(Alliance News) - Online remains the place to be during the drawn out virus pandemic, with publisher Pearson citing online eduction as a lonely bright spot of 2020, while Just Eat Takeaway.com continued to profit at the expense of the sit-down dining experience.
However, online clothing retailer ASOS struck a note of caution, worrying about the damage being done by lockdowns to the spending power of its young target audience.
ASOS said Wednesday it delivered a strong annual performance despite the significant challenges presented by Covid-19.
For the financial year ended August 31, pretax profit was GBP142.1 million, quadrupling from GBP33.1 million in financial 2019, while revenue rose to GBP3.26 billion from GBP2.73 billion last year.
The retailer said it had an active customer base, up 3.1 million to 23.4 million customers which demonstrated momentum in customer acquisition and high levels of engagement.
In addition, ASOS said it made a solid start to the new financial year and expects to deliver continued improvement in underlying profit.
However, ASOS was cautious on the outlook for consumer demand and noted economic prospects and lifestyles of 20-somethings "remain disrupted" due to the pandemic.
"It is clear that a normal pattern of social events is not going to resume in the short term, so whilst we have confidence in our ability to continue growing our market share globally, we are cognisant of the economic impact this crisis is having on our 20-something customers and the pressure on their disposable incomes," said Chief Executive Officer Nick Beighton.
ASOS shares were down 4.5% early Wednesday, though remain up more than 50% so far in 2020.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.3% at 5,984.74
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Hang Seng: down 0.1% at 24,628.37
Nikkei 225: closed up 0.1% at 23,626.73
DJIA: closed down 157.71 points, 0.6%, at 28,679.81
S&P 500: closed down 0.6% at 3,511.93
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GBP: down at USD1.2909 (USD1.2978)
EUR: flat at USD1.1743 (USD1.1741)
Gold: up at USD1,897.21 per ounce (USD1,890.88)
Oil (Brent): steady at USD42.23 a barrel (USD42.30)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
1000 CEST France IEA oil market report
1100 CEST EU industrial production
0700 EDT US MBA weekly mortgage applications survey
0830 EDT US producer price index
1630 EDT US API weekly statistical bulletin
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A "circuit-breaker" lockdown could save thousands of lives by the end of the year, scientists advising the government have calculated, as pressure mounts on UK Prime Minister Boris Johnson to impose stricter restrictions. As the three-tier Covid alert level system comes into force across England, Johnson is facing calls to go further by introducing a fortnight of nationwide curbs to bring the coronavirus resurgence under control, PA reports. Downing Street is understood to be keeping the idea on the table, after Labour leader Keir Starmer said a two to three-week national lockdown over the October half term was needed to prevent a "sleepwalk into a long and bleak winter". A paper by members of the Scientific Advisory Group for Emergencies reportedly calculates that more than 7,000 lives could be saved if schools are closed and people are ordered to stay at home from October 24 for two weeks.
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UK PM Johnson will speak to the president of the European Commission on Wednesday afternoon as his deadline for progress in post-Brexit trade talks draws near. Johnson is expected to discuss progress in the negotiations with Ursula von der Leyen ahead of Thursday's summit of EU leaders. Johnson wants to know if a trade deal is possible by Thursday, when the leaders of the 27 EU countries meet in Brussels. He told Cabinet ministers on Tuesday that he still believes an agreement can be reached – but that failing to do so should hold "no fear", his official spokesman said. Michel Barnier, the EU's lead negotiator, has suggested that talks will go beyond Johnson's October deadline.
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Japan's industrial production rose 1.0% in August from July, the Ministry of Economy, Trade & Industry reported, revising down previously reported growth of 1.7% month-on-month. Despite the revision, growth in industrial output in Japan was recorded for a third straight month, with the motor vehicles, steel and electronic parts industries being the main drivers of activity. However, the METI said that compared with the same month last year, production was down 14% - also revised from 13% down reported before - on a deterioration in output from the production machinery, electrical machinery and paper industries.
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BROKER RATING CHANGES
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HSBC RAISES STANDARD LIFE ABERDEEN TO 'BUY' ('HOLD') - TARGET 300 (315) PENCE
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HSBC CUTS FIRSTGROUP TO 'HOLD' ('BUY') - TARGET 60 (80) PENCE
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HSBC RAISES STAGECOACH TO 'BUY' ('HOLD') - TARGET 60 (125) PENCE
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COMPANIES - FTSE 100
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Pearson said it saw an improving trend in the third quarter with a strong performance in Global Online Learning. The company's North American Courseware and Global Assessment units were in line with expectations, while its International business was hurt further by the Covid-19 pandemic. For the nine months to September 30, group sales were down 14% which Pearson attributed to the coronavirus crisis and test centre and school closures in Global Assessment and International, alongside expected declines in North American Courseware. Global Assessment sales declined 19% following test centre closures in Professional Certification, cancellation of spring testing in US Student Assessment and school closures impacting Clinical Assessment. The North American Courseware unit's sales declined 14% with a stronger adoption performance in the autumn in US Higher Education Courseware and good growth in digital and subscription take up, leading to the faster decline of higher-priced package and print sales. The International unit's sales declined 24% due to Covid-19. Looking ahead, it said: "After nine months Pearson is on track to deliver an outturn broadly in line with market expectations. However, because of the pandemic, larger than usual uncertainties surround the fourth quarter, particularly in International."
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Just Eat Takeaway.com said order growth accelerated in the third quarter, leading to a widening gap to competition in key countries, including the UK and Canada. The online food ordering platform said 46% more orders were placed in the third quarter than a year earlier, due to strong demand in online orders as a result of coronavirus social distancing measures in restaurants. Order growth accelerated from an increase of 32% in the first half of 2020, with orders in the third quarter up 47% in Germany on a year before, 98% in Canada and 43% in the UK. The company said it continued to enhance its restaurant selection, driven by several new partnerships, including the roll-out of approximately 800 McDonald's restaurants and 300 Greggs locations in the UK. "Order growth at Just Eat Takeaway.com further accelerated, consequently widening the gap to competitors in our key markets. We have continued to generate strong adjusted [earnings before interest, tax, depreciation and amortisation], while investing aggressively, and are well-positioned for autumn and winter, our traditional growth season," said Chief Executive Jitse Groen.
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COMPANIES - GLOBAL
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Nestle said it has completed the acquisition of Aimmune Therapeutics. In August, the Swiss nutrition company agreed to buy the three quarters of Aimmune that it didn't already own in an all-cash deal that valued Nasdaq-listed Aimmune at USD2.6 billion. At the time, Nestle Health Science already had USD473 million invested in Aimmune, having first invested in 2016. In September, Nestle said its investment vehicle SPN Merger Sub Inc had commenced a cash tender offer to purchase all of the outstanding shares of Aimmune for USD34.50 per share. On Tuesday, the company stated about 43.4 million Aimmune shares - around 84% of the company's shares - were validly tendered in the offer, which expired on Friday last week.
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ASML Holdings reported growth in revenue and earnings for its third quarter as it confirmed its outlook for the full year. The Netherlands-based photolithography systems supplier said net sales rose to EUR3.96 billion from EUR3.32 billion recorded in the second quarter, also outperforming the EUR2.99 billion recorded for the third quarter of 2019. Net income was also up at EUR1.06 billion from EUR751 million the quarter before and EUR627 million a year prior.
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Wednesday's Shareholder Meetings
Barratt Developments
Diverse Income Trust
Edinburgh Worldwide Investment Trust - GM re approval to renew authority to allot shares
Primorus Investments
Tlou Energy
Watches of Switzerland Group
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
