LONDON (Alliance News) - Another rout in Chinese stock markets Thursday turned the FTSE 100 into a sea of red, with Marks & Spencer Group the sole exception despite reporting a fall in sales, as it said Chief Executive Marc Bolland will be replaced this year.
The FTSE 100-retailer said Bolland, who has been at the helm for six years, will retire in April after the close of the group's current financial year. He will be replaced by Steve Rowe, executive director of the company's general merchandise business, covering its clothing and homewares.
The news came as M&S said group sales in the 13 weeks to December 26 fell 0.4% year-on-year, remaining flat at a constant currency basis, as food sales rose 3.7% but general merchandise dropped 5.0%. On a like-for-like basis, food grew 0.4% and general merchandise declined 5.8%.
M&S said general merchandise performed poorly as it continued to prioritise gross margin and held back from the heavy discounting in the run-up to Christmas. The division faced challenging trading conditions and fell short on availability, while unseasonal weather impacted sales across the clothing sector, the retailer added.
M&S was the sole gainer in the FTSE 100 just after the open, trading up 0.7%.
The blue-chip index traded down 2.1% at 5,942.27 points, the FTSE 250 was down 1.8% at 16,743.15 and the AIM All-Share was down 0.9% at 727.67.
European stocks were heading in the same direction, with the CAC 40 in Paris down 2.2% and the DAX 30 in Frankfurt down 2.6%.
The losses followed heavy declines in the Chinese stock market which triggered an automatic "circuit breaker" after just 15 minutes of trading. The Shanghai market was halted for the day after the Shanghai Composite had fallen 7.3%.
The declines came after China's central bank set a weaker reference rate for the yuan exchange rate. The People's Bank of China fixed Thursday's central parity rate of the yuan at 6.5646 per dollar, around 0.50% weaker than Wednesday's reference rate of 6.5314..
Again it was miners and other stocks with links to China which were suffering the heaviest losses in London. Anglo American was down 8.1% and BHP Billiton down 5.2%. Emerging markets-focused asset manager Aberdeen Asset Manager traded down 7.6%. The stock also went ex-dividend, meaning new buyers no longer qualify for the latest dividend payout.
In the FTSE 250, China-focused investment fund Fidelity China Special Situations traded down 5.2%.
Elsewhere in Asia, the Nikkei 225 index in Tokyo ended down 2.3% and the Hang Seng in Hong Kong ended down 3.1%.
Staggeringly low oil prices weighed on oil companies early Thursday. Brent breached its Wednesday low of USD34.11 a barrel, to a make a new 11-year low of USD32.14 early Thursday. US benchmark West Texas Intermediate similarly fell to a multi-year low of USD32.08 a barrel.
BG Group was down 3.7%, Royal Dutch Shell 'A' down 3.7%, and BP down 3.2%.
Poundland Group was the worst midcap performer, down 8.1%. The single-price retailer said it expects its pretax profit for the year to March to be at the lower-end of market expectations, as some of the sluggish trading seen in the first half of its current financial year continued into the third quarter.
The company said total sales in the third quarter, covering the 13 weeks to December 27, rose 29%, with revenue growth coming from its current Poundland stores but with the majority of this attributable to the 99p Stores outlets added to its estate following the acquisition of its rival last year.
In the AIM All-Share, emerging markets-focused mobile media company Mobile Streams saw its shares fall 24% in early trade after its net assets were hit by the drop in the Argentinian peso.
The peso devalued by around 25% in December, due to the lifting of restrictions on the currency by the new Argentine government, which has hit the valuation of Mobile Streams' assets denominated in the currency and which will hit revenue and earnings.
Mobile Streams said most of the impact on its revenue would come in 2016 but said its earnings before interest, taxation, depreciation and amortisation for 2015 will take an GBP800,000 hit from the devaluation.
Recruitment consultancy Penna Consulting was up 9.7% after it said trading continued to improve in the third quarter, leaving it set to beat expectations for the full year.
Penna said its pretax profit for the nine months to the end of December was up 51% year-on-year, as it was boosted by an increased spend per client, improved margins and new contract wins.
Still ahead in the economic calendar, there are a series of releases from the eurozone at 1000 GMT including unemployment, consumer confidence, retail sales and business climate surveys. In the afternoon the European Central Bank releases its monetary policy meeting accounts at 1230 GMT, before US initial and continuing jobless claims at 1330 GMT.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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