Next Share News (NXT)

(Alliance News) - The FTSE 100 was on a rollercoaster in the opening minutes of trading on Thursday as it zipped in and out of the green.

Helping to lift the large-cap index was Burberry, even as it warned on a significant sales hit, while Ocado slipped despite reporting a rise in sales amid Covid-19 stockpiling.

The FTSE 100 was up 83.16 points, or 1.6%, at 5,163.74 early Thursday.

London's blue-chip index opened higher, but within minutes slipped firmly into the red, only to rebound by over 100 points from a low of 5,042.03 - all in the space of half an hour.

The mid-cap FTSE 250 index was down 201.96 points, or 1.5%, at 12,806.23. The AIM All-Share index was flat at 589.43.

The Cboe UK 100 index was up 0.3% at 8,655.98. The Cboe 250 was down 1.4% at 11,186.00, and the Cboe Small Companies flat at 7,648.74.

In mainland Europe, the CAC 40 in Paris was up 1.8% while the DAX 30 in Frankfurt was flat early Thursday.

"After yesterday's panic driven trading session which saw a broad sell-off in asset classes, including bonds and commodities, Asian equity markets are again down around 1-2%. However, there were some signs in Asian trading of government bond markets stabilising," said Lloyds Bank.

The Japanese Nikkei 225 index closed down 1.0%. In China, the Shanghai Composite ended down 1.0%, while the Hang Seng index in Hong Kong closed 2.6%.

The European Central Bank late Wednesday unexpectedly said it would spend EUR750 billion on "emergency" bond purchases, as it joined other central banks in stepping up efforts to contain the economic damage from the coronavirus.

The so-called Pandemic Emergency Purchase Programme comes just six days after the ECB unveiled another big stimulus package that had failed to calm nervous markets, piling pressure on the bank to open the financial floodgates.

The decision came after the bank's 25-member governing council held emergency talks by phone late into the evening, following criticism the bank wasn't doing enough to shore up the eurozone economy.

The ECB's move came amid dire news out of Italy, which reported 475 new deaths. More than 8,700 people have died around the world with fatalities in Europe now topping those in Asia, where the outbreak began in December in China.

With the number of global coronavirus infections shooting past 200,000, governments announced new containment measures and the US Congress approved a USD100 billion emergency relief package.

The euro traded at USD1.0857 early Thursday, firm on USD1.0840 late Wednesday. Against the yen, the dollar was quoted at JPY109.13 versus JPY108.37.

Sterling, meanwhile, was trading around 35-year lows. The pound was quoted at USD1.1522 early Thursday, lower than USD1.1755 at the London equities close on Wednesday.

Gold was priced at USD1,480.80 an ounce early Thursday, lower than USD1,491.90 on Wednesday. Brent oil was trading at USD26.65 a barrel early Thursday, firm on USD26.08 late Wednesday.

In London, Ocado shares were down 4.5% despite the company recording a surge in Covid-19 stockpiling orders.

However, the online grocer said its guidance for retail revenue growth in the current financial year of 10% to 15% is unchanged at this point, as the company assumes there has been a "large element" of forward buying some items, and added that there may be "further disruptions" ahead.

Retail revenue for the first quarter, which ended March 1, was up 10% year-on-year to GBP441.2 million. Average orders per week rose 10% to 343,000 while the average order size increase 0.3% to GBP110.24.

"The impact of higher basket values and order demand, amid growing public concern over the coronavirus, was limited in the quarter, although this has since picked up significantly," said Melanie Smith, Ocado Retail's chief executive officer.

The online grocer said growth in the second quarter "is so far double that" of the first due to the coronavirus outbreak. It does expect the impact of forward buying to unwind "at some point".

Next shares slid 5.2% after the retailer said it stands ready to weather a significant hit to sales from Covid-19.

Total sales for the financial year ended January were up 3.3% to GBP4.36 billion, while pretax profit rose 0.8% to GBP728.5 million.

Turning to Covid-19, Next said that when the pandemic first appeared in China, it assumed the threat was to its supply chain.

"It is now very clear that the risk to demand is by far the greatest challenge we face, and we need to prepare for a significant downturn in sales for the duration of the pandemic," said Next.

The retailer said the conclusion of a stress test showed the business could comfortably sustain the loss of more than GBP1 billion of annual full price sales without exceeding its current bond and bank facilities.

Meanwhile, Burberry shares were up 2.1% despite the firm reporting on a significant hit to sales from Covid-19.

The luxury retailer said comparable retail store sales have been tracking 40% to 50% lower over the past six weeks.

Trading in mainland China has started to improve, but sales in Europe, Middle East, India & Africa, as well as the Americas, have fallen "materially" in the past few weeks. More than 60% of stores in EMEIA and 85% of those in the Americas are currently closed.

As a result of all this, Burberry expects comparable retail store sales to be down by 70% to 80% for the final weeks of the financial year. For the fourth quarter, comparable sales are to be around 30% lower.

Burberry said it has "significant" financial headroom, including liquidity of GBP900 million.

Over the past month, though, the stock remains 43% lower.

National Express shares were up 9.7% even as the transport operator said it has seen a "significant decline" in passenger numbers in recent weeks due to Covid-19. The stock remains down more than 60% in the past week.

The firm, which runs the eponymous coach services, said it has already taken measures to reduce its cost base and protect cash flow.

In the UK, its coach service it reverting to a network similar to its Christmas Day service, removing up to 80% of capacity. UK bus is reducing its networks similar to a typical Sunday service, which amounts to the removal of around 40% of bus mileage.

Following the recent refinancing, National Express currently has committed fixed borrowing facilities of more than GBP1.3 billion and will retain this level for at least the next 18 months. Current undrawn committed facilities total around GBP500 million.

"At this stage we cannot give precise guidance to what this means for our profitability this year, but our cash flow over the next three months is still anticipated to be positive even in light of the material downturn in passenger volumes. Our balance sheet is strong and we have borrowing headroom of around GBP500 million, while we are holding discussions to increase this further," said Chief Executive Dean Finch.

The economic events calendar on Thursday has eurozone construction output figures at 1000 GMT.

By Lucy Heming; lucyheming@alliancenews.com

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