The High Street is at ‘breaking point’ and many of the country’s biggest chains are in a fight for survival, says a major study. Changing consumer habits, an unfair business rates regime and rising staff costs are hitting the UK’s biggest chains leading to more store closures than ever before, according to research by professional services firm A&M. Profit margins in stores have fallen in the past eight years from 8.8% to 4.1%, while costs have soared by close to 11% in the past five years. Traditional bricks-and-mortar shops have also suffered because consumer spending online has risen fourfold since 2008. The report estimates that Britain’s 150 largest retailers, including supermarkets, have 20% more store space than they would like, which has fuelled closures and insolvencies.
Whitbread (WTB) said that its profits were dented in the past six months amid ‘challenging’ UK trading conditions. The firm said UK accommodation sales slumped by 3.6% during the period, thanks to weaker demand in regional areas where Premier Inn has 80% of its hotels. It once again blamed the ongoing Brexit deadlock, which is taking its toll on consumer and business confidence and the wider travel industry. Whitbread said that the slowdown amid ‘heightened political and economic uncertainty’ was particularly noticeable among its business travellers and spread into the third quarter too. ‘The continuing Brexit circus may be drawing more international attention to Britain but it’s certainly not helping the country’s travel market,’ said Fiona Cincotta from City Index. ‘Whitbread is more exposed to Brexit uncertainty than its UK peers because it has a larger chunk of the domestic business travel market and is more exposed to regional areas.’
The banker at the heart of Royal Bank of Scotland Group (RBS) restructuring group scandal will be in court as a witness for the first time. Derek Sach, former boss of RBS’s toxic Global Restructuring Group (GRG), will give evidence in a case starting next week brought by Oliver Morley, 49, a property developer who took out a loan from RBS and is suing it for damaging his business. He claims that GRG placed him under ‘economic duress’ which led to some of his assets being seized by RBS in 2010 and sold.
Reckitt Benckiser Group (RB.) has slashed its annual sales outlook for the second time this year after a ‘disappointing’ third quarter. Shares in the group dropped 5% as it said sales fell 0.3% across its health division in the three months to September 30, leaving revenues overall growing by a muted 1.6% to £3.3billion. Reckitt cut its expectations for full-year like-for-like sales growth to between zero and 2% due to the poor third quarter and ‘seasonal uncertainty’ in the final three months. Profit margins are also expected to see a ‘modest’ fall in 2019, it cautioned. It comes after Reckitt lowered its revenue guidance in July amid a slowdown in demand for baby formula in China.
Just Eat (JE.) shares soared by a quarter this morning as tech investment firm Prosus revealed a £4.9billion bid to buy the food delivery company. The 710p per share offer puts Just Eat at the centre of a bidding war, with the company already in the midst of a merger with its Dutch rival Takeaway.com. Shares in Just Eat hit 745p, despite Just Eat quickly rebuffing the approach as too low. This implies investors expect Prosus to try again with a higher offer. The firm revealed the 710p bid is just the latest preliminary offer it had put forward, with 670p and 700p being proposed earlier and rebuffed.
Haydale Graphene Industries (HAYD) has unveiled a range of materials that offer protection against lightning strikes. These could be applied to drones, planes, space technology and offshore wind turbines, which Haydale says are particularly susceptible to being struck. It has developed the materials with companies including Airbus UK, GE Aviation and BAE Systems, and has been testing them with customers.
The new chief executive of Travis Perkins (TPK) hit the pause button on the sale of its plumbing and heating unit amid ‘unprecedented’ levels of uncertainty in the market that has knocked trading. The Wickes and Toolstation owner put the division up for sale last December to cut costs and simplify the business. Nick Roberts, who has been at the helm for three months, said the plan to simplify the business remains ‘the right one’ as he announced a 3.8% rise in group sales during the third quarter.
Forterra (FORT) tumbled 26p, to 273p, as it said full-year profit before tax is likely to be ‘modestly below’ the £64.8million it made last year. Although new housing has been steady, Forterra said it was suffering from a slowdown in non-residential building and getting fewer orders from distributors.
Pendragon (PDG) accelerated back into the black with pre-tax profit of £3million in the three months to September, following cost-cutting that included shutting underperforming showrooms. There was a 3.6% fall in revenues at sites open for more than a year, including a double-digit drop in used car sales, and it confirmed it will make a loss for the full-year.
TUI AG Reg Shs (DI) (TUI) hit the bottom of the Footsie after brokers at Morgan Stanley cut its rating from ‘overweight’ to ‘equal weight’, worried that the crisis with Boeing’s 737 Max aircraft will drag out even longer and rack up more costs for the Anglo-German company.
