(Alliance News) - Fashion seller boohoo on Wednesday reported "very strong" first quarter trading despite the Covid-19 pandemic, as it also announced buying the online businesses of failed retailers Oasis and Warehouse.
Revenue was up 45% in the three months to May 31 at GBP367.8 million, with UK revenue up 30% at GBP183.0 million and sales in the rest of Europe surging 66% to GBP63.4 million. US sales rose 79% to GBP92.0 million, and Rest of World sales grew 22% to GBP29.4 million.
"The group entered the year with sustained momentum from a strong finish to its previous financial year. Trading in the middle of March through to early April was mixed, as a result of the impact of the Covid-19 pandemic, initially with a marked decrease in year-on-year growth. Performance across all of our brands and geographies improved throughout April, with a robust performance delivered in May," the online clothing retailer said.
Looking out, boohoo expects to deliver another year of "strong profitable growth", and ahead of market expectations. Revenue growth is expected at 25% for the current financial year, with an adjusted Ebitda margin of 9.5% to 10%.
Alongside the trading update, boohoo announced the acquisition of the online businesses and all associated intellectual property of Oasis and Warehouse for GBP5.3 million in cash from Hilco Capital.
Administrators were called in for the two brands back in April. Deloitte at the time said that all stores would close indefinitely and online sales would be stopped.
Boohoo shares were up 9.4% early Wednesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.4% at 6,267.17
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Hang Seng: up 0.3% at 24,410.35
Nikkei 225: down 0.6% at 22,455.76
DJIA: closed up 526.82 points, 2.0%, at 26,289.98
S&P 500: closed up 1.9% at 3,124.74
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GBP: down at USD1.2574 (USD1.2588)
EUR: up at USD1.1283 (USD1.1261)
Gold: firm at USD1,728.43 per ounce (USD1,727.20)
Oil (Brent): up at USD40.67 a barrel (USD40.22)
(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
1100 CEST EU harmonised consumer price index
1100 CEST EU construction output
0700 EDT US MBA weekly mortgage applications survey
0830 EDT US housing starts and building permits
1030 EDT US EIA weekly petroleum status report
1200 EDT US Fed Chair Powell presents Monetary Policy Report to Senate committee
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UK inflation softened further in May, figures from the Office for National Statistics showed, amid ongoing pressure on fuel prices. The annual inflation rate eased to just 0.5% in May from 0.8% in April - having started the year with a rate of 1.8% in January. Prices for clothing & footwear slumped 3.1%, while food prices were up 1.6%. "The growth in consumer prices again slowed to the lowest annual rate in four years," said Jonathan Athow, deputy national statistician for Economic Statistics at the ONS. A separate ONS release showed producer prices continued to decline in the UK. Output prices fell 1.4% year-on-year in May, double the rate of April's 0.7% decline. Input prices slumped 10.0%, though this was a marginal improvement from a 10.2% fall in April.
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Trade deals with Australia and New Zealand will enable Britain to "make good on the promise of Brexit", the UK international trade secretary has said, PA reports. Publishing the UK's negotiating objectives, Liz Truss said pivoting towards the Asia-Pacific region would diversify trade and increase the resilience of UK supply chains. The UK government hopes trade agreements with Australia and New Zealand will aid the coronavirus recovery by opening up new markets for businesses and creating jobs. Its analysis suggests the value of UK exports to the two countries could increase by GBP1 billion as a result of trade deals. Drinks companies, the automotive industry and professional services firms – as well as small and medium-sized businesses – are expected to benefit from a trade deal. The agreements are also set to include chapters on digital trade. Britain is seeking to sign trade deals which can come into force after December 31, when the Brexit transition period ends. Talks with the EU, US and Japan are ongoing.
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The EU suffered another severe plunge in demand for new passenger vehicles in May, albeit the annual fall was not quite as bad as in April, the European Automobile Manufacturers Association reported. Passenger car registrations dropped by 52% in May from a year before, despite the gradual easing of Covid-19 induced lockdown restrictions, as double-digit declines were seen in each of the 27 EU markets in the month. The 52% annual drop compared to the record 76% fall in April, and also was improved from the 55% decline in March. All major European markets suffered during the month, with Spain down 78%, while France, Germany and Italy all were down 50%.
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Beijing's state media played down a deadly border confrontation between Chinese and Indian troops and did not reveal casualties on its side even as social media users urged retaliation. The Indian army said Tuesday that 20 of its soldiers were killed in a "violent face-off" along the Himalayan frontier on Monday, which resulted in "casualties on both sides". China's defence ministry confirmed late Tuesday that there had been casualties, without giving a number, while state media stayed relatively quiet on the skirmish, the most violent in years. Brawls erupt regularly between soldiers from the world's two most populous nations across their disputed 3,500-kilometre border – but none had proved fatal since 1975. The Chinese nationalist tabloid Global Times reported the number of deaths on the Indian side, but said China had not released information about casualties.
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BROKER RATING CHANGES
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GOLDMAN SACHS RAISES WPP TO 'BUY' (NEUTRAL) - PRICE TARGET 800 (680) PENCE
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COMPANIES - FTSE 100
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Housebuilder Berkeley Group said a sharp slump in annual profit was as expected. Revenue for the financial year to April 30 was down 35% to GBP1.92 billion, with pretax profit also down 35%, at GPB503.7 million. This came from the sale of 2,723 homes - down from 3,698 the year before - at an average selling price of GBP677,000, again down from GBP748,000 the prior year. The company said it is maintaining a pretax return on equity target of at least 15% for the period stretching May 1 to April 30, 2025, which equates to annual pretax profit of GBP500 million for the six-year period.
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Electricity utility SSE reported a fall in full-year profit on exceptional charges, though it continues to target delivery of its five-year dividend plan. Revenue for the year to March 31 slipped 6.8% to GBP6.80 billion from GBP7.30 billion, with pretax profit halving to GBP587.6 million from GBP1.30 billion. "Reported results for the year to 31 March 2020 were significantly lower than the previous year, reflecting pre-tax exceptional charges of GBP738.7 million recognised during the year; both in relation to the reshaping of SSE (with the sale of SSE Energy Services and the closure of Fiddler's Ferry coal fired power station) and a deterioration in market conditions," SSE explained. SSE recommended a full-year dividend of 80 pence, down 18% from 97.5p the year before. Looking forward, SSE continues to target delivery of its five-year dividend plan.
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BHP Group said it has appointed David Lamont, chief financial officer at CSL since 2016, to be its own CFO. Lamont's appointment is effective December 1, and he will join the Anglo-Australian mining firm's executive leadership team. Before joining ASX-listed biotechnology company CSL, Lamont was CFO and an executive director at MMG from 2010. At BHP, Lamont held senior roles between 2001 and 2006, including as CFO of its Carbon Steel Materials and Energy Coal businesses. BHP's current finance chief, Peter Beaven, will stay on in the role until the end of November and will then support Lamont with the handover into early 2021, following which he will depart BHP "to pursue his own personal ambitions".
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COMPANIES - FTSE 250
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Retailer Kingfisher reported a slump in profit for its recently ended financial year, and a fall in sales in the first quarter of its new year due to Covid-19, though trends have improved in more recent weeks. Sales in the year ended January 31 were down 1.5% at GBP11.5 billion, falling 1.5% on a like-for-like basis as well. Pretax profit slumped 66% to GBP103 million after GBP441 million of exceptional items, largely reflecting store and Russia impairments. Turning to recent trading, the B&Q owner said first quarter like-for-like sales were down 25% even though trading up to March 14 continued the "positive trends" seen in the fourth quarter of the recently ended year. However, second quarter like-for-like sales to date were up 22% amid strong e-commerce growth and the phased reopening of stores. "We ended FY19-20 in better shape, after a disappointing first nine months, by returning the group to positive like-for-like sales growth in Q4 as well as for the start of FY 20/21," said Chief Executive Thierry Garnier, who joined the business in late September.
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Wednesday's Shareholder Meetings
Amigo Holdings (re board removal)
RTC Group
Wentworth Resources
STM Group
Salt Lake Potash
Domino's Pizza Group
Pelatro
UK Oil & Gas
G4S
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
WPP (WPP)
Boohoo (BOO)
