Profits at Primark surged 25% in the six months to March, thanks to ongoing store expansion and ‘much higher’ margins, its owner ABF said today. Sales jumped 4% to £3.6billion as the retailer opened four new stores and, in some cases, moved to new, larger premises. Primark is one of the few High Street retailers that does not sell its wares online. It trades from more than 360 stores – 15 million sq ft of selling space – and recently opened its biggest ever shop in Birmingham. Spread over five floors, the new shop boasts a beauty bar, two hairdressers, a Disney cafe and a zone dedicated to Harry Potter, all aimed at driving footfall and boosting basket sizes. ‘This store showcases the breadth of the Primark offer as it is today and is a clear demonstration of Primark’s continuing development,’ the firm said. Associated British Foods (ABF), which owns the cut-price fashion chain as well as sugar and grocery businesses, said more favourable exchange rates and better sourcing helped it grow its margins.
Celebrity collaborations, social media ‘influencers’ and young shoppers with a ‘high propensity’ to spend their cash online helped the Boohoo.com (BOO) group enjoy a surge in sales last year. New figures reveal that revenue at Booho’s PrettyLittleThing brand jumped 107% to £374.4million in the last year, while sales at Nasty Gal rose 96% to £47.9million. Across all its operations, online-based Boohoo’s revenue increased by 48% to £856.9million in the year to 28 February, and pre-tax profit jumped 38% to £59.9million. Turnover rose 37% in the UK and 64% internationally. Boohoo said it had increased active customer numbers by 9% to 7million and expanded its social media presence, a crucial marketing tool for the company that uses celebrities, social media influencers and reality TV stars to market its clothes. The company’s gross margins improved by 190 basis points to 54.7% as a result of tighter control over stock and ‘refinement of the customer proposition.’
Top executives at BT Group (BT.A) UK headquarters were at the heart of a £530million accounting scandal at its Italy division, prosecutors have alleged. In an explosive 353-page report, Italian police said bosses in London put pressure on managers at the foreign subsidiary to hit performance targets, and encouraged the use of ‘aggressive, anomalous and knowingly wrong accounting practices’. The police also said the irregularities might justify adding market manipulation to a list of alleged crimes but concluded that was a matter for Britain to decide as BT was listed there. The claims contradict previous statements by BT that the fraud scandal was a local matter. Regulators in the UK are now under pressure to investigate. Nearly £8billion was wiped off BT’s value in 2017 when it revealed the full cost of the scandal, dubbed ‘the Italian Job’ by shareholders. But a review by KPMG has never been published.
Thomas Cook Group (TCG) shares jumped 18.3% after reports suggested the travel company has been approached by suitors about a possible takeover. Despite the rally, shares are still worth 28.99p, just a fraction of the 146p they were trading at less than a year ago. The debt-laden company has struggled as a fall in demand for package holidays and intense online competition hammered profits. Thomas Cook has reportedly been approached by several parties. The status of talks between the company and its potential suitors is unclear, with insiders cautioning that any deal is months away. Fosun, the Chinese company with which Thomas Cook runs a joint venture, is reported to have lodged a preliminary interest in buying its partner’s tour operating business.
The boss and co-founder of Fevertree Drinks (FEVR) saw a near-five fold increase in pay to £4million last year as he benefited from a continued rise in the company’s fortunes and share price. Tim Warrillow, who co-founded the posh mixer maker with Charles Rolls in 2005 and is the company’s chief executive, saw his pay packet jump from £844,000 in 2017 to £3.98million in 2018. Most of the rise, or just over £3million, is down to the introduction of a long term incentive plan that links pay to the company’s performance, with the award based 75% on turnover and 25% on underlying earnings. The rest of the pay package consists of basic salary of £368,000 and a bonus of £552,000. It comes as the group saw revenues rise 40% to £237.4million last year and pre-tax profits grow 34% to £75.6million compared to 2017.
Sainsbury (J) (SBRY) is set to learn the fate of its proposed £14bn merger with rival Asda as it battles to revive falling sales. The Big Four supermarket could find out tomorrow whether the Competition and Markets Authority (CMA) has backed the deal. A merger has been declared ‘dead in the water’ after the watchdog said in its provisional findings that it should be blocked entirely or require the sale of hundreds of supermarkets. One analyst said: ‘I would think that the CMA is unlikely to U-turn given the way that the provisional findings were set out.’ Markets are preparing for the CMA to block the deal. The decision could spark a major shake-up of Sainsbury’s senior team amid uncertainty over chief executive Mike Coupe’s future.
A success for Tekcapital (TEK), which invests in university-developed technologies to turn them into businesses, has seen shares rocket. One of its portfolio companies, Salarius, has launched production of its invention Microsalt, a new seasoning product which tastes like salt but contains much less sodium as the particles are tiny. Salarius has also received its first order for Microsalt from an unnamed US snack producer.
Oil heavyweights have lifted the Footsie to its highest level in more than six months, after Donald Trump tightened sanctions on Iran. The US had granted countries such as China, India and Japan, which still buy oil from Iran, exemptions from sanctions which would prevent them from dealing with the Middle Eastern country. But President Trump decided on Monday to end those exemptions, meaning any countries which now import oil from Iran could face punishments themselves. Prices of crude oil climbed as the US beefed up its stance against the world’s fourth-largest producer. Trump wants to bring Iran’s oil exports to zero, which would diminish the amount of crude in the market and push up its price. Investors were quick to muscle in on the predicted gains. Fuel giant BP (BP.) edged up 14.8p, to 582.5p, while Royal Dutch Shell ‘B’ (RDSB) climbed 57.5p, to 2541.5p. Oil’s influence was even more pronounced on the FTSE 250, where Cairn Energy (CNE) jumped by 9p, to 174.7p, Premier Oil (PMO) lifted 4.7p, to 106.2p and Tullow Oil (TLW) climbed 8p, to 250p. Even companies which provide services to the oil industry reaped gains – Wood Group (John) (WG.) was up 25p, at 530p and Petrofac Ltd. (PFC) ended the day 18.1p, higher at 485.5p.
Airlines drew the short straw from oil’s rise, amid renewed worries that higher fuel prices could add to cost pressures. easyJet (EZJ) was the FTSE 100’s biggest loser, falling 47p, to 1172p. British Airways parent International Consolidated Airlines Group SA (CDI) (IAG) dipped 18.2p, to 539p, and Wizz Air Holdings (WIZZ) slid 92p, to 3376p.
In an announcement after the market closed, high-interest lender Amigo Holdings (AMGO) said its boss Glen Crawford is standing down because he needs treatment for a spinal condition. He will be succeeded by Hamish Paton, who was due to join the firm next month as its chief commercial officer. Crawford will stay on until the summer to hand over to Paton.
Fishing tackle firm Angling Direct (ANG) has netted record results for the start of the year, while also opening yet another new store. Proving once again to be a bright spot in the currently muddy world of retail, it said overall sales were up by 50.7% in February and March compared to the same period last year. Same-store sales shot up by 28.5%, and Angling Direct managed to reel in 29.5% more visitors to its shops. The company insists it is planning to open more stores in 2019.
Iron ore pellet producer Ferrexpo (FXPO) slid 11.4p, to 275.2p as it admitted some funds of a Ukrainian charity it donates to ‘could have been misappropriated’. In February it found inconsistencies during its audit relating to payments made to the Blooming Land charity, which coordinates Ferrexpo’s corporate social responsibility programme. An independent review is ongoing.
At precious metals miner Polymetal International (POLY), a massive 88.5% of voting shareholders at its annual meeting condemned the election of banker Artem Kirillov as a director. He had been nominated by Russia’s Otkritie Bank, which owns 6.9% of Polymetal, but other shareholders worried that he was not independent. Even though he will not be appointed, shares slid 14.4p, to 802p.
