LONDON (Alliance News) - Shares in the UK clothing retailers are suffering Tuesday after Next warned that the unseasonably warm, dry weather in September had kept customers out of its stores.
Next said that if the weather conditions continue - and some weather forecasters say it may do so for another month - it will have to downgrade its profit guidance for the year.
Next said the cooler weather in August resulted in some strong weeks, but the recent warmer weather conditions since have had the opposite effect. It said its third quarter sales to date are up 6% year-on-year, below its previous guidance of 10% growth.
The retailer said that traditionally, lost sales due to weather are regained once the weather turns. But it said that if the unusually warm weather seen in the UK continues throughout October, it will have to lower its current full-year profit guidance of GBP775 million to GBP815 million.
Next shares are among the worst performing on the FTSE 100, while peers including Marks & Spencer Group, Sports Direct International and Debenhams have also seen their shares fall on the warning.
Plumbing and heating products distributor Wolseley has hiked its total dividend for the year to end-July by 25% and announced a GBP250 million share buyback programme, as a strong performance in the US and lower exceptional costs helped boost profit.
It has proposed a final dividend of 55.0 pence, taking its total dividend to 82.5 pence, up 25% from 66.0 pence the previous year. The company said it had seen a good overall result as market conditions in the US improved, although demand remained weak in Europe and Canada. Residential new construction markets were good in the US, and weak in Continental Europe.
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Markets: Stocks across the UK are slightly down, but Europe has edged higher and the euro fell to to a fresh two-year low against the dollar and the pound after the latest eurozone inflation data put extra pressure on the European Central Bank to take further monetary easing action at its policy meeting on Thursday.
Trading in the US index futures suggests that stocks may open slightly higher. The DJIA, S&P 500 are set to open up 0.3%, while the Nasdaq Composite is set to open up 0.5%, helped by news that eBay has finally bowed to investor pressure and will spin-off its PayPal business.
FTSE 100: down 0.2% at 6,635.88
FTSE 250: down 0.3% at 15,351.21
AIM ALL-SHARE: up 0.1% at 750.20
GBP-USD: down at 1.6194
EUR-USD: down at 1.2592
GOLD: down at USD1,207.73 an ounce
OIL (Brent): up at USD97.34 a barrel
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Other Top UK Corporate News
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Royal Bank of Scotland Group said it expects to "significantly outperform" its previous impairment guidance for the full year, supported by an improvement in economic conditions and asset prices in its key markets, including Ireland, though it issued a warning on third-quarter corporate and institutional banking revenue. RBS had previously guided about GBP1.0 billion in total impairments for the full year, but gave no specific new guidance.
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Intertek Group has poached André Lacroix, chief executive of Inchcape for nearly 10 years, as its own CEO with effect from May 16, 2015. He succeeds Wolfhart Hauser who will step down from the board and retire on May 15, after ten years as CEO.
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British Land Co said it has signed an agreement with Plymouth City Council to develop Drake Circus Leisure, a 100,000 square foot leisure scheme next to its 570,000 square foot Drake Circus Shopping Centre in the city centre of Plymouth. The real estate company said the GBP40 million development will include a 12 screen cinema operated by Cineworld Group PLC, 13 restaurant units and 450 car park spaces.
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Tesco is understood to have lined up a GBP2.5 billion financing package to safeguard the company against potential ratings downgrades as it works to resolve a GBP250 million black hole in its profit guidance, Sky News reported on Monday. The supermarket has signed up a group of banks to provide a credit facility designed to provide what one banker described as an "insurance policy" as the group contends with the accounting problem, Sky News said.
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British Sky Broadcasting Group said it has made a USD5 million investment in San Francisco, California based Sharethrough Inc. Sharethrough provides native advertising services to match online advertising campaigns to the web pages they are hosted on. Native advertising is used to provide content within a web page in a way that is less intrusive, such as promoted tweets on Twitter.
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Melrose Industries said that its Elster Gas business has signed a conditional agreement for the acquisition of Eclipse Inc in a deal worth USD158 million. The company recorded sales of USD126 million for the fiscal year to March 31, 2014. Melrose Industries said that the USD158 million is payable in cash on completion and that the transaction is on a debt and cash free basis, set to be funded within the existing debt facilities of the Melrose Group. Completion of the acquisition is expected to take place in November this year.
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Meggitt said it has secured a USD900 million, five-year refinancing facility. The new revolving credit facility, provided by 13 banks, replaces existing facilities of USD700 million and USD400 million due to expire in 2016 and 2017. The new facility also includes one-year extension options at the end of the first and second years, Meggitt said.
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AO World confirmed the next step in its European expansion with the launch of ao.de in Germany. The new site will focus only on major domestic appliances initially, but otherwise will largely mirror that of the UK operation, it said.
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Saga said its first-half pretax profit fell by almost two-thirds, hit by the costs of its initial public offering and new debt. In a statement, Saga said it made a GBP32.8 million pretax profit in the six months ended July 31, compared with GBP92.1 million in the corresponding period last year. Revenue fell to GBP583.5 million from GBP632.0 million, while administrative and selling expenses rose to GBP190.6 million from GBP147.0 million. On a like-for-like basis, pretax profit increased to GBP106.5 million from GBP92.7 million.
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RPC Group said that it expects revenue to come in significantly ahead of last year due to the contribution from recent acquisitions as well as good growth in the USA, coffee capsules and UK DIY markets. In a pre-close trading statement for the period April 1 to September 30, the rigid plastic packaging supplier said that it is in a strong financial position with cash flow performance in the first-half year expected to be satisfactory.
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ICAP said it expects first-half revenue to be 10% lower at constant currency and 15% lower on a reported basis, and expects full-year profit to be more heavily weighted to the second half than in previous years because of the way it will realise costs savings targeted from the restructuring of its global broking division. In addition, ICAP said Finance Director Iain Torrens has quit to join TalkTalk Group, where he will replace Steve Makin. ICAP said it has begun to search for his replacement, and has appointed executive search and recruitment company Spencer Stuart to seek a successor. Torrens will remain with the group to ensure a smooth transition, ICAP said.
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AIM Movers
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Sovereign Mines of Africa has shot higher after drilling at Mandiana in the Republic of Guinea intersected a high-grade quartz-vein containing gold. Nyota Minerals has also risen sharply after it said its pretax loss narrowed significantly in its last financial year, as it cut costs sharply, and it also said it had made "solid progress" in advancing the mining licence application to rapidly exploit the Abay River, or Blue Nile, gravel terraces transecting its northern exploration blocks in the west of Ethiopia. Powerflute is doing well after it said it would buy cores and coreboard producer Corenso from Finnish pulp and paper manufacturer Stora Enso Oyj for EUR81 million, a deal which will boost its earnings. Mariana Resources is up after it said it will acquire a majority stake in Nassau Gold, which is developing the Nassau Gold project in South America. Verona Pharma is another gainer after it appointed Biresh Roy as its chief financial officer with immediate effect, taking over from part-time financial officer Richard Bungay. Aureus Mining is up after latest drilling at the company's Ndablama gold project in Liberia confirmed the continuity of the mineralised system for a further 300 metres beyond the limits of the initial resource estimate, more than doubling the down dip extent of the mineralised system. Resource Holding Management is also up after revenue rose 27% in the first half of the year. It swung to loss due to the costs associated with its recent transformational takeover deal. Mountfield Group is a big faller after its pretax profit all but evaporated in the recent half-year, despite a rise in revenue, as its results were hit by a major contract with lower-than-expected margins. Nova Resources has lost over a third of its value after its pretax loss in the first half of the year widened and it reiterated that it is in a critical cash position. Range Resources is down by nearly a third after its pretax loss widened due to a major write-off of assets and increased finance costs. Graphene Nanochem is another heavy faller after it warned that a series of delays for the Plat Drill Series meant it is likely to miss market expectations for the full year, despite narrowing its loss and doubling its revenue in the recent half-year. Herencia Resources is down after it completed a subscription and placing to raise about GBP2.4 million by issuing 795.7 million new shares at 0.3 pence each, money it will use to advance its Picachos project towards production. Clontarf Energy is down after it warned that the environment it is currently facing has not improved and said that while it believes its assets in Ghana, Peru and Bolivia have potential, they also have problems. DDD Group is also down after it posted a widened loss for the half year to end-June, despite cutting costs, as the contraction of the 3D personal computer market hit revenue. DDD opted to cut its headcount by 30% to counteract this decline. Mosman Oil & Gas is down as it said it is waiting to receive expert reports to confirm whether hydrocarbons are present in its Crestal-2 well at its Petroleum Creek project in New Zealand. The company's own analysis is not conclusive. Churchill Mining is down as it denied that it had ever forged any documents, after Indonesian police raided its Jakarta offices while the company was in Singapore reviewing documents related to its mining licenses dispute with the Indonesian government. Red Emperor Resources is another faller after reporting a significantly widened loss for its last financial year due to the write down of an exploration cost and as revenue fell.
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Top Economics And General
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The UK economy grew more than estimated in the second quarter, the Office for National Statistics said. Gross domestic product grew 0.9% sequentially, up from the prior estimate of 0.8%. The annual growth was confirmed at 3.2%. The peak to trough fall of the economic downturn in 2008/2009 was estimated to be 6%. Previously this was estimated to be 7.2%.
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UK house prices unexpectedly declined in September after rising for sixteen straight months amid signs that demand may be starting to ease, the results of a survey by the Nationwide Building Society showed. The house price index dropped 0.2% from August, when it climbed 0.8%. Economists were looking for a 0.5% increase. Year-on-year, house prices rose 9.4% after an 11% gain in the previous month. Economists had forecast a 10.4% increase. On a quarterly basis, all 13 UK regions showed annual price gains, though there was significant regional variation. UK house prices rose 1.5% in the three months to September.
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An index measuring UK consumer confidence slid into negative territory in September, the latest survey from GfK revealed on Tuesday with a score of -1. That missed forecasts for a reading of 0, and it was down from +1 in August. The index has fluctuated between +1 and -2 through the last five months; in September 2013, the index came in at -10.
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Eurozone inflation slowed marginally in September as expected, flash data from Eurostat showed. Inflation came in at 0.3%, down from 0.4% in August. It continues to stay below the European Central Bank's target of 'below but close to 2%'. Core inflation that excludes energy, food, alcohol and tobacco, eased to 0.7% in September, while it was forecast to remain unchanged at 0.9%. Cost of food, alcohol and tobacco gained 0.2% and services cost advanced 1.1%. Meanwhile, energy prices declined 2.4%. Non-energy industrial goods prices edged up only 0.1%.
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China's manufacturing sector continued to expand in September, if barely, the latest survey from HSBC revealed with a PMI reading of 50.2. That was unchanged from the August reading, although it was down from the flash estimate of 50.5 earlier this month. A reading above 50 means expansion in a sector, while a score below signals contraction.
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Tens of thousands of Hong Kongers calling for more democracy continued their street protests and blocked main transport routes Tuesday, after a peaceful night of demonstrations in the Chinese territory. Student leaders threatened to step up the protests if their demands were not met by Wednesday, including the resignation of the head of Hong Kong's government, Chief Executive Leung Chun-ying, and the withdrawal of an electoral reform plan announced by Beijing.
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The US-led coalition against Islamic State militants launched overnight airstrikes against the jihadist group's positions near a besieged Kurdish town, a monitoring group said. The strikes hit areas to the east and west of the town of Kobane, on Syria's border with Turkey, the Britain-based Syrian Observatory for Human Rights reported. The strikes took place as Kurdish fighters fought pitched battles with Islamic State forces 4 kilometers from Kobane, the smallest of three Kurdish-controlled areas in conflict-racked Syria.
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Afternoon Watchlist (all times British Summer Time)
13:55 US Redbook index
14:00 US S&P/Case-Shiller Home Price Indices
14:45 US Chicago Purchasing Managers' Index
15:00 US Consumer Confidence
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Wednesday's Key UK Corporate Events
Walker Greenbank - Half Year Results
Avingtrans - Full Year Results
James Halstead - Full Year Results
ITE Group - Trading Statement
J Sainsbury - Trading Statement
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Wednesday's Key Economic Events (all times British Summer Time)
All Day China National Day
00:50 Japan Tankan Index
02:00 China NBS Manufacturing PMI
02:35 Japan Nomura/ JMMA Manufacturing Purchasing Manager Index
06:00 Japan Vehicle Sales
08:45 Italy Markit Manufacturing PMI
08:50 France Markit Manufacturing PMI
08:55 Germany Markit Manufacturing PMI
09:00 EU Markit Manufacturing PMI
09:30 UK Markit Manufacturing PMI
10:00 EU Gross Domestic Product
12:00 US MBA Mortgage Applications
13:15 US ADP Employment Change
14:45 US Markit Manufacturing PMI
15:00 US Construction Spending
15:00 US ISM Manufacturing PMI
15:30 US EIA Crude Oil Stocks change
n/a US Total Vehicle Sales
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30 Sep 2014 11:51
