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Tuesday Update

DB Live: AG Barr slows; Greggs; St James’s Place; Amazon

5.45pm: Luxury marques suffer big falls

French luxury group Kering, which owns the Gucci brand, said sales plunged by 43.7% in the second quarter, although there had been an encouraging recovery in Asia.

Rival LVMH, owner of Bulgari and Chaumet, saw a decline of 38% and sales in its watches and jewellery division plummeted by 39%. Its operating margins were just 9% while Kering’s shrank to 17.7%.

Kering chief financial officer Jean-Marc Duplaix told reporters the absence of tourist flows would weigh on the industry for some time yet.

Chinese shoppers accounted for 37% of luxury goods sales in 2019, though they made the bulk of their purchases while travelling abroad. Kering, like LVMH, said that the strong growth in local shopping could not offset the near-absence of tourism.

Yves Saint Laurent suffered an even bigger sales fall of 48% while Bottega Veneta contained the drop in revenue to 24.4%.

4.45pm: London close

Hopes of a US stimulus package and a strong showing in the housebuilding sector helped drive the FTSE 100 into positive territory. It closed up 24.38 points or 0.4% at 6,129.26.

12.30pm: New SSE chairman

Energy company SSE has appointed a former top civil servant involved in preparing for a no-deal Brexi to succeed Richard Gillingwater as chairman of the board.

Full story

10am: New China covid cases

China has been hit with a spike of coronavirus cases as a new COVID-19 infection cluster spreads to five regions across the country. 

9am: London open

The FTSE 100 followed broadly positive trading in Asia and the US with an uplift in the first hour.

The index touched 6150 before settling back at 6,126 up 22.09 points (0.36%).

Although the Japanese Nikkei 225 index ended down 0.3% the Shanghai Composite closed up 0.7%, while the Hang Seng index in Hong Kong was also up 0.7%.

The Dow Jones Industrial Average closed up 114.88 points, or 0.4%, while the S&P 500 closed up 23.78 points, or 0.7% and the Nasdaq Composite ended up 173.09 points, or 1.7%.

8.50am: Funding for AI Covid project

Scottish technology company Intense IT has formed an international collaboration to roll-out a pioneering AI-based solution, with the aim of helping workplaces minimise the transmission of Coronavirus.

Full story here

8am: Quarantine change ‘speculation’

Cabinet Office Secretary Michael Gove said a report that the quarantine period on travellers arriving into the UK could be cut from 14 to 10 days is “pure speculation”.

7am: AG Barr loses its fizz

Irn-Bru

AG Barr, producer of Irn-Bru, said it expects revenue to fall by up to 15% this year, while reporting a recovery in its hospitality and ‘on the go’ segments as coronavirus curbs eased in recent weeks.

The Cumbernauld-based company said the outlook was based on its assumption that the UK would not enter into a further significant period of lockdown, along with estimated adjustment for Rockstar energy drink no longer being part of its portfolio for the final quarter.

St James’s Place steady

Asset manager St.James’s Place beat analysts’ estimates for the second half, posting funds under management of £115.7bn, with both gross inflows and net inflows edging past forecasts.

Management said “there remains significant uncertainty for the world ahead.”

As a result it will retain one third of the 2019 dividend and postpone the decision on the 2020 payout until February “when we believe we will be in a stronger position to assess the impact that COVID-19 has had on our business.”

Greggs falls to loss

Greggs, the fast food retailer, confirmed it is not paying an interim dividend as it reported half-year results with its sales still down a third from last year following the coronavirus (COVID-19) pandemic lockdown.

Sales at it company-managed stores stood at 72% of the 2019 level in the most recent week as trading recovers.

The company reported a pretax loss of £65.2 million, against a profit of £36.7m a year earlier, for the six months to 27 June after its stores were closed for most of the second quarter.

Games Workshop

Russell Pointon, director at Edison Group, said: There won’t be too many companies in the consumer space that will report record results in the face of the COVID-19 pandemic: Games Workshop is one of them. The strong full year numbers reflect a very strong first half followed by a relatively good second half in which the final quarter was impacted by COVID.”

For the year-ended May 2020, revenue of £269.7m and PBT of £89.4m, represent growth of 5% and 10% respectively.

FCA bans car finance commission

Motorists are poised to save £165 million a year after the financial services watchdog banned car salesmen and brokers receiving commission on the interest rate charged.

Full story here

Deposits rise at Virgin Money

Virgin Money

Virgin Money has not yet seen any significant credit losses nor been required to make any significant specific provisions in relation to the pandemic impact.

Full story here

Moneysupermarket takes hit

Revenue grew by 2% in Q1 but exceptional market conditions caused by COVID-19 led to revenue falling 8% in the half.

Adjusted EBITDA of £62.8m, down 14% on prior year.

Interim dividend maintained at 3.1p , reflecting strong cashflow characteristics and confidence in the business model.

Mark Lewis, CEO, said: “I’m pleased the Group has been able to help our users save over £1bn already this year when so many households are facing unprecedented financial strain.

“COVID-19 and the lockdown measures have significantly impacted our core markets, but our brands MoneySavingExpert and MoneySuperMarket have risen to the challenge providing useful advice and savings tips to millions.

“Our business model has proved resilient, generating good cashflow throughout the crisis and giving us confidence for the future.”

1am: Amazon’s grocery ambitions

Amazon is stepping up its online grocery service after online food sales almost doubled during the pandemic and some suppliers are struggling to keep up with demand.

The US giant is now putting pressure on rivals such as Ocado by rolling out its next-day service beyond the Home Counties by the end of the year.

Retail analyst, Richard Hyman described the move as “extremely significant” and disruptive.

Shoppers have to subscribe to Amazon Prime to get the service and users currently have to pay an additional monthly fee or a delivery charge per order.

Amazon says it will roll out a quicker and unlimited free delivery grocery service to “multiple cities” by the end of this year.

In September, Ocado will start selling M&S products instead of Waitrose food.

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