(Alliance News) - Supermarket chain J Sainsbury confirmed Wednesday it plans to stop new mortgage sales while reporting an improvement in sales trends in the second quarter.
Like-for-like sales excluding fuel in the 12 weeks to September 21 fell 0.2%, compared to a steeper 1.6% fall seen in the first quarter of the year. Total retail sales were up 0.1%, in contrast to a 1.2% fall in the first quarter.
"Sales momentum was stronger in all areas, and we further improved our performance relative to our competitors, particularly in Grocery," said Chief Executive Mike Coupe.
For the first half, Sainsbury's expects underlying pretax profit to be GBP50 million lower than a year ago due to the phasing of cost savings, unseasonal weather and higher marketing costs. However, the company is on track to deliver annual profit in line with consensus.
As the grocer hosts its capital markets day on Wednesday, it laid out some new strategic aims.
In its financial services business, Sainsbury's is to "immediately" stop new mortgage sales, and there will be no more group capital injections after GBP35 million in the current financial year.
Elsewhere, the grocer will review its store estate, which will result in 10 new supermarkets and 10 to 15 closures, and 110 new convenience stores with 30 to 40 closures. The closures should deliver an ongoing net operating profit benefit of GBP20 million per year, the company said.
The stock was up 1.3% early Wednesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.6% at 7,249.20
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Hang Seng: down 1.3% at 25,937.89
Nikkei 225: closed down 0.4% at 22,020.15
DJIA: closed down 142.22 points, 0.5%, at 26,807.77
S&P 500: closed down 0.8% at 2,966.60
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GBP: flat at USD1.2468 (USD1.2469)
EUR: flat at USD1.1000 (USD1.1001)
Gold: firm at USD1,528.40 per ounce (USD1,525.82)
Oil (Brent): down at USD62.54 a barrel (USD63.68)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
1100 BST UK CBI distributive trades survey
0700 EDT US MBA weekly mortgage applications survey
1000 EDT US new residential sales
1030 EDT US EIA weekly petroleum status report
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Members of Parliament are preparing to return to Westminster after the bombshell legal ruling that UK Prime Minister Boris Johnson's suspension of the legislative body was unlawful. Johnson will fly back into a political storm with demands for his resignation from furious opposition parties, determined to hold him to account over his Brexit plans. Downing Street insisted there was no question of him standing aside, despite the Supreme Court ruling on Tuesday there was no "reasonable justification" for his advice to the Queen to prorogue Parliament for five weeks. The prime minister insisted he would not be deterred from taking Britain out of the EU on October 31. While he said he had the "utmost respect" for the judiciary and would abide by the court's ruling, he nevertheless said he "strongly disagreed" with its decision.
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UK employers' hiring intentions have remained positive despite recent uncertainty, data from the Recruitment & Employment Confederation showed. The latest report - which covers the three months to the end of August - showed that demand for permanent employees in the short-term rose by 5 percentage points to 21, compared to the quarter ended May. Medium-term demand also increased over the same period, the REC said, rising by 7 percentage points to 25.
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House Speaker Nancy Pelosi launched a formal impeachment inquiry against US President Donald Trump on Tuesday, yielding to mounting pressure from fellow Democrats and plunging a deeply divided nation into an election-year clash between Congress and the commander in chief. The probe focuses partly on whether Trump abused his presidential powers and sought help from a foreign government to undermine Democratic foe Joe Biden and help his own re-election. Pelosi said such actions would mark a "betrayal of his oath of office" and declared, "No one is above the law."
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Massachusetts officially became the first US state to ban – if temporarily – the sale of all electronic cigarettes, going further than states that only prohibited flavoured products. The ban is effective immediately and will run until January 25, said Governor Charlie Baker, who declared a public health emergency in the northeastern state. San Francisco in California had already adopted a similar citywide ban in July, but until now no other state had imposed a statewide ban.
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BROKER RATING CHANGES
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CITIGROUP CUTS ENTERTAINMENT ONE TO 'NEUTRAL' ('BUY') - TARGET 560 (520) PENCE
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BERENBERG CUTS BBA AVIATION TO 'HOLD' ('BUY') - TARGET 335 (330) PENCE
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COMPANIES - FTSE 100
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Water works United Utilities said first half revenue is expected to be higher than a year ago. This is largely due to allowed regulatory revenue changes, the firm explained. Underlying operating profit is also expected to grow, due to higher revenue and lower infrastructure renewals expenditure. Net debt is expected to increase by around GBP250 million at September 30 versus the firm's position at the end of March, largely reflecting a prepayment of around GBP100 million of agreed deficit recovery contributions in relation to United Utilities' defined-benefit pension schemes.
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Hazard detection firm Halma said it has made good progress in its first half. The company's performance was in line with board expectations and saw further organic constant currency revenue growth, even against a strong comparative period a year ago. All sectors delivered organic constant currency revenue growth, with Environmental & Analysis particularly strong while the rate of growth in the Medical and Infrastructure Safety segments was more modest.
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COMPANIES - FTSE 250
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Car maker Aston Martin Lagonda Global Holdings said it has completed the pricing of USD150 million in 12% senior secured notes due April 15, 2022. In addition, Aston Martin has an option to draw up to USD100 million of additional notes, subject to 1,400 orders of its new DBX model being received within nine months of the initial note issue. "The conditions on the delayed draw notes are well within our order expectations. Aston Martin's first SUV, the DBX, remains operationally on track and we are very pleased with the reception the car received at Monterey Car week during August," said Chief Financial Officer Mark Wilson. Aston Martin said it had 806 orders in production in total as of July 1 and expects to meet current analyst consensus for its key financial metrics in 2019. It said 2020 capital expenditure is not expected to exceed GBP350 million.
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Defence firm Babcock confirmed its annual expectations after reporting in-line trade. The Marine sector is performing well, Babcock said, while in Nuclear the civil nuclear market remains challenging but activity levels have increased across defence. While the firm said it has seen some delays in the award of new contracts in Aviation, overall bidding activity across the sector has increased.
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COMPANIES - OTHER MAIN MARKET AND AIM
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Online fashion retailer boohoo said it delivered a "fantastic" first half with strong revenue and profit growth. Revenue in the six months to the end of August was up 43% to GBP564.9 million, with pretax profit jumping 83% to GBP45.2 million. boohoo brand revenue was up 34% to GBP281.0 million while PrettyLittleThing continues to catch up, with sales 41% higher at GBP237.6 million. Nasty Gal sales more than doubled to GBP43.9 million. On more recent acquisitions, boohoo said revenue from Miss Pap - bought in March - is starting to grow "rapidly" since go-live in April. Karen Millen and Coast, both purchased in August, will commence trading online in October.
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COMPANIES - INTERNATIONAL
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WeWork co-founder Adam Neumann said he is stepping down as chief executive officer of the office sharing startup, calling the increased scrutiny he faced in recent weeks "a significant distraction". Neumann's announcement comes as the startup faces questions over its governance and profit outlook that have clouded its prospects for going public. Prior to his announcement, Neumann had faced pressure from board members tied to SoftBank, a major investor, according to people with knowledge of the matter. Neumann also met Sunday with Jamie Dimon, CEO of JPMorgan Chase & Co, the lead underwriter for the company's initial public offering, and the encounter weighed on Neumann's decision to step down, sources told AFP.
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The chair of French carmaker Renault said a proposed merger with Fiat Chrysler Automobiles is now "behind us", Reuters reported. Renault Chair Jean-Dominique Senard told a hearing in the French Senate that the deal to combine with its Italian-American peer was now a matter that is "behind us today." In May, FCA launched a EUR33 billion merger proposal with Renault. The approach ended just days later amid exasperation with the behaviour of the French government, which owns a 15% stake and 30% of voting rights in Renault. Sources told Reuters that efforts had been made to revive the potential deal in the months that followed the initial approach. On Tuesday, however, Senard emphasised these were currently closed.
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A senior manager at Fiat Chrysler has been charged with misleading US environmental regulators in the scandal over the automaker's use of "defeat devices" to evade emissions tests, the US Justice Department announced. The company in January agreed to pay more than USD500 million to settle the charges it intentionally manipulated software to allow its vehicles to spew more pollutants than allowed by law, and recalled 100,000 diesel vehicles sold in the US. The Justice Department said in a statement that it charged Emanuele Palma, 40, an Italian citizen and resident of Bloomfield Hills, Michigan, for "his alleged role in a conspiracy to mislead US regulators, customers and the public by making false and misleading statements."
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The German government and the state government of Hesse have granted the charter airline Condor, a subsidiary of Thomas Cook Group, a bridging loan worth EUR380 million, the company confirmed. Before the money can be transferred to Condor, the European Commission will also have to permit the loan. It was not clear when a decision from the commission could be expected, Condor said. The company also said that it planned to file a request to separate its business from its parent company Thomas Cook in a procedure that is specific to German insolvency law. This would enable Condor to be exempt from demands made by Thomas Cook.
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Wednesday's Shareholder Meetings
Adept Technology Group
Joules Group
NCC Group
Hornby
PZ Cussons
IMImobile
Orient Telecoms
Sophos Group
Carclo
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By Tom Waite; thomaslwaite@alliancenews.com
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