LONDON BRIEFING: Primark Sees GBP1 Billion In Lost Sales From Lockdown

(Alliance News) - Christmas trading updates flooded out Thursday. For those allowed to trade, such as supermarket Tesco, sales were good. Much less so for those forced by virus restrictions to close, such as AB Foods' Primark fast-fashion store chain and Whitbread's Premier Inn.

Tesco shares were down 1.8% early Thursday and AB Foods down 1.1%, but Whitbread was up 0.6%.

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

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MARKETS

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FTSE 100: up 0.2% at 6,755.78

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Hang Seng: up 1.0% at 28,508.75

Nikkei 225: closed up 0.9% at 28,698.26

DJIA: closed down 8.22 points at 31,060.47

S&P 500: closed up 0.2% at 3,809.84

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GBP: up at USD1.3650 (USD1.3629)

EUR: soft at USD1.2150 (USD1.2158)

Gold: down at USD1,837.84 per ounce (USD1,857.59)

Oil (Brent): soft at USD56.05 a barrel (USD56.21)

(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

1100 GMT Ireland consumer price index

1000 CET Germany gross domestic product

0830 EST US import & export price indexes

0830 EST US unemployment insurance weekly claims report

1030 EST US EIA weekly natural gas storage report

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High street pharmacies are to begin rolling out Covid vaccines, as the virus death toll across the UK climbed above 100,000, PA reports. Boots and Superdrug branches will be among the six stores across England which will be able to administer the jabs from Thursday while the Government aims to hit its target of vaccinating all people in the four most vulnerable groups by the middle of next month. Andrews Pharmacy in Macclesfield, Cullimore Chemist in Edgware, north London, Woodside Pharmacy in Telford, and Appleton Village pharmacy in Widnes will be in the first group to hand out the injections, alongside Boots in Halifax, and Superdrug in Guildford. Those who are eligible for a vaccine will be contacted and invited to make an appointment through a new national booking service. This gives them the option of having a vaccine at a pharmacy or in a GP-led vaccination centre. UK Prime Minister Boris Johnson told MPs that distribution "will be going to 24/7 as soon as we can" but said supply of doses remains the main barrier.

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BROKER RATING CHANGES

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BERENBERG RAISES LONDON STOCK EXCHANGE PRICE TARGET TO 11,800 (9,510) PENCE - 'BUY'

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GOLDMAN SACHS RAISES ANGLO AMERICAN TO 'BUY' ('NEUTRAL') - TARGET 3,500 (2,400) PENCE

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BERENBERG CUTS FERGUSON TO 'SELL' ('HOLD') - TARGET 7,300 (5,600) PENCE

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BERENBERG STARTS CRH WITH 'HOLD' - PRICE TARGET 36 EUR

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COMPANIES - FTSE 100

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Tesco said a strong UK sales performance was sustained in the third quarter as shoppers splurged on the grocer's 'Finest' food products range over the Christmas holiday period. For the third quarter to November 28, Tesco reported group like-for-like sales growth of 5.7%, while Christmas trading in the six weeks to January 9, like-for-like sales growth was 5.4%. In the UK, like-for-like sales growth was 6.7% for the quarter and 8.1% for the Christmas period. Tesco said UK sales grew across all formats, channels and categories. Online sales growth was particularly marked at over 80%, equating to nearly GBP1 billion extra sales over the 19-week period. Looking ahead, Tesco said guidance for the 2021 financial year is unchanged, and it remains confident that retail operating profit is likely to be at least at the same level as in 2020, excluding the repayment of business rates relief. In financial 2020, Tesco posted retail operating profit of GBP2.81 billion. However, Tesco increased the estimate of its incremental costs of dealing with the Covid-19 pandemic in financial 2021, such as increased staff absence, to GBP810 million from GBP725 million.

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Associated British Foods said that for the 16 weeks ended January 2, revenue was 13% lower than the same period last year, at constant currency. AB Foods said its Retail performance, meaning the Primark clothing store chain, was materially hurt by the increased restrictions on the movement of people and trading activity put in place again by UK and European governments, principally during November and late December, to limit the spread of Covid-19. Primark sales were 30% lower than last year at constant currency and 28% lower at actual exchange rates. The company's estimate for the loss of sales in the periods of closure during these 16 weeks is GBP540 million. While stores were open, AB Foods said trading was strong given the circumstances, with sales down 14% on a like-for-like basis compared to last year. AB Foods said uncertainty about store closure periods in the short term has increased. Making the assumption that all of the stores currently closed remain closed until the financial half year point, on February 27, the loss of sales caused by temporary store closures would reach around GBP1.05 billion. This is up from the previous estimate of GBP650 million, it said.

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Whitbread said its third-quarter performance reflects the damage inflicted by the ongoing Covid-19 government restrictions in the UK and Germany, where it operates hotels. For the third quarter to November 26, total like-for-like sales growth was down 56% and year-to-date was down 70%. Premier Inn UK total sales were 55% down in the third quarter reflecting the ongoing UK government restrictions on the operation of hotels and restaurants, which have forced closures of non-essential businesses. As a result, total UK accommodation sales were down 55% with occupancy at 49%. Whitbread said with the increased restrictions, total UK accommodation sales were down 66% for the 5 weeks to December 31, with occupancy at 31%. Following the updated UK government restrictions announced earlier this month, Whitbread said around two-thirds of hotels remain open, while all restaurants are closed.

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Standard Chartered is looking towards the head of its investment bank, Simon Cooper, to replace Chief Executive Bill Winters, the Financial Times reported Wednesday. The FT said Simon Cooper, who runs StanChart's Corporate, Commercial & Institutional Banking unit, is now the "heir apparent" after the outperformance of his advisory and trading unit last year during the coronavirus pandemic. This has elevated him above the emerging markets-focused lender's other main candidate, Ben Hung, who is regional CEO for Greater China & North Asia, and head of retail banking and wealth management. Informal discussions have been held about naming him as deputy CEO, the newspaper reported. Winters, a former JPMorgan Chase & Co executive who has run Standard Chartered since 2015, will not be stepping down this year, but is nearing the end of his tenure.

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A long-running dispute at a Rolls-Royce Holdings factory has been resolved after workers accepted a deal, PA reports. Members of the Unite union at the Rolls-Royce plant in Barnoldswick, Lancashire, started taking industrial action last November in protest at plans to cut jobs and move work making aeroplane fan blades to Singapore. Unite said the deal, which has been supported overwhelmingly by the workforce, will give the historic site a new lease of life as a core manufacturing facility and make it host to a new centre of excellence. A company spokesman said: "We are pleased to confirm that after many weeks of complex and constructive talks about the future of our facility in Barnoldswick we have agreed a way forward with Unite. "This includes a commitment to the long-term future of the site, delivering on our pledge not to close Barnoldswick, and the development of a training programme on the site to address the changing requirements for skilled engineering capability across the group and associated supply chain."

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COMPANIES - MAIN MARKET AND AIM

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Deliveroo has hired a who's who of investment banks to help prepare for its London Stock Exchange float, which is expected to value the food delivery firm at over GBP5 billion, Sky News reported late Wednesday. Bank of America Merrill Lynch, Citigroup, Jefferies and Numis Securities have been appointed to work on a listing, Sky News reported. JPMorgan Chase & Co and Goldman Sachs also will be involved, Sky News added. The initial public offering, which would be by far London's biggest so far in 2021, is expected to take place in or around April, Sky News added. Citing market sources, Sky News reported that the banks are preparing for Deliveroo to be valued at over GBP5 billion and potentially even as high as GBP8 billion.

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COMPANIES - GLOBAL

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Fast Retailing said it continued the expansion of its global e-commerce business as profit rose in the first quarter of its current financial year. The Japanese owner of the Uniqlo band said revenue for the three months to the end of November declined by 0.6% to JPY619.80 billion - about USD5.96 billion - compared to JPY623.48 billion a year ago. Fast Retailing reported pretax profit for the first quarter of JPY107.16 billion, up 5.0% when compared to the prior year's JPY102.02 billion. The rise in profit was attributed primarily to large increases in profit from Uniqlo operations in Japan and Greater China, as well as rising profit and a strong overall performance from the GU brand.

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Thursday's Shareholder Meetings

Cardiff Property PLC - AGM

Baillie Gifford Shin Nippon PLC - GM re authority to allot shares

GoCo Group PLC - GM re acquisition by Future

Future PLC - GM re acquisition of GoCo

ICG-Longbow Senior Secured UK Property - EGM re proposed realisation

C&C Group PLC - EGM re replacing CREST system for settling shares

AA PLC - GM re takeover by TowerBrook and Warburg Pincus

JPMorgan Japanese Investment Trust PLC - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

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