, with the two Manchester clubs’ revenues alone increasing by a total of £160 million. However, according to figures from Deloitte, the 20 Premier League English teams still made a pre-tax loss of £110 million.
Balance books were hit by increased player expenditure, operating costs and one-off charges, with the report noting that wage costs increased by 12 percent to £2.3 billion over the period.
Dan Jones, head of the Sports Business Group at Deloitte, said:
“Manchester United’s participation in the 2015-16 UEFA Champions League, coupled with continued strong commercial revenue growth, resulted in a 30 percent increase in revenue to 515m pounds. This saw them top the Deloitte Football Money League for the first time since 2003-04, as the world’s highest revenue-generating club,” Jones said.
“Increased distributions to clubs competing in Europe, under the new UEFA broadcast rights cycle – notably Manchester City, who reached the semi-finals of the UEFA Champions League – also contributed to Premier League clubs’ revenue growth,” he added.
18 of the 20 clubs made a operating profit, with just 12 clubs making a pre-tax profit. Overall revenues are set to rise going into the next season, with a new television deal with Sky and BT worth a record £5.136 billion for live Premier League TV rights over three seasons.
Action Hotel shares dive 12pc as delays and Middle East uncertainty bites
Shares in Action Hotels (LON:AHCG) took a serious hit on Thursday, falling over 12 percent as delayed hotel openings disappoint investors.
The company reported revenue in-line with expectations, up around 22 percent to approximately $53.1 million. Adjusted EBITDA increased by 16 percent to approximately $18.5 million, with the value of Action Hotels’ hotel assets increasing by 15 percent to $458 million.
However, the group said had unexpected delays on new hotel openings, saying:
“As is typical in many development companies, Action Hotels experienced some unforeseen delays in opening dates of some of its new hotels and this has negatively impacted revenue resulting in a level that is materially below market expectations.”
It also added that due to the company being in an accelerated growth and development phase, an “overall net loss before tax position is expected as a result of the impact of pre-opening costs of the new hotels, finance costs and depreciation and amortisation.”
Whilst trading in the first quarter of 2017 remained solid, with total revenue up around 14 percent, the company remains “mindful of adverse pressure on the hotel sector across the Middle East”.
Alain Debare, Action Hotels CEO said:
“We are pleased to update the market on our performance which has been robust across the Action Hotels portfolio. We remain focused on driving performance at our operating hotels and our growth reflects the strong contribution from our mature hotel portfolio, as well as the encouraging success of our newest hotels as they gain traction in their respective markets. We have a good pipeline of hotels in development and are on track to complete an additional three hotels this year.”
Investors appeared not to be reassured by the group’s statement, with shares falling 11.96 percent to 40.50 (0933GMT).
Global economy set to grow, says IMF
The pace of global economic growth is rising, according to a new report from the International Monetary Fund, with growth forecasts upped from 3.1 percent in 2016 to 3.5 percent this year.
Writing in the IMF’s new World Economic Outlook, Maurice Obstfeldt said “we could be at a turning point”, adding that the IMF sees buoyant financial markets and “a long awaited cyclical recovery in manufacturing and trade”.
The UK’s economy is likely to grow by 2 percent this year, according to the report, with stronger growth than any of the major developed economies apart from the US despite the threat of a Brexit-related slowdown.
This figure is only slightly below what the IMF predicted a year ago, ahead of the EU referendum.
However, the IMF report does indicate several possible threats facing the economy, including “pressures for inward looking policies in the advanced economies”.
Protectionist policies represent a large problem to economic growth, with Mr Obstfeldt saying: “Capitulating to those pressures would result in a self-inflicted wound, leading to higher prices for consumers and businesses, lower productivity, and therefore, lower overall real income for households.”
Strong first quarter trading sees Bonmarche shares soar
Shares in women’s budget retailer Bonmarche (LON:BON) rose nearly 6 percent in early trading on Wednesday, after a trading update showed a strong start to the year.
Sales for the 14 weeks ended 1 April 2017 increased by 2.7 percent on the same period last year. Like-for-like sales in-store decreased by 0.5 percent, but this was offset by a 15.2 percent rise in online sales.
The first quarter of the year shows an improvement on the full year figures, which show like-for-likes sales drop by 4.3 percent and online sales grew by 2.2 percent.
Helen Connolly, Chief Executive Officer of Bonmarche, acknowledged that post-Christmas trading conditions had been “challenging” but fitted with the group’s previous guidance:
“Store like-for like sales were negative in January but stronger during February and March, and we also saw the resumption of growth in online sales following improvements made to our online offering”, Connolly said.
“Whilst we expect the apparel market to remain challenging during the coming financial year, we are actively taking measures to improve our proposition to customers.
“We remain confident that Bonmarché remains unique in its ability to serve the needs of its target market and that the successful implementation of our plan will allow us to deliver growth in FY18, despite the challenging market”, she concluded.
Shares in Bonmarche are currently trading up 5.27 percent at 78.95 (0930GMT).
AB Foods shares boosted after 36pc profit jump
Primark owner Associated British Foods (LON:ABF) saw profits jump in the first half of the year, alongside a more optimistic outlook on the year ahead.
Group revenue rose 19 percent to £7,296 million in the 24 weeks to March 4th, with adjusted operating profit up 36 percent to £652 million.
The group, whose business engages in the grocery, sugar, agriculture, ingredients and retail sectors, saw adjusted profit before tax also take a hefty boost, up 35 percent to £624 million.
The company said its sugar business, AB Sugar, had benefited from a rise in sugar prices and “significant savings” achieved as a result of performance improvements.
Its retail brand Primark also had a strong six months, with revenue increasing by 12 percent on a comparable basis with last year at constant currency.
George Weston, Chief Executive of Associated British Foods, said:
“The underlying growth of the group at constant currency was strong in the first half. Primark delivered a substantial increase in selling space which, together with its strong consumer offering, contributed to a further increase in our share of the total clothing market. Furthermore, we achieved a more acceptable rate of return in Sugar and further good progress was made by our Ingredients and Grocery businesses.”
Shares in AB Foods are currently up 2.24 percent to 2,779.00 (0914GMT).
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United Airlines shares continue to trade down after viral footage
Shares in American air carrier United Airlines (NYSE:UAL) continued to trade down on Wednesday, after footage showing a man being forcibly removed from his seat went viral over the weekend.
A video surfaced of United Airlines security dragging a man from his seat after the flight was overbooked, ending with him sustaining injuries. The incident provoked outrage from the public, and is likely to significantly damage the carrier’s brand.
Their share price continued to drop at the start of the week despite statements from United’s CEO, Oscar Munoz. The incident is the second to cause controversy for the airline over the last couple of weeks, after it attracted strong criticism on social media for refusing to allow two teenage girls to board a flight because they were wearing leggings.
Shares in United Continental Holdings are currently trading down 1.13 percent at 70.71 (1131GMT).
Profits up 81 percent at JD Sports, despite ‘prison-like’ warehouse allegations
Sports store JD Sports (LON:JD) reported record profits on Tuesday, with a boost to fashion fitness wear sending shares up nearly 10 percent.
Operating profit at the group rose 55 percent in the year to January 28th, with revenue hitting £2,378,694. Profit before tax saw an impressive 81 percent increase, marking record annual figures for the company.
The group’s other chains, outdoor stores Millets and Blacks, both made money for the first time since their acquisition by JD. Like-for-like sales, which strip out the impact of new stores opening, grew 10 percent over the year.
Peter Cowgill, Executive Chairman, called the year a “period of very significant progress for the group”, adding that it was an “outstanding performance and provides the group with a robust platform for further development”.
However, he warned on the effects of an uncertain economy going forward, adding that “we must recognise that there are external influences which may impact the latter part of the year, notably inflationary pressures arising from Brexit”.
Arguably such strong results were slightly unexpected, with the group having been subject to significant controversy over the course of the year.
A Channel 4 undercover investigation in December showed workers saying conditions at its Kingsway distribution centre in Rochdale were “worse than a prison”, sparking an independent investigation undertaken Deloitte in order to review the allegations.
Women investing in stocks and shares up 53 percent, says Selftrade CEO
Investment platform Selftrade saw a significant increase in the number of women opening a stocks and shares ISA over the past few months, with numbers up 53 percent compared to the same period in 2016.
Men still opened more ISA accounts over the period, but the gap closed significantly. In 2016, 76 percent more men opened ISA accounts than women, but in 2017 this figure fell to 34 percent.
Mark Taylor, CEO of the Selftrade platform, commented: “It’s promising to see concrete evidence that more women are engaging with the world of investing. For so long we have seen women shy away from the stock market and stick to cash savings.
“While there is some way to go before we reach parity, this is a positive step forward. We meet a lot of women who feel investing is “not for them” – they often think it’s “male-dominated”, “complicated” and “unaffordable”.
“The message we are keen to get across is that investing is for everyone. Having a monthly direct debit into a stocks and shares ISA for as little as £50 a month is a great way to dip your toe in the water without throwing yourself in. We can only hope industry figures echo our own and that more women are engaging with investing”.
Across the board the platform saw a significant increase in ISA activity over the season, ahead of the new tax year. According to the company, the top traded stock this ISA season was Lloyds Banking Group, followed by BP and Vodafone, with the iShares Core FTSE 100 UCITS ETF GBP also making the top 10.