(Alliance News) - The Competition & Markets Authority on Thursday demanded that JD Sports sell Footasylum, saying the 2019 takeover could lead to "a substantial reduction in competition and a worse deal for Footasylum's customers".
JD Sports lashed out the UK regulator's decision, saying the main competition that it faces is the direct-to-consumer operations of big sportswear brands, such as Nike and adidas, rather than other high-street retailers like Footasylum.
The FTSE 100 company called the CMA's decision "extreme and unprecedented", saying it "defies logic". It said it will study the regulator's Footasylum report and consider its options.
The CMA said it will oversee the sale of Footasylum and approve the purchaser to ensure it is run by a "fully independent competitor".
"The UK boasts a thriving sports fashion market and today's decision reflects our commitment to keeping it that way," said Kip Meek, chair of the CMA inquiry group. "We strongly believe shoppers could suffer if Footasylum stopped having to compete with JD Sports. It is likely they would pay more for less choice, worse service and lower quality."
JD Sports shares were up 1.3% early Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.3% at 7,270.11
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Hang Seng: up 0.8% at 25,225.19
Nikkei 225: closed up 0.9% at 29,794.37
DJIA: closed up 104.95 points, or 0.3%, at 36,157.58.
S&P 500: closed up 29.92 points, or 0.7%, at 4,660.57
Nasdaq Composite: closed up 161.98 points, or 1.0%, at 15,811.58
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EUR: down at USD1.1572 (USD1.1581)
GBP: down at USD1.3656 (USD1.3662)
USD: up at JPY114.24 (JPY114.04)
Gold: up at USD1,773.89 per ounce (USD1,766.02)
Oil (Brent): down at USD81.92 a barrel (USD82.02)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
OPEC and non-OPEC ministerial meeting
0955 CET Germany services purchasing managers' index
1000 CET EU eurozone services PMI
1100 CET EU producer price index
0900 GMT UK SMMT registration figures
0930 GMT UK construction PMI
1200 GMT UK BoE quarterly monetary policy report
1200 GMT UK BoE interest rate decision
0830 EDT US initial jobless claims
0830 EDT US international trade in goods & services
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UK Brexit minister David Frost will meet France's Europe minister, Clement Beaune, in Paris in an attempt to end a bitter dispute over post-Brexit fishing rights, PA reports. France has threatened sanctions over what it perceives as a refusal to issue licences to its trawlers to operate in UK waters. The UK government insisted the overwhelming majority of applications for licences have been granted. French President Emmanuel Macron has delayed the imposition of punitive measures while talks between the UK, France and the European Commission take place. But the French government has insisted the measures – which could include a ban on British trawlers landing their catches in French ports and tighter customs checks to hamper cross-Channel trade – remain "on the table" if a deal cannot be reached. Frost will follow his talks with Beaune on Thursday by heading to Brussels on Friday to meet European Commission Vice-President Maros Sefcovic.
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UK retail footfall received a late October lift from the school half-term break, as high streets edge closer to becoming the bustling places they once were prior to the Covid-19 pandemic. According to figures from Springboard, the decline in UK footfall eased in October. Retail football was 13% lower than two years earlier in October, comparing favourably to September's 17% decline. Compared to a year earlier, retail footfall surged 29% in October. Ahead of the half-term break, footfall was 14% lower on average in the first three weeks of the month, compared to 2019. Helped by the school break, footfall in the final week was down by a slimmer 11% two-year shortfall.
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Demand for new cars fell by around a quarter last month compared with October last year. The Society of Motor Manufacturers & Traders, which released the preliminary data, said it expects a total of 1.66 million new cars to be registered in the UK this year. That would represent a 1.9% increase on 2020. Uptake of plug-in vehicles began to accelerate during 2020 and accounts for more than 16% of all new cars registered in the UK this year. The SMMT forecasts that some 287,000 of those vehicles will be registered across the whole of 2021, which would be more than every year combined from 2010 to 2019.
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Japanese services companies reported an increase in business activity for the first time since the start of last year in October, according to au Jibun Bank and IHS Markit survey results. The au Jibun Bank Japan composite purchasing managers' output index - which measures combined output in the manufacturing and service sectors – rose to 50.7 points in October from 47.9 points in September, exceeding the neutral score of 50. New orders saw renewed growth, as demand for manufactured goods returned to expansion. The Japan services business activity index rose to 50.7 in October from 47.8 in September. Service providers noted that the lifting of Covid restrictions aided a broad-based boost in business activity. Released on Monday, the manufacturing PMI increased to 53.2 points in October from 51.5 in September.
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BROKER RATING CHANGES
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BARCLAYS CUTS AVEVA TO 'EQUAL WEIGHT' ('OVERWEIGHT') - TARGET 3880 (4500) PENCE
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BERNSTEIN RAISES TUI TO 'MARKET-PERFORM' (UNDERPERFORM)
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COMPANIES - FTSE 100
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J Sainsbury backed guidance despite bracing for a normalisation in shopping trends and facing supply chain challenges. Revenue for the half-year to September 18 rose 5.3% to GBP15.72 billion from GBP14.93 billion a year ago. The supermarket chain swung to a pretax profit of GBP541 million from a loss of GP137 million. Underlying pretax profit improved 23% to GBP371 million. "The business performed well through the first half, benefiting from higher in-home grocery consumption and outperforming grocery competitors, while general merchandise sales declined, as expected, against an exceptionally strong period last year," Sainsbury's said. In the second half, Sainsbury's expects consumer behaviour to normalise and grocery growth to moderate. It also noted supply chain challenges and a tight labour market. Despite all this, the company continues to expect to report underlying pretax profit of at least GBP660 million for the financial year ending March 2022. Underlying pretax profit was GBP371 million in the first half, up 23% on a year ago.
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Telecommunications firm BT reported a 3% dip in revenue for the six months to September 30 to GBP10.31 billion. Pretax profit slipped 5% to GBP1.01 billion. However, it highlighted progress in the period. BT said it delivered GBP1 billion of gross annualised savings 18 months early at a cost of GBP571 million. It has brought forward its 2025 financial year target of achieving GBP2 billion in gross annualised savings to 2024, and peak capital expenditure from 2023 is now expected to be GBP4.8 billion, down from GBP5 billion seen previously. It also reported record Openreach 'fibre to the premises' build in the second quarter, to bring its footprint to nearly 6 million. "BT is on track and with results in-line with our expectations, we are today confirming our financial outlook for FY22 and FY23," said Chief Executive Philip Jansen. "Looking further out, as we pass the peak of our fibre build and move towards an all-fibre, all-IP network, we expect a reduction in capex of at least GBP1 billion and lower operating costs of GBP500 million. From these two factors alone, by the end of the decade we expect an expansion of at least GBP1.5 billion in normalised free cash flow compared to FY22." BT reinstated its dividend with an interim payout of 2.31p per share.
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Smith & Nephew said it is on track to deliver at the low end of full-year guidance due to the Delta variant of coronavirus, as well as supply constrains. For the third quarter, revenue rose 5.5% to USD1.27 billion, and grew 2.3% on an underlying basis. Sports Medicine & ENT and Advanced Wound Management both saw solid growth, while Orthopaedics revenue slipped. For the first nine months of the year, group revenue growth was 20%, or 14% on an underlying basis. "Third quarter performance included the impacts of the Delta variant, which we expect to be less in the final quarter, and continued supply constraints," the medical devices maker said. As a result, Smith & Nephew said it is on track to deliver at the low end of its full-year guidance ranges. For 2021, the underlying revenue growth guided range was 10.0% to 13.0%, and trading profit margin guided range was 18.0% to 19.0%.
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COMPANIES - FTSE 250
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Aston Martin Lagonda reported a surge in nine-month revenue and a narrowed loss. Total wholesale volumes for the first nine months of 2021 soared to 4,250 from 1,555 a year ago, leading revenue to jump to GBP736.4 million from GBP270.0 million. Pretax loss narrowed to GBP188.6 million from GBP307.9 million - this was despite its third quarter loss widening to GBP97.9 million from GBP80.5 million. The luxury car maker said year-to-date trading is in line with its expectations and held full-year guidance. "The shift to a demand-led, ultra-luxury operating model achieved earlier this year continues to support strong pricing dynamics with order cover through 2021 and extending into 2022," said Chief Executive Tobias Moers.
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Currys unveiled plans to launch a GBP75 million share buyback after "robust" trading for the electrical goods retailer. Sales over the first six months of the year were up 15% on a like-for-like basis compared to two years ago, though fell 1% year-on-year. "The group expects to deliver a robust peak trading season. We have put in place measures to mitigate the well-publicised supply chain disruption caused by industry-wide availability challenges and labour shortages. We believe that these measures combined with our scale, stores and expert colleagues, mean we are on track to meet consensus expectations for full year 2021/22," Currys said.
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COMPANIES - OTHER UK
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Supermarket chain Iceland has pledged to become "plastic neutral" from 2022 in what it claims is an industry first. The UK retailer said it will recover and recycle waste plastic to the equivalent of its own total plastic consumption from next year as it pledged to "continue to work towards" being plastic-free across its own-label packaging. It has announced a partnership with Seven Clean Seas, which works with companies to pull plastic out of the ocean on their behalf. Iceland has reported a 29% overall reduction in plastic packaging across its own-label range since 2017, removing 3,794 tonnes of plastic.
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COMPANIES - GLOBAL
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Credit Suisse reported an improved third quarter, despite a hit relating to a scandal in Mozambique, though the company warned of a fourth quarter loss. In addition, the Credit Suisse outlined plans to trim its investment bank - including an exit from its Prime Services arm - but boost its wealth management unit. In the third quarter of 2021, net revenue increased 4.8% year-on-year to CHF5.44 billion from CHF5.20 billion. Credit Suisse posted a pretax profit of CHF1.01, up 26% from CHF803 million a year earlier. Profit was helped by a CHF235 million gain from a release of a provision related to Archegos, a US hedge fund whose collapse cost Credit Suisse some USD5.5 billion. Hurting profit, however, was a CHF214 million hit related to a matter in Mozambique. US officials in October said Credit Suisse agreed to pay USD475 million to US and British authorities to resolve charges of "fraudulently misleading investors" and violating anti-corruption law in bond offerings in Mozambique.
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Swiss pharmaceutical firm Roche said it will buy back around one third of its voting capital currently held by rival Novartis as the two groups disentangle their ties for greater strategic flexibility. The two drugmakers said in separate statements that Roche would repurchase 53.3 million of its own shares currently held by Novartis for around CHF19 billion, about USD20 billion. "After more than 20 years as a shareholder of Roche, we concluded that now is the right time to monetise our investment," said Novartis Chief Executive Vas Narasimhan. Novartis has been a shareholder of Roche since May, 2001 and currently holds 33% of its outstanding voting shares.
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Thursday's Shareholder Meetings
Argos Resources Ltd - AGM
Capital Metals PLC - AGM
Induction Healthcare Group PLC - AGM
JPMorgan Emerging Markets Investment Trust PLC - AGM
NCC Group PLC - AGM
Provexis PLC - AGM
Tintra PLC - GM re fundraising
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
