JD Sports sidesteps high street crisis with 26% boost to profits
Retailer JD Sports (LON:JD) released a strong set of results on Tuesday, sending shares up and reassuring investors that it remains unfazed by the current high street crisis.
Headline profit before tax rose 26 percent in the 53 weeks to February 3rd, hitting to £307.4 million. Strong digital sales growth gave a 3 percent boost to like-for-like store sales, with revenue rising by 33 percent across the year to £3,161.4 million.
Operating profit rose by £62.6 million to hit £308.8 million, driven by the first full-year contribution from Go Outdoors. JD Sports bought the outdoor clothing and equipment company back at the beginning of 2017, and its EBITDA has since risen from £7 million to £23 million.
Profit before tax, including exceptional items, increased by 24 percent to £294.5 million.
JD Sports opened a total of 56 stores in the 12 month period, up from 54 the previous year, nine of which were in the Asia Pacific region.
“This is an excellent result demonstrating our capacity for continuing growth in both existing and new markets, and the strength of our offer in store and online,” said chief executive Peter Cowgill.
The final dividend payable to investors increased by 5.4 percent, taking the total dividends payable for the year to 1.63 pence.
“At this early stage, we are satisfied with progress and remain confident about the prospects for the current financial year,” the firm said.
Shares in JD Sports are currently trading up 6.66 percent at 376.40 (0826GMT).
AB Foods shares slip after sugar division hit by rising prices
Shares in Associated British Foods (LON:ABF) slipped on Tuesday morning, after its sugar division saw revenue sink 13 percent over the first half of the year as a result of low EU sugar prices.
Statutory profit before tax for the entire group fell 30 percent to £603 million, whilst revenue declined by 2 percent. Adjusted operating profit fell 1 percent to £648 million, while adjusted earnings per share rose 3 percent to 61.3p.
The figures were hit significantly by the 13 percent revenue fall at AB Sugar, dropping to £938 million for the year, as the low EU prices affected both its UK and Spanish businesses.
Sales at Primark continued to show strength however, coming in at 7 percent ahead of last year at constant currency. Like-for-like sales for the group fell 1.5 percent, as a result of ‘unseasonably’ warm weather in October, despite the UK arm reporting a sales 8 percent of last year.
Sales in Continental Europe were also 6 percent ahead of last year due to increased retail selling space, but this partially offset by like-for-like decline in northern Europe.
Despite the slightly weaker than expected performance, AB Foods maintained its full year outlook with progress expected in both adjusted operating profit and adjusted earnings per share.
George Weston, the group’s CEO, commented: “The group made progress in this period. Good sales and profit growth was achieved by all of our businesses at constant currency, other than Sugar, where the reduction was as expected. Our full year outlook for the group is unchanged with progress expected in both adjusted operating profit and adjusted earnings per share”.
Shares in AB Foods (LON:ABF) are currently trading down 1.55 percent at 2,543.00 (0810GMT).
Netflix shares rise 6pc as group beats expectations
Netflix (NASDAQ: NFLX) beat expectations for the first quarter of 2018, boasting 7.4 million new subscribers.
The streaming giant reported a record number of new subscribers for the first quarter, which ended March 31.
Netflix’s strategy in releasing original content appears to be working, with 1.96 million new subscribers in the US and 5.46 million new international users.
Following the positive results, shares jumped over than six percent in after-hours trading Tuesday to $307.78 per share.
Goldman Sachs analyst Heath Terry wrote in a note earlier this month: “We continue to believe long-term subscriber growth and profitability will exceed current consensus expectations as Netflix realises the global scale benefits that come from its subscriber base, distribution network and content library.”
The group still predicts it will remain at a loss for several more years, spending huge amounts on original content. The group said it will “continue to raise debt as needed to fund our increase in original content.”
In the first quarter, Netflix released original content including “The End of the F***ing World”, “Altered Carbon” and “A Series of Unfortunate Events.”
Executives have announced that they plan to release over 700 original series and 80 films over the course of the year.
“We have big plans for content growth and you should expect that to continue,” said the Chief Executive Reed Hastings on a post-earnings webcast.
Netflix has predicted content spending of around $8 billion in 2018.
Earlier this year, the streaming giant announced Susan Rice, a former top aide to President Obama, to the group’s board of directors.
“As a global company operating in over 190 countries, Susan’s expertise in international affairs will be valuable,” said Netflix.
Wetherspoons to quit all social media
JD Wetherspoon (LON: JDW) has announced that it is quitting all social media including Facebook (NASDAQ: FB) and Twitter (NYSE: TWTR).
The move comes in response to the “trolling” of some MPs but the decision has been met with criticism and claims of a publicity stunt.
“We are going against conventional wisdom that these platforms are a vital component of a successful business,” wrote the group’s chairman Tim Martin in a tweet that is no longer available.
“I don’t believe that closing these accounts will affect our business whatsoever, and this is the overwhelming view of our pub managers.”
“It’s becoming increasingly obvious that people spend too much time on Twitter, Instagram and Facebook, and struggle to control the compulsion. We will still be as vocal as ever through our Wetherspoon News magazine, as well as keeping the press updated at all times,” he added.
The 900 pubs and head office will quit social media with immediate effect and no jobs will be affected by the decision.
Martin has said that leaving social media platforms is a response to online abuse made to MPs, particularly those from religious or ethnic minorities.
He told BBC Radio 5 Live that he thinks quitting social media would be good for society.
Martin said that is people “limited their social media to half an hour a day, they’d be mentally and physically better off”.
“I find most people I know waste their time on it. A lot of them say they know they waste their time on it, but they struggle to get off it.”
The group’s chairman reassured that JD Wetherspoons would remain vocal and keep customers up to date via the Wetherspoon website and app.
Househould spending drops to weakest level since 2012
Household spending fell to its weakest level since 2012 during the first quarter of the year, as poor weather and waning consumer confidence discouraged shoppers from spending money.
According to the UK Consumer Spending Index published today by Visa, spending fell by 1.4 percent year-on-year across the first three months of the year. This was the worst quarterly performance recorded in five years.
March was the hardest hit month, with overall consumer spending falling by 2.1 percent as a results of unseasonably winter weather and the ‘Beast from the East’. face-to-face spending on the high street was down by 3 percent year-on-year.
Online spending also fell, dropping by 1.2 percent annually, recording the first month in ten that it has seen a decline.
Mark Antipof, chief commercial officer at Visa, said: “The negative impact that the Beast from the East had on UK economic activity last month has been widely reported, but this doesn’t entirely explain March’s lacklustre consumer spending.
“We are in the midst of a dip in consumer confidence and this – coupled with other economic factors – is causing shoppers to continue to restrain themselves.
“High street sales suffered once again, however it is also noteworthy that e-commerce spend fell for the first time in 10 months, and by its fastest rate since 2012.
“That said, it is too early to read a great deal into this year-on-year decline, which should be viewed in the context of high growth rates in early 2017.”
Avacta reports widening losses, despite revenue boost
Biology research group Avacta reported widening losses on Monday, despite an increase in half year revenues across the business.
Administration costs rose to £4 million over the course of the period, up from £3.50 million previously, a direct result of its Life Sciences division’s attempts to deliver on growth plans.
Operating losses widened to £4.5 million as research and development costs weighed. Half year revenues increased, however, by 16 percent to £1.5 million.
The firm maintained its focus on generating clinical data for its lead Affimer therapeutic programme, saying that its pipeline of assets in its immuno-oncology division could be ‘potentially transformative’ as it heads towards 2020.
“The group has delivered strongly against the objectives set out in 2015 when it raised funds to initiate an Affimer drug development programme and to begin commercialisation of Affimer reagents,” the firm said.
“We will continue to grow the Affimer reagents revenue during this time period, with a focus on long term recurring royalty revenue rather than short term services income, with the objective of creating a potentially stand-alone business unit,'” its chief executive officer, Alastair Smith, commented.
Shares in Avacta (LON:AVCT) are currently trading down 0.17 percent at31.94 (0841GMT).
Supermarket Income REIT meets investor expectations with dividend payout
Grocery sector investor Supermarket Income REIT (LON:SUPR) announced that it invested £210.5 million in four supermarket assets in the first quarter, with dividend payments meeting its annual payout guidance.
The property investment company, aimed at offering investors a slice of the grocery market through exposure to supermarket real estate assets, declared a dividend for the three months through March of 1.375p per share and said it still expected to pay annualised dividends of 5.5p per share.
The group’s chief investment advisor, Ben Green, said, “Since our IPO in July 2017, Supermarket Income REIT has rapidly built a portfolio of high quality UK supermarket property generating attractive inflation-linked income for shareholders.
“During the quarter, we concluded two rent reviews with increases of 3.9 percent, demonstrating the value of the contracted RPI linkage in our leases.”
The company’s investment properties were independently valued on 31 March at £210.5 million, representing an increase of 4.5% above their aggregate acquisition price. The group has invested so far in three Tesco stores, in Thetford, Cumbernauld and Bristol, and a Sainsbury’s in Ashford, Kent.
Shares are currently trading down 0.25 percent at 100.75 (0832GMT).
Servier buys Shire arm for £2.4 billion
FTSE 100 biotech company Shire (LON:SHP) has made a $2.4 billion deal with international pharmaceutical company Servier for the sale of its Oncology business.
Shire chief executive Flemming Ornskov said that while the Oncology business had delivered “high growth and profitability, we have concluded that it is not core to Shire’s longer-term strategy”.
“We will continue to evaluate our portfolio for opportunities to unlock further value and sharpen our focus on rare disease leadership with selective disposals of non-strategic assets.”
Shire has already been the subject of some takeover speculation, with the CEO of Takeda, Japan’s largest drugs firm by sales, flying to the US last week to drum up shareholder support for an offer.
Sir Martin Sorrell steps down from WPP after misconduct allegations
Shares in advertising agency WPP (LON:WPP) sunk over 5 percent at market open on Monday, after its chief executive announced his resignation over misconduct allegations.
The group confirmed that Sir Martin Sorrell had chosen to step down in a statement originally released on Saturday, less than a week after the announcement of a misconduct allegation.
WPP continued to say that the allegations of financial misconduct ‘did not involve amounts that are material’.
Sorrell, who started the world’s biggest advertising group over 30 years ago, said: “Obviously I am sad to leave WPP after 33 years. It has been a passion, focus and source of energy for so long. However, I believe it is in the best interests of the business if I step down now.”
The group’s chairman Roberto Quarta said Sorrell had been the driving force behind WPP’s expansion and thanked him for his “commitment to the business over more than three decades”.
Whilst Sorrell will not get a payoff or pension, as written in the terms of his contract, he may be set to make around £19 million from interests in WPP shares.
His remaining entitlement to long-term share bonus awards means the maximum number of shares Sir Martin may be awarded if WPP meets targets is 1.65 million, worth around £19 million.
Shares in WPP are currently trading down 4.26 percent on the news at 1,137.5 (0808GMT).
Slough: The Crossrail Effect
Since before its construction began in 2009, Crossrail has been highly anticipated as a game-changing railway line that could have a positive and significant impact on London and the South East.
Set to be fully operational by December 2019, such is Crossrail’s forecasted impact through improving access into the Capital – by bringing 1.5 million more people within a 45-minute commute, it has already had a noticeable effect on investment into locations along its route and, subsequently house prices. And not in just a handful of places, but across all towns along its route.
Indeed, since 2009 all areas located within one mile of a confirmed Crossrail station have seen house prices increase by upwards of 66%. By 2020 – one year into the line’s operation – these prices are predicted to rise by another 35%.
One town in particular that has benefitted from being situated along this line is Slough in Berkshire. Once considered a ‘joke’ town, known best as the dreary suburb that was the setting for British sitcom ‘The Office’, Slough has not only seen an unprecedented rise in house prices – in 2017 alone house price growth reportedly hit 13.8% – but in 2017 it was named as the best place to live and work in the UK in a survey by employment website Glassdoor.
Of course, looking closely at what it is about Slough that has suddenly grown in appeal, it’s fairly easy to see. The town is home to the largest concentration of global headquarters outside of London, including 02, Telefónica, Amazon and Mars and projects totalling more than £450 million are well underway to completely transforming the town’s retail, commercial, leisure and residential offering.
The town is also already within a short commutable distance of Heathrow Airport, making overseas travel easy and providing employment for many Slough residents. Now that Crossrail is about to make access between Slough and the Capital so much quicker and easier, its appeal as an affordable alternative to life in the Capital is skyrocketing.
This all bodes well for property investors looking for opportunities outside of London that are not only more affordable but offer serious potential for high yields and capital growth far beyond Crossrail.
Leading UK property developer SevenCapital is running a seminar looking at ‘the Crossrail Effect’, specifically on Slough, on Wednesday April 18th at the Hilton London Paddington. Joined by JLL Residential Research Director Neil Chegwidden, who authored JLL’s report into Crossrail’s effect on house prices along the Commuter Belt, the seminar will cover:
Crossrail’s effect on property prices and regeneration around the Commuter Belt
Which areas along the Crossrail route have become investment hotspots
Residential developments within Slough and the surrounding area
Property value forecasts
To book your free place at this seminar visit SevenCapital’s website.
For more information on SevenCapital visit www.sevencapital.com.
One town in particular that has benefitted from being situated along this line is Slough in Berkshire. Once considered a ‘joke’ town, known best as the dreary suburb that was the setting for British sitcom ‘The Office’, Slough has not only seen an unprecedented rise in house prices – in 2017 alone house price growth reportedly hit 13.8% – but in 2017 it was named as the best place to live and work in the UK in a survey by employment website Glassdoor.
Of course, looking closely at what it is about Slough that has suddenly grown in appeal, it’s fairly easy to see. The town is home to the largest concentration of global headquarters outside of London, including 02, Telefónica, Amazon and Mars and projects totalling more than £450 million are well underway to completely transforming the town’s retail, commercial, leisure and residential offering.
The town is also already within a short commutable distance of Heathrow Airport, making overseas travel easy and providing employment for many Slough residents. Now that Crossrail is about to make access between Slough and the Capital so much quicker and easier, its appeal as an affordable alternative to life in the Capital is skyrocketing.
This all bodes well for property investors looking for opportunities outside of London that are not only more affordable but offer serious potential for high yields and capital growth far beyond Crossrail.
Leading UK property developer SevenCapital is running a seminar looking at ‘the Crossrail Effect’, specifically on Slough, on Wednesday April 18th at the Hilton London Paddington. Joined by JLL Residential Research Director Neil Chegwidden, who authored JLL’s report into Crossrail’s effect on house prices along the Commuter Belt, the seminar will cover:
Crossrail’s effect on property prices and regeneration around the Commuter Belt
Which areas along the Crossrail route have become investment hotspots
Residential developments within Slough and the surrounding area
Property value forecasts
To book your free place at this seminar visit SevenCapital’s website.
For more information on SevenCapital visit www.sevencapital.com.