LONDON MARKET OPEN: Next falls after cutting sales and profit guidance

(Alliance News) - Stock prices in London opened mixed on Thursday ahead of a NATO summit in Brussels, while UK retailer Next was lower after downgrading earnings guidance.

US President Joe Biden is meeting NATO and EU leaders in Brussels on Thursday in a show of trans-Atlantic unity exactly one month after the start of Russia's war in Ukraine.

Biden joins Western allies for a special meeting of NATO leaders, a G7 summit and an EU leaders' summit for talks on how to support the Ukrainian people, how to further punish Russia and the long-term changes necessary to ensure Europe's security.

A proposal to strengthen NATO's eastern flank with permanent troop deployments, supported by air and naval power, is still on the table. The move would mark a violation of the NATO-Russia Founding Act, and would likely escalate tensions with Russia.

The FTSE 100 index was up 17.90 points, or 0.2%, at 7,478.53 early Thursday. The mid-cap FTSE 250 index was down 51.53 points, or 0.3%, at 20,948.08. The AIM All-Share index was up 0.66 of a point at 1,037.50.

The Cboe UK 100 index was up 0.2% at 743.58. The Cboe 250 was flat at 18,518.65, and the Cboe Small Companies up 0.1% at 15,045.01.

In mainland Europe, the CAC 40 stock index in Paris was up 0.3% while the DAX 40 in Frankfurt was rose 0.2%.

In the FTSE 100, precious metal miner Fresnillo was the best performer, up 1.7%, tracking spot gold prices higher.

Gold stood at USD1,944.77 an ounce Thursday morning, rising from USD1,933.76 at the London equities close Wednesday.

At the other end of the large-caps, Schroders and Pearson were the worst performers, down 3.5% and 3.0%, after the stocks went ex-dividend, meaning new buyers no longer qualify for the latest payout.

Next was down 2.5%. The clothing and homewares retailer downgraded its earnings expectations following the closure of websites in Ukraine and Russia.

For the financial year that ended January 29, revenue was up 31% to GBP4.63 billion from GBP3.53 billion the year before, and pretax profit surged to GBP823.1 million from GBP342.4 million. Pretax profit was marginally higher than the company's recent guidance of GBP822 million.

Looking ahead, Next reduced its central guidance for full-year full price sales growth to 5% from 7%, amid the closure of its websites in Ukraine and Russia.

It has lowered sales guidance by GBP85 million and knocked its profit outlook by GBP10 million.

As a result, it expects annual pretax profit of GBP850 million, down from the previous GBP860 million forecast. This would still represent 3.3% growth from financial 2022.

Steve Clayton, HL Select fund manager, said: "The market's reaction, knocking the shares back a couple of percent in early trading seems a knee-jerk to the reduction in sales forecasts. But all of that relates to the events in Ukraine and cash generation expectations for the current year are actually improved. Longer term, that cash flow modelling suggests that there is in fact much for investors to look forward to."

International Consolidated Airlines was down 2.0% after Deutsche Bank cut the British Airways parent to 'hold' from 'buy'.

In the FTSE 250, Bridgepoint Group was the best performer, up 11%, after the private equity investor reported strong results in its maiden year as a listed company.

For 2021, pretax profit was GBP62.6 million, up 29% from GBP48.5 million in 2020, and total operating income GBP270.6 million, up 41% from GBP191.8 million.

Bridgepoint had total assets under management of EUR32.9 billion at December 31, up 24% from EUR26.6 billion at the same time the year before.

Bridgepoint declared a 3.64p dividend for 2021, up from 0.79p in 2020.

Looking ahead, Bridgepoint said it is well positioned for 2022, with its financial performance in line with expectations.

Games Workshop was up 8.1% after the miniature wargames maker said trading in the three months to the end of February 2022 has been in line with expectations. It declared a dividend of 70 pence per share, in line with the company's policy of distributing surplus cash.

At the other end of the midcaps, XP Power was the worst performer, down 8.5%. The Singapore-based maker of power controllers said Comet Technologies was awarded USD40 million in damages as part of a US lawsuit.

The San Jose, California-based firm had alleged trade secret misappropriation relating to radio frequency match and generator technology. XP power said a jury in the US trial - which began on March 14 - found in favour of Comet, awarding the damages against XP.

In response, XP Power said it did not agree with the ruling and was considering next steps. The stock also went ex-dividend.

In Asia on Thursday, the Japanese Nikkei 225 index closed up 0.3%. In China, the Shanghai Composite ended down 0.6%, while the Hang Seng index in Hong Kong lost 0.9%. The S&P/ASX 200 in Sydney closed up 0.1%.

The pound was quoted at USD1.3180 early Thursday, lower from USD1.3201 at the London equities close Wednesday. The euro was priced at USD1.0992, down from USD1.1005. Against the yen, the dollar was trading at JPY121.57 in London, up from JPY121.03.

Brent oil was quoted at USD122.44 a barrel on Thursday morning, up from USD121.99 late Wednesday.

The economic calendar on Thursday has a PMI reading from the UK at 0930 GMT. US jobless claims are at 1230 GMT followed by the PMI at 1345 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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