Market report

Menzies swoops | retail sales | Joules loss | Just Eat disposal


5pm: Pound saves the FTSE 100

A collapse in the pound, falling to a four-week low against the dollar, helped save the FTSE 100, according to IG senior market analyst Josh Mahoney.

The index finished 8.5 points higher at 7,550.37, while on Wall Street, all major indices were in the red.

8am: Menzies breaks new ground

Menzies Aviation has acquired a majority stake in ground services companies based in Montenegro and Serbia. 

Menzies will purchase 70% of Fly Montenegro Ground Handling, Montenegro and Flystar Aviation Services, Serbia, which provide ground services at three airports.

Fly Montenegro Ground Handling provides ground services at Podgorica Airport and Tivat Airport, and Flystar Aviation Services provides ground services at Belgrade Nikola Tesla Airport.

7am: Public sector borrowing rises

Government borrowing was £55 billion in the year to July, £3 billion higher than expected as the government faced inflationary rises in interest payments.

7am: Retail volumes fall

Retail sales by value rose by 7.8% year-on-year, according to that latest official data, though this was primarily due to rising prices. Sales volumes fell 3.4%.

Helen Dickinson, chief executive of the British Retail Consortium, said: “The summer sunshine brought a slight uplift in sales. Summer clothing, air conditioning appliances and outdoor foods all benefitted from record temperatures, but most retailers will still be seeing falling volumes in the face of rising inflation.

“Consumer confidence has hit new lows as inflation soared past 10% and talk of a recession has grown.

“The Bank of England expects inflation to reach over 13% in October when energy bills rise again, further limiting discretionary spending for struggling households. For many businesses, 2022 is proving to be every bit as challenging as the pandemic.”

7am: Joules expects full year loss

Softer trading has led the board to expect a significant loss in the first half, followed by an improved performance in the second half as the benefits of business simplification begin to be realised.

However, the group anticipates a full year loss before tax, and before adjusting items, significantly below current market expectations.

Over the subsequent five weeks (to 14 August), it said trading has softened materially. The recent extremely warm and dry summer weather has adversely affected full price sales of core categories such as outerwear, rainwear, knitwear, and wellingtons and has compounded the ongoing subdued consumer demand due to the well-documented cost of living crisis.

Consequently, retail sales have been depressed over the five-week period, resulting in an 8% year-on-year reduction in retail sales in the 11 weeks of the current financial year to date.

Wholesale trading for the Joules brand has achieved 10% growth year-on-year despite delays experienced in US ports, however Garden Trading wholesale has continued to be significantly impacted by the wider slowdown in the home and garden market.

Talks continue with Next about an equity investment and trading on its online platform. The Group expects to require a waiver of certain covenants on its facilities and is currently in positive discussions with its bank in this regard.

7am: Just Eat disposal

Just Eat is selling a 33% stake in iFood to MIH Movile Holdings, an affiliate of Prosus , for €1.5 billion in cash with a deferred payment of up to €300 million.

The consideration represents an equity multiple of over 5 times on the investments over the life of the joint venture.

Just Eat said it remains focused on improving its profitability and on a disciplined allocation of capital. It will retain the transaction proceeds to maintain its balance sheet strength and to service repayment s of its upcoming debt maturities. The company re-confirms its guidance as set out in its half year 2022 results on 3 August 2022.

Global markets

Wall Street reversed earlier losses to close higher on Thursday, as investors digested a fresh batch of better-than-expected economic indicators.

Inflation and retail sales showed some positive indications and now there has been an improvement in weekly jobless claims, down 2,000 to 252,000, against consensus forecasts for 260,000.

At the close, the Dow Jones Industrial Average was up 0.06%, while the S&P 500 added 0.23% tand the Nasdaq Composite was 0.21% higher.

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