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(Alliance News) - Clothing and homewares retailer Next on Wednesday said third-quarter full price sales were slightly ahead of guidance as it held steady its outlook for the full-year.
Total full price sales were up 2.0% in the quarter to October 26, being last Saturday, which Next said was "slightly ahead" of guidance given in September. Retail sales were down 6.3%, online sales up 9.7% and finance interest income up 7.0%.
In the year to October 26, total full price sales were up 3.5%.
The UK retail bellwether said it thinks strong sales in July pulled forward sales from August, while sales in September were "adversely affected by unusually warm weather". This was followed by a "significant improvement" in October when temperatures fell and the heavens opened with rain.
"We believe the improved sales growth in October recouped some of the lost sales in September and we do not expect sales growth for the rest of the year to be as strong as October," said Next.
As a result, the retailer maintained its guidance for the financial year ended in January, with total full price sales to grow 3.6% and pretax profit to edge up 0.3% year-on-year to GBP725 million.
The update from Next came as the British Retail Consortium-Nielsen Shop Price Index showed UK shop prices continued to fall in October leaving retailers holding out for a successful festive period.
Shop prices fell 0.4% year-on-year in October, following a 0.6% fall in September. This was below the twelve and six-month average price changes of 0.2% and minus 0.2%, respectively.
Non-food prices fell 1.5% annually in October, less steep than the 1.7% decline recorded in September, while the prices of food items rose 1.6%, strengthening from a 1.1% rise posted the month before.
Next shares were down 2.0% 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 0.1% at 7,301.42
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Hang Seng: down 0.6% at 26,618.31
Nikkei 225: closed down 0.6% at 22,843.12
DJIA: closed down 19.30 points, 0.1%, at 27,071.42
S&P 500: closed down 0.1% at 3,036.89
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GBP: flat at USD1.2880 (USD1.2887)
EUR: firm at USD1.1119 (USD1.1108)
Gold: firm at USD1,488.80 per ounce (USD1,488.37)
Oil (Brent): down at USD61.46 a barrel (USD61.86)
(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
1400 CET Germany provisional consumer price index
0700 EDT US MBA weekly mortgage applications survey
0815 EDT US ADP national employment report
0830 EDT US advance estimate gross domestic product
1030 EDT US EIA weekly petroleum status report
1400 EDT US Federal Reserve interest rate decision
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UK Prime Minister Boris Johnson has said he is prepared for a "tough" general election battle after members of Parliament cleared the way for the first December poll in almost a century. Following his Commons victory on Tuesday – at the fourth time of asking – Johnson sought to rally Tory MPs telling them it was time to "get Brexit done". The one-page Bill enabling the election to be held on December 12 now goes to the House of Lords, but it is unlikely to be held up in the unelected upper chamber. Once it receives the royal assent, it will pave the way for Parliament to be dissolved on November 6 marking the start of the campaign in earnest. In the end, the Bill passed the Commons by 438 votes to 20.
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The time taken to sell a house in the UK has hit a three-year high, according to the latest figures from Zoopla. In its September UK Cities House Price Index, the property portal said slower house price growth and weaker demand has resulted in the time taken to sell hitting a three-year high of 12 weeks. The discount to asking price has widened to 3.8% across UK cities. In 2016, homes took around eight weeks to sell, and the discount to asking price was 2.2%.
Here is what you need to know at the London market open:
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BROKER RATING CHANGES
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BERNSTEIN RAISES RYANAIR PRICE TARGET TO 11.80 (10.00) EUR - 'MARKET-PERFORM'
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CREDIT SUISSE CUTS BP PRICE TARGET TO 580 (605) PENCE - 'NEUTRAL'
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DEUTSCHE BANK RAISES ASTRAZENECA PRICE TARGET TO 8300 (7800) PENCE - 'BUY'
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COMPANIES - FTSE 100
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Oil major BP, noting "certain commentary", confirmed that no decision has yet been made over a fourth quarter, or any future, dividend. "Any decisions with respect to future dividends will be made by the board of BP PLC following the end of each quarter," it said. BP on Tuesday declared a 10.25 US cent dividend for the third quarter, unchanged from its second quarter payout, while removing the scrip dividend alternative.
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Dublin-headquartered packaging firm Smurfit Kappa said it delivered a "strong performance" in the year-to-date. For the nine months to September 30, revenue was up 3% to EUR6.85 billion and earnings before interest, tax, depreciation and amortisation 11% higher at EUR1.26 billion. The firm's Ebitda margin increased 140 basis points to 18.3%. Key metrics have been at, or ahead of, stated targets, said Smurfit. This performance "continues to demonstrate the strength and resilience of the group's business model", the company said. In Europe, Smurfit's corrugated box volume growth was "close to" 4% year-on-year, or 2% on an organic basis. Corrugated pricing has been in line with expectations, the firm noted. In the Americas, organic volume growth was 2%, with "continued" Ebitda and margin improvement.
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Standard Life Aberdeen said it has sold a stake in its Indian joint venture, HDFC Life Insurance Co. Standard Life, through wholly-owned subsidiary Standard Life (Mauritius Holdings) 2006, sold 100 million shares at an average price of INR575.15, totalling INR57.0 billion, or GBP622 million. The shares represent a 4.96% stake in HDFC Life Insurance, and Standard Life will continue to hold a 14.7% interest in the venture with local firm Housing Development Finance Corp. This remaining stake is worth around GBP2.0 billion, Standard Life said.
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Standard Chartered warned of "growing headwinds" despite achieved solid profit growth in the third quarter of 2019. For the three months to September, StanChart's pretax profit rose by 4% year-on-year to USD1.11 billion, with the underlying figure up 16% to USD1.24 billion. The bank's income climbed by 7% to USD3.98 billion, and StanChart said there was "broad-based growth" across all business segments and regions. There was a particularly strong performance, it continued, from Corporate & Institutional Banking, which grew income by 13%, and Private Banking, which increased income by 14%.
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COMPANIES - INTERNATIONAL
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Deutsche Bank said its transformation is on track, though the move has caused a quarterly loss. In July, Deutsche Bank launched a major plan to cut costs by over 25%, which included slashing 18,000 jobs by 2022, leaving it with around 74,000 full-time staff. Chief Executive Christian Sewing on Wednesday said Deutsche Bank is making good progress. Since the third-quarter of 2018, headcount has fallen by 5%, the first time it has dipped below 90,000 since 2010. Turning to third-quarter 2019 results, Deutsche Bank posted a pretax loss of EUR687 million due to restructuring costs, after a EUR506 million profit a year before. Net revenue declined by 15% to EUR5.26 billion. The common equity tier 1 ratio was 13.4%, from 14% the year before, which Sewing said reflects the German bank's underlying strength.
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Japan's Sony said half-year net profit fell 15%, but it upgraded its annual net profit forecast on solid growth in its image sensor and music sectors. The PlayStation manufacturer said net profit dropped to JPY340 billion, about USD3.12 billion, for the April-September period, and forecast annual net profits of JPY540 billion, up from an earlier JPY500 billion forecast.
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Japan's Toyota Motor reported a rise in half-year vehicle sales, with its domestic performance particularly strong. Toyota's worldwide sales for the six months to September increased 3.2% year-on-year to just under 5.0 million vehicles. Within Japan, sales including mini-vehicles rose 11%, while outside of Japan, total sales were up 1.8%. Half-year production was 3.7% higher at 4.6 million units, with the figure up 15% in Japan but down 2.0% abroad. For September, Toyota's worldwide sales were up 0.3% year-on-year. Including mini-vehicles in Japan, they rose 26%, but outside of Japan fell 4.5%.
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Italian-American carmaker Fiat-Chrysler Automobiles is discussing a merger with French rival PSA Group, which comprises Peugeot, Citroen and Opel, according to a report on Tuesday by the Wall Street Journal. Under a 50-50 tie-up, PSA's Chief Executive Carlos Tavares and FCA Chair John Elkann would retain the same position in the merged entity, the newspaper said. Its report attributed the information to "people familiar with the matter", but stressed that "talks are fluid" and "there is no guarantee that any final agreement will be reached".
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Wednesday's Shareholder Meetings
Surface Transforms
Wizz Air Holdings
Origo Partners
Ideagen
Ashoka India Equity Investment Trust
Redde
Frontier Developments
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By Tom Waite; thomaslwaite@alliancenews.com
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