Amazon to surpass Tesco by 2025

Liam Roche
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Amazon to surpass Tesco by 2025

Amazon will also test employees for new variants of Covid

Amazon (NASDAQ:AMZN) could overtake Tesco to become the UK’s largest retailer by 2025, according to research from Edge by Ascential.

Amazon, having opened its first Amazon Fresh store in the UK earlier this year, is expected to make £77.1bn of sales in Britain in the next four years.

Amazon’s projected figure would outdo Tesco’s estimated sales of £76.1bn.

Last year the American technology giant’s sales were half that of Tesco at £36.3bn.

The research sees Amazon increasing its share of beauty and clothing markets, while continuing to grow its digital sales.

Amazon also announced its intention to test its front-line staff in the UK for coronavirus in an effort to combat the emergence of new variants.

The retail giant opened testing labs in Britain and America to provide voluntary testing for staff.

Thanks to its effective vaccine roll-out, the UK is close to reopening its economy fully after long periods of lockdowns. However the Delta variant, first identified in India, has spread, including in areas where Amazon operates.

Luke Meredith, director of the Amazon Diagnostic Laboratory in Britain, has not ruled out making its testing programme available to the British public in the coming months.

“It’s very important that we acknowledge the fact that variants can transmit in different ways, they have different responses to vaccines, they may have different impacts on people’s health,” he told Reuters. “This is a learning phase.”

“I don’t think we can rule anything out at this point in time, that’s a decision that will have to be made, but for now we just want to focus on our staff,” Meredith added.

Plenty for investors to ponder as FTSE 100 ‘falls out of bed’ on Thursday

Liam Roche
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Plenty for investors to ponder as FTSE 100 ‘falls out of bed’ on Thursday

The FTSE 100 slid by 0.57% on Thursday morning to 7,067.14 as AMC shares surged following a campaign by Reddit investors.

“The period earlier in the year when so-called ‘meme’ stocks were soaring wasn’t necessarily the happiest time for the markets overall and it’s notable that after shares in US cinema chain AMC Entertainment soared to a record high overnight the FTSE 100 fell out of bed on Thursday morning,” says AJ Bell financial analyst Danni Hewson.

“National Grid shares trading without the rights to the dividend accounted for some of the weakness but nervousness over inflation may be creeping up too ahead of tomorrow’s key US jobs report,” Hewson added.

It appears there are a number of factors for investors to consider, including new variants of Covid or the economy overheating.

“There is also an element of having to second guess how central banks and governments will respond to the rapidly shifting backdrop,” said Hewson.

“All of this uncertainty is making it tricky for the markets to make concerted progress as we move towards the halfway point of 2021.”

FTSE 100 Top Movers

Johnson Matthey (1.56%), Burberry Group (0.73%) and Pearson (0.65%) are the biggest movers so far on a slow day for the UK index.

At the other end, National Grid (-4.71%), Kingfisher (-3.26%) and BT (-2.95%) are holding the FTSE 100 back.

B&M

Bargain store B&M (LON:BME) saw is profits surge throughout the past year as its cheap prices proved to be an attractive proposition to customers during the pandemic. B&M made an adjusted profit before tax of £540.1m, an increase of 107%, for the year ended in March 2021.

The FTSE 100 company’s total revenues rose by 26% to £4.8bn, while its annual core earnings increased to 83% to £626.4m.

Etsy set to buy Depop for $1.6bn

Liam Roche
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Etsy set to buy Depop for $1.6bn

The deal will land around £45m for Depop CEO Simon Beckerman

Etsy (NASDAQ:ETSY) has moved to make a $1.6bn bid for Depop in an effort to capitalise on the growing fashion resale market.

If it goes ahead then Depop’s early backers could be in for a big payout.

Depop, since its founding the years ago, has grown in popularity in the past 12 months, with as many as 27m people using its app and website to buy and sell second-hand clothes.

It is thought that 90% of Depop’s customer base is under the age of 26. This gives access to a sizeable pool of young shoppers.

Josh Silverman, chief executive of Etsy, explained the benefits of this point, telling investors that ‘Generation Z’ now account for 25% of the global workforce, while well over 1bn would be in jobs by 2030.

“That’s four times the US population and Depop is the choice of Gen Z,” Silverman added. “We think Depop is the most exciting company in the most exciting sector in retail right now.”

“Recommerce of clothing is growing at 40 per cent year-over-year and is projected to be a $64 billion market in the US alone.”

Etsy, after its founding in 2005, listed on the New York Stock Exchange, and has since been aiming to increase its pull among younger generations. The average age of its current users is 39, due to the app’s focus largely being on handmade pieces and secondhand garments.

The deal will land around £45m for Simon Beckerman, who founded Depop “for fun” in 2011, while working for an Italian fashion publication. Beckerman owns around 4% of the shares.

Maria Raga, Depop’s chief executive, who joined from Groupon and headed up the firm since 2016, has a stake roughly of the same size.

Depop has registered users in nearly 150 countries, as its active sellers sold $650m worth of items last year. Depop took $70m from the sales.

B&M profits more than double on surge in demand during pandemic

Liam Roche
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B&M profits more than double on surge in demand during pandemic

B&M opened 43 new stores on the increased demand

Bargain store B&M (LON:BME) saw is profits surge throughout the past year as its cheap prices proved to be an attractive proposition to customers during the pandemic.

B&M made an adjusted profit before tax of £540.1m, an increase of 107%, for the year ended in March 2021.

The FTSE 100 company’s total revenues rose by 26% to £4.8bn, while its annual core earnings increased to 83% to £626.4m.

In addition, B&M opened 43 new stores on the increased demand.

Amisha Chohan, equity research analyst at Quilter Cheviot, commented on the company’s strong results during the pandemic.

“B&M is an out-and-out winner from the pandemic, and the fact that is was classified as an essential retailer early on has allowed the business to achieve an exceptional set of results with group sales up 26% and profits up 83% over the year.”

“The group’s good value product offering has clearly resonated with customers, old and new, and its out of town store locations have proved popular.”

Amisha Chohan drew attention to B&M’s prospects of continuing its growth beyond the pandemic.

“After a year of phenomenal growth, and one which arguably won’t be replicated again soon, the question on the minds of investors will be how much will like for like sales and profits fall by this year when competitors start to return to normal operations.”

“Like for like sales in the first nine weeks of this year are down 1%, driven by a pull-forward of gardening demand in April that usually occurs more evenly through the Spring and Summer period,” Chohan said.

B&M shares are down by 2.17% during the morning session on Thursday, while over the past year the value of its stock is up by around 60%.

“Our results reflect the speed at which we responded to the challenges presented by Covid-19, and the strength of our execution,” said Simon Arora, B&M chief executive.

“The core B&M UK business, as an essential retailer, traded throughout the year and welcomed a number of new shoppers, with colleagues working tirelessly to maintain on-shelf availability.”

Octopus Renewables to acquire Scottish wind farm

Liam Roche
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Octopus Renewables to acquire Scottish wind farm

Completion of the acquisition is dependent on achieving ready-to-build status

Octopus Renewables Infrastructure Trust confirmed on Thursday that is signed a share purchase to acquire 100% of the rights to construct the Cumberhead Wind Farm.

The 50MW wind farm, located in South Lanarkshire, Scotland, was acquitted from RDC Partners LLP.

Completion of the acquisition, according to ORIT, is dependent on achieving ready-to-build status, which is expected to happen in August of this year.

The total consideration for the acquisition for the project, as well as any resulting construction costs, are expected to reach around £75m.

Construction will commence shortly after the deal is completed, allowing the wind farm to be fully operational in the fourth quarter of 2022.

Cumberhead will be made up of 12 turbines and have an expected operating life of 25 years.

Phil Austin, Chairman of Octopus Renewables Infrastructure Trust plc, commented: “We are pleased to announce our latest acquisition, of the rights to construct a 50MW onshore wind farm in Scotland, which adds a further onshore wind project to our portfolio. The project diversifies our holdings in the UK, and once operational will contribute to reducing the UK’s carbon footprint.”

ORIT said it is progressing a number of additional investment opportunities. For this reason, it is considering the issuance of new shares.

If there is a fundraise then it will likely follow a prospectus, the investment manager said.

Octopus Renewables Infrastructure Trust is a closed end investment company incorporated in England and Wales focused on providing investors with income returns by investing in a diversified portfolio of renewable energy assets in Europe and Australia.

Wetherspoon chief calls for visa scheme as UK pubs deal with staff shortages

Liam Roche
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Wetherspoon chief calls for visa scheme as UK pubs deal with staff shortages

Tim Martin has previously been a vocal supporter of Brexit

The chief executive of JD Wetherspoon has called on Boris Johnson to implement a visa scheme for workers in the European Union as restaurants and pubs across the UK are struggling to bring in staff as lockdowns ease.

Tim Martin, who was previously outspoken in his support for Brexit, said the UK prime minister should act to reduce the pressure on businesses, arguing that nations closer to the UK in terms of geography could be favoured.

Owners of restaurants and pubs have been forced to close their sites during peak trading hours due to a shortage of workers.

The JD Wetherspoon boss told the Daily Telegraph: “The UK has a low birth rate. A reasonably liberal immigration system controlled by those we have elected, as distinct from the EU system, would be a plus for the economy and the country.”

“America, Australia and Singapore have benefited for many decades from this approach. Immigration combined with democracy works.”

Tim Martin has previously been critical of the government’s guidelines and spoke of the need for sensible and consistent policies moving forward.

JD Wetherspoon has also set its eyes on expanding as many hospitality and service sector businesses were forced to close down during the pandemic.

This allowed the company to expand its estate. As a result, it may emerge from the pandemic in a stronger position.

The African startups attracting investors’ cash

Liam Roche
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The African startups attracting investors’ cash

Africa Behind in VC Investment
Global VC (venture capital) data values highlight that Africa significantly underperformed other regions when it comes to receiving VC investment in 2020. Last year, a total of $259.4bn was invested globally. Of this amount, $132.9bn went to North America, $33.4bn went to Europe and $87.1bn went to Asia. Only $1.4bn was invested in African companies.
Despite the downturn in the global economy during the pandemic, the value of global VC and tech investment increased. However, according to Partech, African VC investment dropped by 29% in 2020to $1.43bn. This can ...

Domino’s share price: plans to open more outlets remain on track

Liam Roche
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0
Domino’s share price: plans to open more outlets remain on track

Domino’s Share Price

While industries across the board suffered through the pandemic, the Domino’s share price (LON:DOM) rose steadily. In May this year Domino’s was flirting with an all-time-high, before retreating to its current level of 368p. Year-to-date the Domino’s share price is up by 16.5%. Now the pizza delivery company faces a new challenge of maintaining its recent momentum as people are allowed outside, and other options become more readily available. So far, it remains committed to its strategy of opening new locations across the country.

New Stores

Domino’s is looking to hire 5,000 new employees in an effort to boost its sites as demand is picking up across the UK. This follows the fast-food chain recruiting thousand of workers last year in order to keep pace with demand.

Part of the reason for the hiring spree is that people, for example hairdressers and taxi drivers, are moving back to their old roles. However, in addition to needing more staff for its 1,100 UK branches, Domino’s is continuing with its plans to open up more stores.

Earlier this year the company unveiled plans to add 200 new outlets to its 1,201 stores. This is in part to revive its collections and drive-thru business as it continues to battle against its competitors.

Russ Mould, the investment director at the stockbroker AJ Bell, said: “Domino’s needs to address the threat of growing competition from non-pizza operators. The rise of food ordering apps from Just Eat and Deliveroo mean it is just as easy to order a McDonald’s as it is to shop with Domino’s.”

The company has been aiming to grow its site locations by dividing up areas covered by its franchisees. This strategy has slowed significantly during the pandemic, which could be a worry. It has also annoyed current franchise operators who are now seeking a better deal. With 278 stores added in the last five years, Domino’s remains ahead of its target.

As of April 2021, only three stores have been added, although Domino’s remains focused on its target of 25 to 30 new openings this year.

Royal Mail, income investing and trade deals with Alan Green

UK Investor Magazine
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Royal Mail, income investing and trade deals with Alan Green

Alan Green joins the Podcast with Jonathan Roy for the weekly instalment of UK equities and market themes.

With the FTSE 100 remaining stubbornly within a tight range, we look back at the appreciation we’ve seen in cyclical shares and whether investors should expect a greater proportion of their returns to be achieved from income in the form of dividends in the future.

Financials, tobacco and some commodity shares are now yielding significantly above 5% and present an attractive allocation possibility for investors.

Having secured promotion to the FTSE 100 we look at Royal Mail and the drivers behind the tremendous run in shares from below 150p to 600p. This was largely down to success inn parcel growth that could waver as the economy reopens so we question their growth strategy going forward.

We discuss Royal Mail (LON:RMG), ECR Minerals (LON:ECR) and Destiny Pharma (LON:DEST).

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