Market report

Asos sales fall | Close Brothers’ profits squeezed

ASOS

Online fashion firm Asos has revealed that operating profits for the full year will come in at the bottom end of expectations and free cash flow will be significantly lower than guidance.

In a a fourth quarter trading update, the retailer said adjusted like-for-like sales were down 15% in the three months to 3 September, slightly worse than the 14% decline seen in the third quarter.

Sales continued to fall across the group’s four main geographies – the UK, EU, US and Rest of World – but the downturn worsened in every region except the EU. A wet July and August dampened UK sales growth.

“EBIT is expected around the bottom of the guided £40m to £60m range, with free cash inflow in H2 now expected to be c.£60m excluding refinancing costs (previously £150m), principally as a result of timing effects that will reverse in September and October,” said the company.

Shares in Asos fell 5.75p, or 1.5 per cent, at 381p.


Meta rips up London lease

Meta, the owner of Facebook, has paid £149 million to surrender a 20-year lease on a London office block which has had no staff two years after the US social media giant signed the deal.

The group’s UK division will abandon the eight-storey block near Regent’s Park, which it took on in 2021 at £21 million a year. The lease of 1 Triton Square to the Silicon Valley company was seen at the time as a vote of confidence in Brexit and London’s recovery from the pandemic.

However, the tech slump led Meta to axe thousands of jobs, while the shift to working from home and hybrid working has reduced its office space requirements.


Close Brothers

A strong second half of the year was not enough to stop investment banking group Close Brothers’ profit falling by half compared to the previous year as a result of provisions related to legal finance specialist Novitas.

In the year to July, operating pretax profit dropped 52% to £112 million from £232.8m. This related in the main to the £114.6m set aside for bad loans from Novitas, which Close Brothers acquired in 2017.

Excluding the Novitas provisions, operating profit still fell year-on-year as its market making business Winterflood continued to struggle.

Despite the impact of the Novitas loans, boss Adrian Sainsbury was confident that the bank was moving in the right direction after a strong second half.

“We have performed well in the second half, with an acceleration of loan book growth, strong margins and a stable credit performance in our banking business,” said Mr Sainsbury.


AG Barr

Irn-Bru manufacturer AG Barr saw its profit margin squeezed as it chose not to pass on the full effects of inflation on its costs. Shares fell 0.5p to 484.5p.

Full story here


Market close

The London Stock Exchange lifted the suspension on trading in AMTE Power‘s shares from 1.30pm. The shares in the AIM-quoted battery maker were suspended on 13 September over concerns about settlement. On Monday the company’s investors backed a new issue of shares to raise just over £2m.

Shares in Bellway closed up 36p at 2328p after RBC issued an “outperform” recommendation on the FTSE 250 housebuilder, praising its “track record of stability and delivery”.

The FTSE 100 index, which benefited from a weak pound, eked out a gain of 1.73 points to 7,625.72.

Barclays was another riser, up 6p to 159.75p after analysts at Morgan Stanley lifted their rating to “overweight”, believing there is room for “capital efficiency to increase payouts”. 

Concerns about rising bond yields, a strengthening dollar and the potential for a US government shutdown dragged US stocks lower. The Dow Jones industrial average dropped by 388 points, or 1.1%.

Investors are also focused on developments in China’s troubled property sector after indebted developer Evergrande said it had missed an onshore bond repayment.



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