Railways face strike threat over pensions. Walkout feared if workers are told to boost contributions. Urgent talks are under way to avert a mass walkout on the railways in a growing row over pensions. Tensions have risen over the Pensions Regulator’s demands that train companies and workers plug yawning deficits in their final-salary schemes. The regulator’s demands come at a crucial time for the sector, which is wrestling with threadbare finances, weak growth in passenger numbers, punctuality problems and long-running industrial action over the role of guards on trains. After the collapse of the East Coast franchise and financial woes on routes including Northern and Greater Anglia, industry sources warned that making train companies shoulder extra risk for pensions could drive operators away. The regulator’s demand that rail workers should make greater pension contributions risks inflaming the situation. In 2006 all three main rail unions threatened a national strike over this issue. “This is the one thing no one wants to tackle because it could cause a national rail strike,” said an industry expert.
Bond markets signal end of bull run for shares. Financial markets are signalling the American economy could plunge into recession within a year, top investors have warned, fuelling anxiety that the decade-long bull run in share prices is coming to an end. A closely watched measure of the bond markets that has predicted every downturn for the past four decades — and delivered few false alarms — played a key role in last week’s stock market turmoil. Shares tumbled around the world amid rising trade tensions between America and China. However, developments in US bond markets are more worrying, according to big investors. “This is a big deal,” said Jim Leaviss, head of retail fixed interest at the fund manager M&G Investments, adding that a continuation of recent moves would suggest “a [US] recession within the next year to 18 months”.
Mandarins line up rivals for Interserve (IRV) contracts. Cabinet Office mandarins are believed to have sounded out Interserve’s rivals about the possibility of taking on some of the outsourcer’s work. The cleaning and building company is heading for a debt-for-equity swap with its lenders as it creaks under debts of £650m. The swap could wipe out shareholders. Interserve is a significant government supplier, with long-term deals for schools, hospitals and motorways. Jon Trickett, Labour’s shadow minister for the Cabinet Office, last night called for a temporary ban on the company bidding for public contracts — “until they have proved they are financially stable and there is no risk to the taxpayer”.
Domino’s Pizza boss David Wild warned his shops may go to war for bigger slice of profits. Disgruntled franchisees have written to the board of Domino’s Pizza Group (DOM) threatening to “declare war” on the fast-food chain if they are not handed a greater share of company profits. The Domino’s Franchise Association UK & Ireland, set up recently by 11 of the largest Domino’s franchisees, said it would boycott the company’s annual pizza-making festival in March if their demands are not met. They could also refuse to open new stores. The rancour centres on the ability of franchisees, who buy food and services from Domino’s, to make money from their operations. They have been affected by rising costs and pressure to open more sites in existing locations — which benefits Domino’s but damages their own profits.
Carphone on the hook for store closures. The Dixons Carphone (DC.) chief executive Alex Baldock is expected to announce a raft of shop closures this week in another blow to the high street. “Investors will be expecting them to announce that a bunch of Carphone Warehouse stores will close, and it will have to be 100 or 200 to really make an impact,” said Tony Shiret, an analyst at Whitman Howard. Carphone Warehouse is struggling because the slowing pace of innovation from Apple and other manufacturers is prompting consumers to hold on to their mobile phones for longer before upgrading. Meanwhile, the other part of Dixons’ business is under pressure as demand for white goods ebbs in a slowing housing market, and spending on televisions and laptops is squeezed by Brexit-induced consumer jitters.
Tour operator TUI AG Reg Shs (DI) (TUI) is set to reveal the impact of Britain’s summer heatwave on holidaymakers booking last-minute overseas trips. Britain’s biggest travel company, which last year ditched the Thomson brand in favour of Tui, will report full-year results this week. Analysts are expecting revenue to reach €19.3bn (£17.3bn), according to Bloomberg consensus, compared with €18.5bn last year, while pre-tax profits are expected to reach €1.04bn. Tui’s results will be closely watched after rival Thomas Cook was rocked by the company’s second profit warning in two months.
Hollywood Bowl offers a chance to strike. Hollywood Bowl Group (BOWL) is due to report full-year results tomorrow and analysts expect it to announce another special dividend, after a 3.33p-per-share payout last year. Shore Capital is predicting a shareholder gift of 3.5p to 4p. Part of the recent malaise in its share price reflects the tough consumer climate. A warm summer, coupled with the World Cup, kept families outdoors and weighed on trade. However, Hollywood Bowl has continued to perform well — as leisure continues to outperform retail for its share of the consumer pound. Families today value experiences over accumulating possessions. The company is cash-generative and has managed its costs to maintain its dividend yield — expected to be 3.9% this year, if conservative consensus estimates are to be believed. Of the 309 bowling centres in the UK, 173 are independent — in groups of fewer than five sites. Along with Ten Entertainment Group, Hollywood Bowl uses scale to its advantage. It can invest in technology such as online booking, allowing families to bowl for a little less. In turn, this means supervisors can control costs by managing staff rotas. Investec has a 255p target on the company, while Berenberg and Peel Hunt are predicting 250p. The recent dip in the share price gives investors a chance to get on board. Buy.
