LONDON (Alliance News) - Stocks in London were lower Thursday morning, with Burberry Group the worst performer in the FTSE 100 as it warned of challenges in the year ahead after sales declined in the second half of its recent financial year.
The FTSE 100 was down 0.3%, or 13.89 points, at 6,349.00, after having set a new 2016 high at the close on Wednesday. In Europe, the CAC 40 index in Paris was up 0.1% and the DAX 30 in Frankfurt up 0.3%.
Luxury goods retailer Burberry said total sales in the six months to the end of March slipped to GBP1.41 billion from GBP1.42 billion a year earlier. Underlying constant currency retail revenue was flat year-on-year in the half, while wholesale revenue fell 1.0% and licensing revenue fell in line with its expectations amid reductions to licensing income in Japan.
Like-for-like sales for the second half fell 2.0%, with a deterioration in the fourth quarter when like-for-like sales declined 5.0% year-on-year, having been flat in the third quarter. The group said growth continued in mainland China, Korea and Japan, but Hong Kong and Macau both proved weak in the second half, while sales to travelling customers in Europe declined. Domestic demand in the US also remained uneven in the half, Burberry said.
Shares in Burberry were down 5.6%.
Shares in Persimmon also were down, by 3.1%, despite reporting a strong start to 2016. The housebuilder's private sales rates and average selling prices continuing to rise after the strong growth it reported in 2015, but noted planning delays is "hindering the drive" to boost house volumes.
Persimmon said total forward sales revenue in the first 15 weeks of 2016, including legal completions taken so far this year, are up 8.0% at GBP2.15 billion, compared with GBP2.00 billion in the year earlier period. It said its weekly private sales rate per site is up 6.0% on the year, and it has sold 7,598 homes forward at an average selling price of about GBP220,000, up 5.8% on the year.
Blue-chips going ex-dividend also were weighing on the index, with Standard Life down 2.9%, Intu Properties down 2.4% and Reckitt Benckiser Group down 1.8%.
Unilever was down 0.8%, after it reported a fall in revenue in the first quarter of 2016 in a "volatile" market which it said was harmed by negative foreign exchange rates, slowing volume growth and price deflation. The personal care and household products company said revenue in the first quarter of 2016 slipped by 2.0% to EUR12.5 billion, hit by negative currency movements and slowing volume growth.
Underlying sales, however, grew by 4.7%, while underlying volume was up 2.6%. The group said underlying sales growth was driven by market share gains across all four categories of personal care, foods, home care and refreshment. Emerging markets grew by 8.3% with an increased contribution from volume. Developed markets declined by 0.3% with volume growth offset by widespread price deflation in Europe.
Unilever raised its quarterly dividend by 6% to EUR0.3201.
The FTSE 250 was down 0.1% at 17,023.80 and the AIM All-Share was up 0.2% at 732.58.
Mid-cap film and television producer Entertainment One was the best mid-cap performer, up 11%. The company noted said it has received "no approach", following a report from the Financial Times that ITV is understood to be eyeing a prelimary takeover approach for the film and television producer.
The FT report, citing people familiar with the matter, said ITV has held early talks with Entertainment One, the owner of the Peppa Pig franchise, about a potential deal, though no decision has been taken yet. Shares in ITV were up 0.4%.
Hays was up 5.4%, after the recruiter said its net fee income grew in the third quarter despite a slowdown in activity in the UK & Ireland. Hays said its total net fee income for the third quarter to the end of March grew 5.0% year-on-year and was up 4.0% on a like-for-like, constant currency basis.
Asia Pacific net fee income grew 2.0% year-on-year in the quarter, while Continental Europe & Rest of the World net fee income rose 14%, driven by a strong underlying performance in Germany and despite a negative impact from Easter falling at the end of the quarter.
Department store operator Debenhams was up 3.1%, after it reported growth in profit in the first half of its financial year as it revealed the search for a new chief executive is underway. The company said pretax profit in the 26 weeks ended February 27 grew to GBP93.8 million from GBP88.9 million in the first half of the prior year, as revenue remained broadly flat at GBP1.327 billion from GBP1.325 billion.
The Bank of England interest rate decision and minutes, all due at 1200 BST, are set to see policymakers keep rates at a record low, as uncertainty ahead of the UK's referendum on its European Union membership approaches.
"We expect the BoE to maintain its bank rate at 0.5% and the asset purchase target at GBP375 billion. Importantly, market participants' attention will be on the Monetary Policy Committee comments, which could provide the committee's assessment on the impact of Brexit uncertainty on market-relevant variables (sterling in particular)," said analysts at Societe Generale.
Lloyds Bank economist Jonathan Thomas highlighted that MPC members also will have in mind next month's Inflation Report. Thomas said investors will focus on the minutes of the meeting, also searching "for guidance on how the MPC balances the modestly positive news from the 'hard' domestic data since its March decision, against continuing anxieties about global growth prospects".
Consumer prices data from the Eurozone and from the US are likely to attract market attention as well. The Eurozone CPI is at 1000 BST, while the same US data are at 1330 BST, together with US initial and continuing jobless claims.
"The first increase in gasoline prices since June 2015 will likely boost the [US] March headline CPI by 0.2% (0.242% unrounded), with a decent possibility that the increase could get rounded up to a 0.3% advance," said analysts at Societe Generale.
On a yearly basis, US headline inflation expectations are for a 1.2% increase, up from the 1.0% from February. Core US inflation month-on-month is expected to come in at 0.2%, versus the 0.3% in February, whilst year-on-year, consensus expects an unchanged reading of 2.3%.
In Asia, the Nikkei 225 index in Tokyo closed up 3.0%. Japanese exporters were boosted by a weaker yen against the US dollar. The greenback hit a one-week high of JPY109.54 early Thursday, standing at JPY109.42 ahead of the London open.
The Shanghai Composite index closed up 0.5% and the Hang Seng in Hong Kong is up 0.8%.
Stocks in New York ended higher Wednesday, with the Dow 30 up 1.1%, the S&P 500 up 1.0% and the Nasdaq Composite up 1.6%.
By Daniel Ruiz; danielruiz@alliancenews.com
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