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(Alliance News) - boohoo on Thursday became the latest UK retailer to warn that the rise in the Omicron variant of Covid-19 is harming sales ahead of Christmas.
The AIM-listed online fast-fashion retailer cut annual sales and margins guidance due to Omicron uncertainty and as a high product returns rate hits net sales. It also has seen "continued disruption" hit online deliveries alongside persistent virus-related cost inflation.
However, boohoo said: "It is the view of the board that the factors currently negatively impacting the business are primarily related to the ongoing impact of the pandemic and are, therefore, transient in nature."
In the three months to November 30, net sales increased 10% year-on-year to GBP506.2 million from GBP460.7 million, boohoo said. On a two-year basis, net sales are 53% higher.
For the financial year ending February 28, boohoo now expects net sales growth in the 12% to 14% range, cut from previous guidance of a rise of 20% to 25%.
"This reflects our expectation that the factors impacting our performance in the period persist through the remainder of the financial year, and recent developments surrounding the Omicron variant could pose further demand uncertainty and elevated returns rates particularly in January and February," the retailer explained.
boohoo's adjusted earnings before interest, tax, depreciation and amortisation margin is expected to be between 6% and 7%, lowered from previous guidance of 9% to 9.5%. This will imply an adjusted Ebitda of GBP117 million to GBP139 million.
On Wednesday, electronics retailer Currys also had warned about the damage to sales being caused by caution among shoppers due to the Omicron variant and government warnings.
Boohoo shares were down 16% 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 1.1% at 7,249.71
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Hang Seng: up 0.2% at 23,475.50
Nikkei 225: closed up 2.1% at 29,066.32
S&P/ASX 200: closed down 0.4% at 7,295.70
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DJIA: closed up 383.25 points, or 1.1%, at 35,927.43
S&P 500: closed up 75.76 points, or 1.6%, at 4,709.85
Nasdaq Composite: closed up 327.94 points, or 2.2%, at 15,565.58
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EUR: up at USD1.1305 (USD1.1262)
GBP: up at USD1.3262 (USD1.3222)
USD: up at JPY114.12 (JPY113.80)
Gold: up at USD1,785.84 per ounce (USD1,767.04)
Oil (Brent): up at USD74.58 a barrel (USD73.30)
(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
0930 CET Germany flash purchasing managers' index
1000 CET EU flash PMI
1100 CET EU foreign trade
1345 CET EU ECB interest rate decision
1430 CET EU press conference with ECB President Christine Lagarde
0930 GMT UK CIPS-Markit flash manufacturing and services PMI
1200 GMT UK Bank of England interest rate decision
0830 EST US housing starts and building permits
0830 EST US jobless claims
0915 EST US industrial production
0945 EST US flash manufacturing PMI
0945 EST US flash services PMI
0945 EST US consumer comfort index
1030 EST US EIA weekly natural gas storage report
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France is to tighten up restrictions on travel to and from Britain to slow the spread of the Omicron variant of Covid-19 which is causing record numbers of cases on the other side of the Channel, the government in Paris said. "We will put in place a system of controls drastically tighter than the one we have already," government spokesman Gabriel Attal told BFM-TV, saying returning travellers would need a negative test of less than 24 hours, a quarantine enforced on return to France and trips for tourism limited.
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Chris Whitty's plea for people to consider cutting back socialising around Christmas due to the threat from the Omicron variant has prompted fresh calls for support to the hospitality sector. Experts called for clearer messaging as UK Prime Minister Boris Johnson stopped short of matching England's chief medical officer's warning, instead urging people to "think carefully" before attending celebrations. The variant was surging across the UK, with daily confirmed Covid-19 cases reaching a record high of 78,610 new cases and Whitty warning "records will be broken a lot over the next few weeks". Businesses warned of a fresh threat hitting their existence as people weigh up whether to risk nights out or cancel to improve the chances of spending Christmas with their families. One scientific adviser said it was possible one million people could be isolating on Christmas Day, with the 10-day isolation period for positive tests now covering December 25.
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Export growth in Japan accelerated in November but fell slightly short of forecasts, according to figures from the Ministry of Finance, in what was the ninth straight month of yearly export gains. Exports in the country climbed by 20.5% to JPY7.367 trillion, about USD64.53 billion, in November from JPY6.113 trillion a year before, just shy of market estimates of a 21.2% rise, according to FXStreet. The annual growth rate in November represented a sharp acceleration from 9.4% growth in October, amid robust foreign demand and easing supply chain problems. Imports surged 44% year-on-year to JPY8.322 trillion from JPY5.787 trillion, above market forecasts of 40% growth and comfortably above a 27% rise in October. It was the tenth straight month of growth in imports. On a monthly basis, imports grew by 27%. As a result, Japan posted a trade deficit of JPY954.77 billion, about USD8.37 billion, in November, swung from a JPY325.91 billion surplus a year ago. The trade gap increased substantially from JPY67.37 billion in October.
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Flash purchasing managers' index readings for Japan showed slowing growth in the private sector. The flash composite reading was 51.8 points, down from 53.3 in November. The manufacturing reading fell to 53.3 from 54.0 and the services score to 51.1 from 53.0.
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BROKER RATING CHANGES
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DEUTSCHE BANK CUTS ABRDN TO 'HOLD' (BUY) - PRICE TARGET 275 (320) PENCE
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JEFFERIES INITIATES DIGITAL 9 INFRASTRUCTURE WITH 'HOLD'
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JEFFERIES INITIATES CORDIANT DIGITAL INFRASTRUCTURE WITH 'HOLD'
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COMPANIES - FTSE 100
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Schroders confirmed it is in discussions to take a "significant stake" in Greencoat Capital. Sky News reported on Thursday that Schroders was in talks to buy a 75% stake in the renewables-focused managers. Greencoat Capital manages London-listed Greencoat UK Wind and Greencoat Renewables. "Schroders continues to evaluate potential acquisition opportunities in line with its strategy to build a comprehensive private assets platform and enhance its leadership position in sustainability," the company said.
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Aviva lifted its current buyback programme to GBP1 billion from GBP750 million. The scheme will be extended to no later than March 31. The increase is part of the insurer's commitment to return GBP4 billion to ordinary shareholders. "We will update further on our capital return and dividend plans at our full year results in March 2022," CEO Amanda Blanc added.
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Heathrow has been given permission to increase charges by more than 50% from January 1. The UK Civil Aviation Authority said the cap on the west London airport's price per passenger next year will be GBP30.19. The current charge is GBP19.60. Charges are paid by airlines such as IAG's British Airways, but are generally passed on to passengers in air fares. A decision on a long-term cap which is expected to begin in summer 2022 and run to 2027 is due to be announced early next year. Heathrow, which had called for the cap to range from GBP32 to GBP43, said it was "extremely disappointed" in the interim figure of GBP30.19, saying it "relies on rushed analysis and will undermine passenger experience" at the airport.
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COMPANIES - FTSE 250
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Domino's Pizza said it has reached a deal with its franchisees. The firm said the acrimony "held the company back", and it can now "begin a new era". Under the terms of the deal, Domino's will make a one-time capital investment of about GBP20 million, spread over three years, to boost digital acceleration. It will also increase marketing investment and develop an improved new store incentive scheme, to encourage new site openings. The deal runs for an initial three years from January 3. In addition, Domino's lifted its medium-term system sales guidance to at least the upper end of the previously announced GBP1.6 billion to GBP1.9 billion target. "This is an important moment for Domino's, and I'm delighted we have reached what is truly a great resolution with our franchisees," Chief Executive Officer Dominic Paul said.
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COMPANIES - MAIN MARKET AND AIM
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Rothermere announced its offer for publisher Daily Mail & General Trust has become unconditional in all respects. Rothermere upped its offer for the Daily Mail newspaper owner earlier in December by 5.9% to 270 pence per share in cash from 255p previously. The increase was worth GBP40 million. Rothermere on Thursday said it has agreed to acquire or has already acquired DMGT shares representing just under 57% of the company. It said its offer remains open until January 6, and it intends to cancel DMGT's A shares from trading.
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COMPANIES - GLOBAL
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Australian flag carrier Qantas announced a deal to buy 40 Airbus aircraft, to renew its domestic fleet. The purchase, which is expected to be finalised at the end of the next financial year, is for 20 long-range A321XLRs and 20 A220s. "Financial details of the deal are commercial in confidence but represent a material discount from list prices," Qantas said. The order is a blow to US planemaker Boeing, which currently supplies much of Qantas' domestic fleet. Qantas also Thursday predicted a loss of AUD1.1 billion, about USD790 million, in the first six months of the 2022 financial year but said it has made progress in reducing debt.
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Thursday's shareholder meetings
888 Holdings PLC - GM re moving tax residence to UK
Arc Minerals Ltd - AGM
AVI Global Trust PLC - AGM
Baillie Gifford Japan Trust PLC - AGM
Checkit PLC - GM re placing
Glenveagh Properties PLC - GM re share buyback
Netcall PLC - AGM
Sareum Holdings PLC - AGM
Schroder Income Growth Fund PLC - AGM
Seeing Machines Ltd - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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