Debenhams’ plan to close 22 stores puts hundreds of jobs at risk. About 1,200 jobs are at risk after Debenhams (DEB) outlined plans to shut 22 department stores next year as part of a restructuring designed to keep the chain going. Debenhams is seeking approval from creditors for a contentious insolvency process called a company voluntary arrangement, which could lead to about 50 of its 166 British stores eventually closing. The 22 stores earmarked for closure range from Kirkcaldy in Fife to Canterbury in Kent. The CVA, which requires the backing of at least 75% in value of creditors voting on May 9, is the latest part of an emergency restructuring of Debenhams, which collapsed into administration this month before its lenders quickly took control as part of a so-called pre-packaged sale.
Faulty robot caused Ocado warehouse fire. The fire that destroyed an Ocado Group (OCDO) warehouse this year and hit the online grocer’s sales was sparked by an electrical fault causing a plastic lid on a robot to catch alight, it has emerged. Details of the fire at Ocado’s Andover depot in Hampshire were revealed in a document issued to shareholders yesterday as part of its planned tie-up with Marks & Spencer Group (MKS). The fire in February completely destroyed the warehouse, led to homes being evacuated and caused Ocado to lose 1.2% of sales during the quarter. In its circular to investors, Ocado said that a further assessment carried out with FM Global, its insurer, and Hampshire Fire and Rescue Service had concluded that an “electrical fault at one of the first generation battery charging units at the edge of the ambient storage grid . . . caused the plastic lid on the top of a grocery-carrying robot to catch alight”.
Wheels come off WPP in America. The world’s largest advertising group revealed a fall of more than 8% in its American revenues yesterday after losing several key accounts. WPP (WPP) said that its North American business had suffered contract cancellations including those of Ford, one of its oldest customers which took away its creative brief away in the autumn, Glaxosmithkline, United Airlines and American Express. Mark Read, 51, chief executive, said that revenue had been shrinking in the United States since 2016, a result of “under-investment in creative talent” and a structure that was “too complicated”. In December he outlined a plan to revive the agency. He has overhauled the leadership team in the US, but conceded that it would “take time” for the new executives to turn the division around.
Deloitte quits as Ferrexpo’s auditor over charity payments. Shares in Ferrexpo (FXPO) fell by more than a quarter yesterday after its auditor abruptly resigned. Deloitte’s decision to quit came after it had issued a qualified opinion on Ferrexpo’s accounts and the FTSE 250 miner had said that funds it donated to Blooming Land, a Ukrainian charity, may have been misappropriated. Late yesterday, Mary Reilly, 66, a Ferrexpo independent non-executive director, chairwoman of the audit committee and a former audit partner at Deloitte, said that she would not seek re-election to the board in June. Bert Nacken, 70, another independent director, also said that he would not seek re-election.
Astrazeneca returning to health as new treatments drive sales growth. New medicines and strong growth in China helped AstraZeneca (AZN) to deliver first-quarter results that were better than expected yesterday. The Anglo-Swedish company reported its third successive quarterly sales rise, with product sales increasing by 14% to $5.47 billion in the three months to the end of March on a constant currency basis. It outpaced the $5.29 billion expected by analysts.
Companies’ caution hits the bottom line at Royal Bank of Scotland Group (RBS). Royal Bank of Scotland yesterday blamed uncertainty about Brexit and the knock-on effect on companies’ borrowing plans for a decline in profit at the start of this year. Shares in the bank fell as investors reacted to news of a 13% year-on-year decline in net profit to £707 million for the first three months of 2019 and to a downbeat outlook for corporate activity in the UK. Ross McEwan, 61, the chief executive who revealed on Thursday that he planned to stand down within 12 months, said that Brexit uncertainty was filtering through to parts of the bank’s operations. While the retail business and lending to small companies were holding up, he said that larger corporate customers were putting off spending decisions and therefore loan applications. “The sustained uncertainty is causing some customers to pause investment decisions,” he said. “It is clear people are pausing and you are starting to see that coming through in our numbers.”
Just Eat goes off the boil as winter cools Britons’ appetites. Just Eat (JE.) reported its lowest rate of order growth in Britain since flotation five years ago as the February heatwave and the timing of Easter took the steam out of its first-quarter performance. The takeaway delivery group, which has 26 million customers worldwide, said that while orders for the company as a whole had increased by 21% to 61.4 million, orders in its core UK business had risen by only 7.4% to 31.9 million. It said that its first-quarter growth in Britain had been hit by three factors: the unseasonably warm weather, which is not conducive to people ordering a takeaway; Easter falling entirely in the second quarter; and strong comparative trading in the same period last year.
Tough market proves battle for Hastings Group Holdings (HSTG). A difficult trading environment in motor insurance has prompted Hastings to warn that its margins will come under pressure this year if conditions do not improve. The insurance group said that claims were rising faster than customers’ premiums, meaning that its loss ratio — the amount it pays out on claims compared with the money it earns from selling insurance premiums — could reach its highest level of 79%.
Virtual schools offer textbook lesson at Pearson (PSON). Pearson reported a modest rise in its American business, despite weaker sales of university textbooks. Underlying revenues at the education publisher rose by 2% in the first quarter at its US wing, with growth from virtual schools and professional training offsetting a “slight decline” from higher education. Turnover grew by 4% in Britain, Australia and Italy, while sales in Pearson’s “growth” markets, which include India and China, were flat. John Fallon, chief executive, predicted that Pearson would hit its targets for the full year, with adjusted operating earnings of between £590 million and £640 million.
Sainsbury’s ready to get back to basics. Sainsbury (J) (SBRY) is expected to launch a back-to-basics campaign next week to win back its reputation as a quality and convenience-led supermarket group after the collapse of its plan to merge with Asda. Britain’s second largest grocery business is expected to use its annual results on Wednesday to renew its push into digital shopping, driven by its ownership of Argos, the catalogue retailer. While Sainsbury’s has been under pressure to press ahead with some of the £1 billion in price cuts that it had said would follow the Asda merger, it is expected to avoid making costly promises and instead to focus on the quality of its produce.
Glencore (GLEN) was among the biggest fallers in the FTSE 100 yesterday as investors shunned the miner and commodities trader after it was revealed that it was under investigation by a regulator in the United States. The Commodity Futures Trading Commission is investigating whether the company and its subsidiaries may have violated regulations through “corrupt practices”, Glencore said on Thursday night. It said that the investigation was at an early stage and had a similar scope to an existing US Department of Justice investigation. Last year the department demanded documents relating to the company’s dealings in Venezuela, Nigeria and the Democratic Republic of Congo since 2007.
AJ Bell (AJB) rose 30p to 407p after the investment platform’s interim results beat market expectations. The company reported a 4% rise in first-half assets under management to £47.7 billion, despite a 4% fall in assets under management reported in the first quarter. It floated at 160p only four and a half months ago.
A technology and life sciences intellectual property commercialisation company backed by Neil Woodford, the renowned fund manager, was under pressure after it said that it planned to cease investments in new companies. Allied Minds (ALM) said that it would “focus exclusively on funding and operating our existing portfolio with a view to maximising monetisation opportunities”. The group reported a 42% annual fall in net cash and investments to $97.7 million.
