(Alliance News) - Luxury goods retailer Burberry on Wednesday said it delivered "another good quarter" with comparable store sales up as it raised its full-year revenue outlook.
Retail revenue grew 1% at actual exchange rates and 2% at constant currency in the quarter to December 31 to GBP719 million. Comparable store sales were up 3%, ahead of the growth rate of 1% reported for the same period a year ago.
Growth was led by full price sales, partially offset by lower levels of markdown inventory available for sale and continued disruptions in Hong Kong.
Among regions, Asia Pacific grew by a "low single digit percentage", driven by mainland China which was up mid-teens, whilst sales in Hong Kong halved. The Americas were "stable", while sales in Europe, Middle East, India & Africa were supported by tourist spend.
For the 2020 financial year as a whole, Burberry expects total revenue to grow by a low single digit percentage at constant currency, compared to previous guidance of "broadly stable". Adjusted operating margin is expected to remain broadly stable due to disruption in Hong Kong.
The stock was down 2.1% in early trade Wednesday.
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: up 0.2% at 7,625.26
----------
Hang Seng: up 1.3% at 28,351.14
Nikkei 225: closed up 0.7% at 24,031.35
DJIA: closed down 152.06 points, 0.5%, at 29,196.04
S&P 500: closed down 0.3% at 3,320.79
----------
GBP: firm at USD1.3053 (USD1.3045)
EUR: down at USD1.1081 (USD1.1096)
Gold: down at USD1,554.58 per ounce (USD1,557.30)
Oil (Brent): down at USD64.22 a barrel (USD64.72)
(changes since previous London equities close)
----------
ECONOMICS AND GENERAL
----------
Wednesday's Key Economic Events still to come
Switzerland - World Economic Forum Annual Meeting continues in Davos.
0930 GMT UK public sector finances
1100 GMT UK CBI industrial trends survey
1100 GMT Ireland wholesale price index
0700 EST US MBA weekly mortgage applications survey
1000 EST US existing home sales
1630 EST US API weekly statistical bulletin
----------
UK MPs will consider amendments to the prime minister's Brexit deal after the government was defeated five times by defiant peers. The House of Lords backed two more amendments to the EU Withdrawal Agreement Bill in a mauling for ministers on Tuesday. It followed three defeats on Monday on the rights of EU workers legally residing in the UK to have physical proof of their right to remain and the power of courts to depart from European Court of Justice rulings. In the latest reverses, the government was heavily defeated as peers backed a move to ensure the rights of unaccompanied child refugees to be reunited with their families in the UK post-Brexit.
----------
The Chinese city at the centre of a SARS-like virus outbreak has urged people to stay away, cancelling a major Lunar New Year event, as it strives to contain a disease that has spread across the country. The death toll from the virus, which first emerged in the central city of Wuhan, has reached nine while more than 400 people have now been infected in 13 provinces and municipalities. The disease is spreading just as hundreds of millions of people are travelling in packed trains, planes and buses across China to gather with friends and family for the Lunar New Year holiday, which starts on Friday.
----------
BROKER RATING CHANGES
----------
BERENBERG CUTS UNILEVER TO 'HOLD' (BUY) - PRICE TARGET 4750 (5350) PENCE
----------
COMPANIES - FTSE 100
----------
UK housebuilder Berkeley said it plans to increase its shareholder returns by GBP455 million over the next two years. Under its existing programme, a return of GBP125 million was due to be made by March 31, 2020 and GBP280 million was planned for each of the following financial years. However, the company now plans to return GBP500 million by means of a B share scheme in March 2020 and a further GBP500 million to shareholders in March 2021. Following this, the company intends to revert to making annual returns of GBP280 million in six-monthly instalments of GBP140 million through either share buybacks or dividends up to and including September 30, 2025. Berkeley said it came to this decision in light of the progress made in bringing forward its new building sites, its assessment of the prevailing operating environment, and a review of its net cash position and future requirements.
----------
Accounting software firm Sage Group said total organic revenue rose 6.7% to GBP465 million in the first quarter of its financial year, which was the three months to December 31. Recurring revenue was up 11% - underpinned by software subscription growth of 25% - while Other Revenue, SSRS and processing, was down 16%. The fall in Other Revenue reflected Sage's "managed decline" in licence sales and the de-prioritisation of professional services revenue as the business continues to focus on subscriptions.
----------
Antofagasta reported a "good" 2019 despite problems such as drought and social unrest in Chile. The copper miner achieved fourth-quarter copper production of 185,500 tonnes, which it said is "only" 5.8% lower than the previous quarter. The decline was due to planned lower grades and maintenance at the Centinela mine, as well as a strike at Antucoya and fuel delivery disruption at Los Pelambres due to social unrest in Chile. Antofagasta's 2019 production of copper was 770,000 tonnes, a record for the company and at the top end of guidance. This was 6.2% higher than 2018 due to increased output at Los Pelambres, Centinela, and Zaldivar.
----------
Hundreds more management jobs are being cut at J Sainsbury in the latest overhaul following its takeover of the Argos catalogue retail chain. The supermarket giant confirmed plans to further integrate the head office functions for both Sainsbury's and Argos across departments including commercial, retail, finance, digital, technology and human resources. It declined to reveal the total number of further roles that will be cut, but said it would be in the "hundreds".
----------
Melrose Industries is mulling the sale of a part of Nortek, the Financial Times reported, citing "two people with knowledge of the matter". Melrose is exploring the disposal of US domestic heating and air conditioning manufacturer Nortek's Global HVAC and air quality and home solutions businesses. A sale would bring in over USD3 billion, according to the newspaper. The FT said "chunky corporate buyers", such as US industrial firm United Technologies and Ireland-based Johnson Controls International, are considering bids.
----------
European Commission competition authorities could give the green light to the acquisition of Refinitv by London Stock Exchange Group by the summer, Raffaele Jerusalmi, an LSEG board member and chief executive of Borsa Italiana, said. "It is a process that is underway, and if it has not been done, it will be shortly. I believe the time for the first authorities assessments will be roughly around the summer," he added during an event in Milan, according to Reuters. Jerusalmi said LSEG has no plan to sell the Milan stock exchange following the acquisition of Refinitiv. "For now, absolutely not, because it is considered a strategic asset, so there is no will to deprive itself of Borsa Italiana," he said.
----------
COMPANIES - FTSE 250
----------
WH Smith said it delivered a "good performance" in the first 20 weeks of its financial year, with Travel revenue up strongly. Total revenue was up 7% in the 20 weeks to January 18 while like-for-like revenue was down 1%. The company's performance was boosted by its Travel arm, which posted a 19% increase in revenue and a 3% rise in like-for-like sales. Excluding the magazine and stationery retailer's acquisitions of InMotion and Marshall Retail Group, total Travel sales were up 5%. Operations in WH Smith's high street side of the business lagged, with revenue down 5% and like-for-like sales also slipping 5%. The gross margin was, however, ahead of plan and WH Smith said it has identified GBP3 million of additional cost savings. "Looking ahead, we are on track for the current year and as we continue to grow our share of the global travel retail market, the group is well positioned for the years ahead," said Chief Executive Carl Cowling.
----------
JD Wetherspoon said sales grew strongly in the second quarter of its financial year as it backed its annual guidance. For the 12 weeks to January 19, like-for-like sales were up 4.7% and total sales increased 4.2%. In the year-to-date, like-for-like sales were up 5.0% and total sales by 4.9%. "We continue to anticipate a trading outcome for this financial year in line with our previous expectations," said Chair Tim Martin.
----------
COMPANIES - OTHER MAIN MARKET AND AIM
----------
Upmarket clothing retailer Ted Baker said a review has concluded that the value of inventory held on its balance sheet was overstated by more than first thought. Ted Baker said a review by Deloitte has now concluded, and the London-listed firm expects to report that the value of inventory held on its balance sheet at January 26 was overstated by GBP58 million. This is "materially higher", it admitted, than the preliminary assessment of GBP20 million to GBP25 million made in early December. "As previously stated, the overstatement is a non-cash item and related to prior years," Ted Baker said.
----------
COMPANIES - INTERNATIONAL
----------
Netflix said it added millions of new subscribers globally over the past quarter as it ramped up for a tougher competitive landscape, but scaled back its outlook for early 2020. The global streaming television giant largely beat expectations with a profit of USD587 million in the fourth quarter as revenue rose 31% from a year ago to USD5.5 billion. Netflix added a better-than-expected 8.8 million subscribers worldwide to hit 167 million, but growth in North America was below forecasts with 550,000 new members, including 420,000 in the US.
----------
IBM reported a rise in income in the final quarter of 2019 on the back of a sharp rise in cloud software revenue. In the three months to December 31, International Business Machines recorded net income of USD3.67 billion, almost double the USD1.95 billion recorded in the same period the year before. Revenue in the final quarter was flat year-on-year at USD21.78 billion from USD21.67 billion.
----------
Naspers said it has raised EUR1.5 billion from selling 1.4% of its holding in Prosus. Amsterdam-listed Prosus, which was spun off from South African media & internet firm Naspers, recently lost out in a battle to acquire UK-listed takeaway platform Just Eat. The placing will increase Prosus's free-float to almost 28% from 26% with Naspers expected to hold just shy of 73% of Prosus shares after the completion of the placing.
----------
State prosecutors in Brazil charged the ex-boss of mining giant Vale and 15 others with intentional homicide in a massive dam collapse that killed 270 people last year. The January 25 tailings dam rupture in the mineral-rich southeastern state of Minas Gerais spewed millions of tons of mining waste over houses and farmland in the country's worst industrial accident. Former Vale president Fabio Schvartsman is among 16 individuals charged with intentional homicide and environmental offenses, prosecutors said in a news conference. Vale and TUV SUD, which had certified the dam's stability, have been accused of environmental crimes. The other charged 15 people are current or former employees of the two companies. If convicted of intentional homicide, they could face a maximum jail sentence of 30 years, prosecutors said. It was the second such disaster in three years involving Brazilian mining giant Vale – one of the biggest mining companies in the world. The failure of a tailings dam in Mariana district – owned by a joint venture between Vale and the Anglo-Australian miner BHP Group – in 2015 killed 19 people and flooded 39 towns in Brazil's worst environmental disaster.
----------
Wednesday's Shareholder Meetings
AJ Bell
Topps Tiles
WH Smith
Majedie Investments
Edinburgh Worldwide Investment Trust
----------
By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
Burberry (BRBY)
Unilever (ULVR)
