Like discarded Christmas trees, they will start piling up this week: more trading updates from UK retailers – those melancholic January reminders of another festive season passed, writes Matthew Vincent.
Last week, just a few hit the pavement: remnants of cheer from
John Lewis, until
Debenhams reminded everyone that the fun’s over, with a profit warning.
This week, like all those Norwegian firs that somehow find their way onto street corners overnight, loads more will appear: from
Marks & Spencer, Tesco, Sainsbury, Morrison and more.
Overall, the signs aren’t good. Visa’s UK consumer spending index, which is compiled by data company IHS Markit, shows that households’ expenditure was 1 per cent lower, after adjusting for inflation, in December 2017 than in the same month a year earlier. That represents the fourth consecutive month in which consumer spending fell – the weakest annual performance for household expenditure since 2012, based on debit and credit card payments.
And, this morning,
Mothercare added to the woes. It has also warned on profits, after its turnround plan hit problems over Christmas. Despite trying to boost web sales, weakness in the UK market led to a 7 per cent fall in online sales in the 12 weeks to the end of 2017, compared to the previous year, and a similar drop in overall like-for-like domestic sales.
Mothercare said performance overall was “below expectations”, with international sales also “challenging”. That drove global sales down 8 per cent in total — although statutory revenues, which include royalty payments and goods sent to franchisees slipped by only 2.4 per cent.
Like Next, Mothercare resisted discounting in the run up to Christmas in an effort to “protect [its] brand positioning”, but heavier cuts to prices in the post-Christmas sales as a result were expected to lead to a reduction in full year margin.
Still, analysts at Peel Hunt suggests this week’s trading updates won’t all be monuments to New Year misery: “The consumer was out to spend, although the product and pricing had to be competitive,” they suggest. “The Debenhams’ profit warning was the most predicted slip-up… structurally challenged retailers such as Debenhams are facing up to declining gross margins and inflation rates that are exceeding revenue growth.”
Babcock is looking forward to a more productive 2018, though, by teaming up with Thales, Harland & Wolff, designer BMT and Ferguson Marine to bid for construction of the UK government’s new Type 31e frigate.
Its so called ‘Team 31’ will aim to deliver world-class ships while at the same time spreading “economic benefits throughout the UK”. Ferguson Marine on the Clyde, Harland & Wolff in Belfast and the Babcock facilities in Fife and Devon will all have key roles to play, while much of the equipment provided by Thales and others will support jobs across Britain.
Under the arrangement, Babcock will act as the overall programme lead, whilst Thales will have overall responsibility for the development of the Mission System solution. Babcock and BMT will use their experience in the development of designs for both naval and commercial vessels to coordinate production.
And, finally, the
Opening Quote Ashes update:
Fifth Test, Sydney:
England 346 & 180
Australia 649-7 dec
Australia won by an innings and 123 runs; and won the Ashes series 4-0
Prevailing sentiment: At least that’s over for four years…
FastFT reportsinterdealer broker
TP ICAP is clearly still on the acquisition trail, announcing on Monday that it has bought US broker SCS Commodities. SCS, founded in 1991, generated revenues of $14.3m in 2016, with 26 brokers. Up to now, it has been 98 per cent owned by its five partners. Financial terms of the deal were not disclosed.
Dialog Semiconductor said its sales climbed by more than a quarter in the final three months of 2017, beating the forecast it issued in November. The Anglo-German Apple supplier, which makes chips that help manage the power usage in iPhones, said in a trading update that it expects to post fourth quarter revenues of $463m, 27 per cent higher than the same period in 2016.
FT Opening Quote, with commentary by Matthew Vincent, is your early Square Mile briefing. You can sign up for the full newsletter here.
Beyond the Square Mile
Hollywood’s leading lights took aim at gender inequality and racism in a politically charged Golden Globes ceremony where women called for pay parity with male peers and wore black gowns to protest against sexual harassment. British-Irish playwright Martin McDonagh (In Bruges) was a notable winner with his Three Billboards outside Ebbing, Missouri.
Novo Nordisk, the world’s largest maker of insulin, has made a €2.6bn bid to purchase Belgian biotech group Ablynx, publicly announcing the offer on Monday after its initial private overtures were rejected.
German manufacturing orders edged lower in November, marking the first fall since July 2017 on the back of a decline in domestic and international demand.
Trading got off to a cautious start
in Asia on Monday as equities in Australia climbed 0.1 per cent but those in Hong Kong edged down 0.1 per cent while traders in Tokyo took the day off.
LG Electronics are forecast to have increased more than 84 per cent last year from the previous year, the company said on Monday. Operating profit from 2017 is estimated to come in at Won2.4tn ($2.2bn), up from Won1.3tn in 2016, according to preliminary earnings released by the South Korean company.
The economic calendar (all times London):
08.30: Halifax UK house prices
09.30: Eurozone Sentix index
10:00: Eurozone retail sales
In the US, the
Q4 earnings season kicks off later this week, with the big banks Wells Fargo and JPMorgan reporting results on Friday. A rush of gadgetry announcements are expected from the
Consumer Electronics Show in Las Vegas as it gets underway properly today.
Consumer credit data is released at 2000 GMT.
IPOs: US seeks depth in stock market listings pool
“Although tech companies get the most attention, the issue is not confined to that sector. The broad pool of US listed companies is in long-term decline. After peaking at nearly 7,500 in 1997, the number of public companies fell to about 3,600 at the end of 2017, the lowest level since the early 1970s, according to Wilshire Associates which compiles a benchmark for the US stock markets.” (The Big Read)
Virgin’s bailout damages the case for private rail ownership
“This is often presented as one of the triumphs of privatisation. Direct net subsidies of services have, after all, declined from more than £2bn at privatisation to a net payment to government of about £1bn last year. Usage on the railways has more than doubled in that time. But behind the glossy paintwork there are cracks in evidence.” (Jonathan Ford)
Carillion puts outsourcers’ accounting practices into spotlight
“If Carillion was a bricks n’mortar building rather than a bricks n’mortar business employing 43,000 workers it would be rubble by now. It is a miracle of engineering that Carillion still stands.” (Small Talk)
Markets at 0807 GMT
Nikkei 225 up +208.20 (+0.89%) at 23,715
Topix up +16.52 (+0.89%) at 1,880
Hang Seng up +19.04 (+0.06%) at 30,834
S&P 500 up +19.16 (+0.70%) at 2,743
DJIA up +220.74 (+0.88%) at 25,296
Nasdaq up +58.64 (+0.83%) at 7,137
Eurofirst 300 up +14.27 (+0.92%) at 1,562
FTSE100 up +28.34 (+0.37%) at 7,724
CAC 40 unchanged 0.00 (0.00%) at 5,471
Dax unchanged 0.00 (0.00%) at 13,320
€/$ 1.20 (1.20)
$/¥ 113.24 (113.09)
£/$ 1.35 (1.36)
€/£ 0.8865 (0.886)
Brent Crude (ICE) up +0.08 at 67.70
Light Crude (Nymex) up +0.05 at 61.49
100 Oz Gold (Comex) down -3.10 at 1,317
Copper (Comex) unchanged 0.00 at 3.21
10-year government bond yields (%)
CDS (closing levels)
Markit iTraxx Europe +0.02bps at 43.57bp
Markit iTraxx Xover -2.66bps at 221.58bp
Markit CDX IG -0.54bps at 45.51bp
Sources: FT, Bloomberg, Markit
Source : https://ftalphaville.ft.com/2018/01/08/2197318/ft-opening-quote-mothercare-warns-on-profits/1643