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LONDON (Alliance News) - SuperGroup gave the market a fright on what is expected to be the warmest Halloween on record in the UK, but the market has pushed higher nonetheless.
With temperatures reaching 20 degrees Celsius in London on Friday, the fashion retailer downgraded its full-year profit guidance, blaming continued warm weather in both September and October in the UK and Europe.
The FTSE 250 constituent said it would downgrade its full-year profit guidance to between GBP60 million and GBP65 million, down from the previous guidance of GBP67.1 million to GBP70.3 million. It said that while the majority of its full-year profit comes in the second half of the year, the level of discounting in the clothing sector and the uncertainty caused by the unseasonably warm weather conditions in key markets meant it would have to cut its guidance.
SuperGroup's comments, which were made ahead of schedule, follows a profit warning by Next for the same reason on Wednesday, which had dragged down the entire retail sector.
Last week, figures from the UK Office for National Statistics showed retail sales were down more than expected in September, off 0.3% on a sharp contraction in clothing sales in the month.
Analysts said they expect further bad news from Marks & Spencer in its interims due on Wednesday next week. SuperGroup shares are down 8.1% at midday, leading FTSE 250 fallers.
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Markets: UK shares shot out of the blocks in response to the Bank of Japan's announcement of additional economic stimulus. IAG and RBS trade well on the back of their respective earnings updates, while miners are being hit by a further decline in precious metals prices.
Gold fell to a low of USD1,166.92 per ounce, the lowest it has been since July 2010 after a hawkish tones from the Federal Reserve and the subsequent rally by the dollar.
Futures indicate Wall Street for a strong open, with the DJIA pointed up 1.1%, the S&P 500 up 1.1% and the Nasdaq Composite up 1.4%.
FTSE 100: up 1.2% at 6,540.59
FTSE 250: up 1.3% at 15,500.70
AIM ALL-SHARE: up 0.4% at 717.44
GBP-USD: down at USD1.5988
EUR-USD: down at USD1.2563
GOLD: down at USD1,165.06 an ounce
OIL (Brent): down at USD85.33 a barrel
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Other Top UK Corporate News
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International Consolidated Airlines Group posted a rise in third quarter operating profit and revenue on a constant currency basis, with both British Airways and Iberia both performing well in the quarter. Operating profit for the group in the third quarter to September 30 was EUR900 million, up on the EUR690 million a year earlier. British Airways made an operating profit of EUR607 million, up from EUR477 million a year earlier. Iberia's operating profit rose to EUR162 million from EUR74 million. On a constant currency basis, revenue for the group rose 6.9%, but it was up 8.5% on a reported basis to EUR5.9 billion. Passenger unit revenue for the group was down 0.9% on a constant currency basis, with fuel units costs falling 7.5%.
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Royal Bank of Scotland Group reported a swing to third-quarter pretax profit, but results included hundreds of millions of pounds of litigation and conduct costs, relating to matters such as regulators' probe into the foreign exchange markets and a further charge taken for the payment protection insurance scandal. In a statement, RBS said it made a GBP1.27 billion pretax profit in the quarter ended September 30, compared with a GBP634 million pretax loss in the corresponding quarter last year. The quarterly performance was supported by net impairment provision releases of GBP801 million, primarily in Ulster Bank and in RBS Capital Resolution, the 'bad bank' it set up to run down capital intensive assets, as RBS benefits from improving economic conditions in the UK and Ireland.
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Direct Line Insurance Group said it is on track to meet its financial targets for the year, despite reporting a fall in third-quarter gross written premium. In a statement, Direct Line said gross written premium from ongoing operations fell to GBP928.0 million in the quarter ended September 30, compared with GBP977.7 million in the corresponding period last year, citing falls across its business lines of motor, home, rescue and other personal lines, and commercial. The group said insurance market trends in the third quarter were similar to those seen in the second quarter, namely that the motor market experienced a second successive quarter of pricing stability whereas the home market saw further premium deflation.
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Intu Properties said it has secured a new corporate GBP600 million revolving credit facility which replaces its existing deal. FTSE 100 property company Intu said the new deal replaces it existing GBP375 million facility, due to expire in November 2018.
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Rolls-Royce Holdings said it has won a contract with BG Group to supply its Trent 60 DLE industrial gas turbine for the proposed Lake Charles liquefied natural gas export project the oil company is carrying out in Louisiana in the US. The two FTSE 100 companies have also agreed the terms of a long term service agreement covering the support and maintenance of equipment for up to 25 years.
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WPP was among the few fallers in the FTSE 100 after the company provided more evidence of the impact of the strong pound on earnings for multinational companies, posting a rise in revenue in the third quarter which was held back by the impact of currency translation. Reported third quarter revenue for the FTSE 100 advertising group in the quarter to the end of September was up 3.1% to GBP2.76 billion, with revenue in dollar terms rising 10.8% to USD4.6 billion and gaining 10.9% euro terms to EUR3.5 billion. The impact of the strength of sterling was illustrated by the rise in its constant currency revenue of 10.6%, with like-for-like revenue rising 7.6%. Third quarter constant currency net sales were up 6.1%, with like-for-like sales rising 3% in the period.
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BP has stepped up its call for the man heading the Gulf of Mexico compensation fund to be sacked after the company uncovered a trove of new evidence allegedly casting doubts on his impartiality, The Daily Telegraph reported. The FTSE 100 oil company has already asked a US court to remove Patrick Juneau from his role overseeing payouts to victims of the Deepwater Horizon spill in 2010, after he was alleged to have misled the court about a potential conflict of interest, the paper said. But BP has now widened its claim against Juneau, following a slew of new emails and billing records which have emerged which suggest Juneau was acting against BP in connection with cases for private clients.
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Rio Tinto is set to take a USD2.5 billion writedown on its Oyu Tolgoi mining project in Mongolia, The Times reported. Construction of the USD5 billion project has fallen into trouble due to a tax dispute with the local government, the newspaper added. Rio Tinto flagged in its half-year results in August that it could have to write down the value of the project should the delays persist, but Turquoise Hill, the Rio Tinto-controlled company that owns the majority of the project, has said the delays have contributed to a USD2.5 billion reduction in the value of the scheme.
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Elementis said it expects to meet market expectations for its full year earnings as it said it performed resiliently in the third quarter. The FTSE 250 specialty chemicals company said it remains confident it will perform well in its core markets over the year and expects full-year earnings per share to be in line with market expectations. The group said Specialty Products sales were up 6% in the third quarter to the end of September, with sales in its coatings, personal care and oil and gas drilling divisions all rising by that percentage.
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Regus shares jumped higher after the service office company said it produced a strong financial performance in the third quarter, with underlying revenue increasing, though held back by sterling strength, and analysts suggesting Regus was achieving growth on a lower-than-expected capital expenditure. The group said revenue in the third quarter to the end of September was GBP413.6 million, up from GBP386.6 million a year earlier, a 7% rise on a reported basis. On a constant currency basis, Regus said revenue rose 13.5%.
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AIM Movers: TXO is up 10% after the investment company said Empire Energy Inc, in which TXO owns a 25% stake, has won its case against Smart Win in the US. TXO said a New York judge denied the motion by Smart Win for a summary judgement in the case against Empire Energy. Range Resources is up 8.4%. The oil and gas explorer said that revenue in the quarter ended September 30 increased by 11% from the previous quarter to USD5.2 million from USD4.7 million, as average oil production in Trinidad increased by 7% on the previous quarter. ULS Technology shares are off 22%. The UK conveyancing and financial intermediary online platform provider said its full-year operating profit will still be below expectations, despite an improvement year-on-year, as it said it expects its first half to be in line. ULS said improved margins should mean the impact of market conditions on its results is less pronounced, but said underlying profit for the year is still expected to fall below expectations, despite year-on-year growth. The company said it has been hit by the impact of the UK's Mortgage Market Review and lower in-take volumes from key partners.
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Top Economics And General
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US PERSONAL INCOME INCHES UP 0.2% IN SEPTEMBER, PERSONAL SPENDING DIPS 0.2%
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The Bank of Japan expanded its massive quantitative easing unexpectedly as policymakers assessed it necessary to achieve the 2% inflation target even after a sales tax hike in April. In a 5-4 vote, the Policy Board led by Governor Haruhiko Kuroda decided to raise the monetary base at an annual pace of about JPY80 trillion. The earlier plan was to increase it by about JPY60-70 trillion.
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Consumer prices in Japan added 3.2% on year in September, the Ministry of Internal Affairs and Communications said - below expectations for 3.3%, which would have been unchanged from the August reading. Core consumer prices gained 3.0% - matching forecasts and down from 3.1% in the previous month.
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The unemployment rate in Japan came in at 3.6% in September, the Ministry of Internal Affairs and Communications said - in line with expectations and up from 3.5% in August.
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Consumer confidence in the UK fell slightly in October, research firm GfK revealed with an index score of -2. That's down from -1 in September, and represents a three-month low. A negative score means that pessimists outnumber optimists. The index was dragged lower by weakness among the sub-indexes for 12-month economic outlook and major purchases.
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Eurozone inflation rose slightly in October as expected by economists, flash data from Eurostat showed. Inflation rose to 0.4% in October from 0.3% in September. It has been below the 2% ceiling since February 2013. Core inflation, which excludes energy, food, alcohol and tobacco, slowed to 0.7% from 0.8% a month ago. It was forecast to remain unchanged at 0.8% in October.
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The euro area jobless rate remained stable at 11.5% in September, Eurostat reported Friday. The rate came in line with expectations. Compared with August, the number of persons unemployed decreased by 19,000 in September. On a yearly basis, unemployment plunged 826,000.
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German retail sales declined at the fastest pace since May 2007 in September, data from Destatis showed. Retail sales were down 3.2% in September from August, while economists forecast a 0.9% drop. This was the biggest monthly fall since May 2007. The increase for August was revised down to 1.5%. On a yearly basis, retail sales gained 2.3% in September, faster than the 1.2% rise forecast by economists.
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Russia has agreed to resume gas supplies to Ukraine under a USD4.6 billion dollar winter package, which will also secure gas for the EU as the cold season approaches. The EU has been mediating discussions to help find a sustainable solution to the dispute between Russia and Ukraine over gas pricing, supply and payment dues. After seven rounds of negotiations in recent months, the major breakthrough came about at Thursday night's talks moderated by European Commissioner for Energy, Günther H. Oettinger, in Brussels.
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The US military has deployed about one-quarter of the 4,000 troops it said it would send to West Africa to fight the Ebola epidemic there, Secretary of Defence Chuck Hagel said Thursday. About 1,100 US military personnel have been sent to the region thus far, Hagel said at a Pentagon briefing.
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The first group of Iraqi Kurdish Peshmerga troops entered the besieged Syrian border town of Kobane on Thursday for a short reconnaissance visit before returning to Turkish territory, a local official told dpa. "The group, which included commanders, entered this morning, held talks with the leaders of the People's Protection Units, studied the geography of the area of Kobane and then left to prepare the movement of their troops," said Ismet Hassan, the Syrian Kurdish defence chief in Kobane.
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Afternoon Watchlist (all times in GMT)
14:45 US Chicago Purchasing Managers' Index
14:55 US Reuters/Michigan Consumer Sentiment Index
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Monday's Key UK Corporate Events
HSBC Holdings - Interim Management Statement
Telecity Group - Interim Management Statement
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Monday's Key Economic Events (all times in GMT)
holidays Japan and Russia
01:00 China Non-manufacturing PMI
01:45 China HSBC Manufacturing PMI
05:00 Russia HSBC Manufacturing PMI
08:30 Switzerland SVME - Purchasing Managers' Index
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
14:30 US Fed's Evans Speech
14:30 Canada RBC Manufacturing PMI
14:45 US Markit Manufacturing PMI
15:00 US Construction Spending (MoM)
15:00 US ISM Manufacturing PMI and Prices Paid
17:40 US Fed's Richard Fisher's speech
17:50 Canada BoC Governor Poloz Speech
n/a US Total Vehicle Sales
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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