LONDON BRIEFING: Founder Mike Ashley to step back at retailer Frasers

(Alliance News) - Frasers Group on Thursday confirmed its founder, Mike Ashley, will be stepping aside as chief executive to an executive director role, paving the way for future son-in-law Michael Murray to become the company's new boss.

The House of Fraser and Sports Direct store chain owner said it is discussing transitioning the CEO role from Ashley to Murray over the course of the 2022 financial year. It is currently proposed that Murray will assume the role on May 1 next year and that Ashley would step down as CEO but remain on the board as an executive director.

Murray is currently Frasers's "head of elevation", meaning upgrading stores.

"The group's elevation strategy is transforming the business and receiving positive feedback from consumers and our brand partners, especially on projects such as the new Oxford Street Sports Direct which opened in June 2021," Frasers said, adding: "The board consider it appropriate that Michael leads us forward on this increasingly successful elevation journey."

The plan was first reported by the Telegraph newspaper on Tuesday.

Ashley founded the Shirebrook, Derbyshire-based company in 1982 and still owns 64% of it. He had been executive deputy chair until taking back over as CEO in 2016.

Also on Thursday, Frasers reported a huge drop in full-year profit, down to GBP8.5 million in the 52 weeks to April 25 from GBP143.5 million the year before. This was on revenue that fell 8.4% to GBP3.63 billion.

"We are a resilient business, but the Covid-19 pandemic has resulted in some significant non-cash accounting impairments to our asset base," Frasers explained.

Frasers shares were down 1.1% early Thursday.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: down 0.1% at 7,118.94

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Hang Seng: down 0.9% at 26,201.29

Nikkei 225: closed up 0.5% at 27,728.12

DJIA: closed down 323.73 points, or 0.9%, at 34,792.67

S&P 500: closed down 20.49 points, or 0.5%, at 4,402.66

Nasdaq Composite: closed up 19.24 points, or 0.1%, at 14,780.53

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EUR: flat at USD1.1836 (USD1.1835)

GBP: down at USD1.3889 (USD1.3905)

USD: firm at JPY109.69 (JPY109.65)

Gold: up at USD1,809.92 per ounce (USD1,808.00)

Oil (Brent): down at USD70.13 a barrel (USD71.22)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Thursday's Key Economic Events still to come

0900 BST UK SMMT vehicle registration figures

0930 BST UK construction purchasing managers' index

1100 BST Ireland monthly unemployment

1200 BST UK BoE interest rate decision and monetary policy report

0830 EDT US international trade in goods & services

0830 EDT US unemployment insurance weekly claims report

1200 EDT US retail chain store sales index

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Ireland's service sector expanded at the fastest pace in over two decades in July, boosted as virus restrictions were lifted. The AIB services business activity index strengthened to 66.6 points in July from 63.1 in June, remaining above the no-change mark of 50.0 for the fifth month in a row. "This is the highest reading since August 2000 and the third month in a row that the index has been above 60. It points to a rapid rebound in services activity, driven by the release of pent-up demand as lockdown restrictions are gradually lifted," said Oliver Mangan, AIB chief economist. New business expanded at the fastest rate since January 2016, while input cost inflation hit a 13-year high. The composite output index grew to 65.0 points in July from 63.4 in June.

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The average cost of motor insurance has fallen to a five-year low in the UK as coronavirus lockdowns have led to fewer claims, according to insurers. Drivers are paying GBP430 on average for comprehensive cover – the lowest figure since the first quarter of 2016 – the Association of British Insurers said. The ABI's tracker looks at the price people pay for cover rather than the price they are quoted. The GBP430 average recorded in the second quarter of this year is GBP6 lower than the previous quarter and GBP30, or 7%, lower than the same quarter in 2020. The average premium has fallen by GBP38 since the fourth quarter of last year. The fall in part reflects insurers passing on cost savings from fewer claims during lockdowns, with fewer vehicles on the roads, the ABI said.

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BROKER RATING CHANGES

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GOLDMAN SACHS CUTS NATWEST TO 'BUY' (CONVICTION BUY LIST) - PRICE TARGET 305 (320) PENCE

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GOLDMAN CUTS BARCLAYS PRICE TARGET TO 270 (280) PENCE - 'BUY'

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GOLDMAN CUTS LLOYDS BANKING TO 'SELL' (NEUTRAL) - PRICE TARGET 45 (50) PENCE

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JPMORGAN CUTS BAE SYSTEMS TO 'NEUTRAL' (OVERWEIGHT) - PRICE TARGET 645 (605) PENCE

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COMPANIES - FTSE 100

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Ad agency WPP hailed a return to pre-virus trading levels a year ahead of plan. Revenue for the first half of 2021 rose 9.8% to GBP6.13 billion, while WPP swung to a pretax profit of GBP394 million from a loss of GBP3.18 billion a year ago. Revenue less pass-through costs rose 16% on a like-for-like basis, and the firm noted the second-quarter growth of 19% was its highest on record. "We have returned to 2019 levels in 2021, a year ahead of our plan, with good momentum into 2022," said Chief Executive Mark Read. Full-year like-for-like revenue less pass-through costs growth is now expected to be around 9% to 10%, returning to 2019 levels a year ahead of plan. WPP declared an interim dividend of 12.5 pence, up 25% from 10p a year ago. It added that it has GBP350 million in share buybacks planned for the second half after GBP248 million was completed in the first.

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Jet engine maker Rolls-Royce Holdings unveiled a swing back to profit and said it is on track to turn free cash flow positive in the second half after a "good" start to the year. Revenue for the first half of 2021 fell to GBP5.16 billion from GBP5.67 billion a year ago, but the jet engine maker swung to a pretax profit of GBP114 million from a loss of GBP5.21 billion. Rolls-Royce reported negative free cash flow of GBP1.15 billion for the period, an improvement on the outflow of GBP2.80 billion recorded a year ago. It is targeting turning free cash flow positive during the second half 2021, and aims to improve the full-year figure to negative GBP2.0 billion from negative GBP4.2 billion in 2020. "This leaner cost base together with a strong liquidity position gives us confidence in our ability to withstand uncertainties around the pace of recovery in international travel and benefit from the eventual rebound," said Chief Executive Warren East.

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COMPANIES - FTSE 250

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Egyptian gold miner reported a sharp drop in half-year pretax profit, down 39% to USD116.8 million from USD192.5 million. Revenue fell 18% to USD367.4 million from USD448.8 million as gold production dropped by 20% to 204,275 ounces from 256,084 ounces. However, Centamin kept its full-year production and cost guidance unchanged. It declared a 4.0 US cents interim dividend per share and said it expects to pay out 5.0 US cents as a final dividend.

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COMPANIES - GLOBAL

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New extradition hearings of the chief financial officer of China's Huawei Technologies kicked off Wednesday in Vancouver, after nearly three years of court battles and diplomatic sparring. Meng Wanzhou, 49, the daughter of Founder & Chief Executive Officer Ren Zhengfei, is fighting extradition to the US. She is accused of defrauding HSBC Bank by falsely misrepresenting links between Huawei and Skycom, a subsidiary that sold telecoms equipment to Iran, putting the bank at risk of violating US sanctions against Tehran as it continued to clear US dollar transactions for Huawei. Meng appeared smiling Wednesday morning as she left her mansion in the western Canadian coastal city, where she has to wear an ankle monitoring bracelet at all times.

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Thursday's Shareholder Meetings

Bushveld Minerals Ltd - AGM

Dekel Agri-Vision PLC - AGM

Distil PLC - AGM

Investec PLC and Ltd - AGM

Naked Wines PLC - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

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