Willie Walsh is to stand down as boss of International Consolidated Airlines Group SA (CDI) (IAG). Mr Walsh was the architect of deals that united the carriers at International Consolidated Airlines Group (IAG). They led to thousands of job losses but have delivered solid returns for investors, with shares in IAG up 123% since the company was created in 2011 when BA and Iberia came together. He will leave on March 26. Executives at rival airlines said last night that the expectation in the industry was that if IAG were to announce a management change it would be the exit of Álex Cruz, who as boss of British Airways has suffered a damaging strike by pilots and a downward trajectory in the popularity of the airline. Instead, the news that Mr Walsh has decided to retire as group chief completes an Iberian takeover of the key roles at IAG. He will be replaced by Luis Gallego, 51, who has been chief executive of Iberia for the past seven years and is little known in the UK.
Too many skinny jeans and too much food waste took the shine off Marks & Spencer Group (MKS) recording its first total like-for-like sales growth in three years. A recovery in the retailer’s food division lifted total like-for-like sales by 0.2 per cent as customers were lured in by its festive treats and a focus on attracting more family customers with cheaper prices. The grocery arm delivered a 1.4% rise in like-for-like sales but its perennially challenged clothing and home division suffered another slip, with like-for-like sales falling 1.7% and total sales declining by 3.7% to £1.06 billion.
Tesco (TSCO) has delivered its fifth consecutive rise in sales for the vital Christmas period despite a subdued wider market. The supermarket chain said that like-for-like sales rose 0.1% in the UK in the six weeks to January 4, supported by lower prices, better availability and a strong performance in fresh food. It said that it had enjoyed its biggest day of UK food sales in its 100-year history on December 23. The rise in like-for-like sales followed a 0.4% drop in the previous quarter, which covered the 13 weeks to November 23. This meant that in the 19 weeks to January 4, which includes the quarter and the Christmas period, like-for-like sales fell by 0.2%. Dave Lewis, 54, the outgoing boss of Tesco, said that before Christmas shoppers “were uncertain, unsure — and that does translate into people being a little bit more cautious about how they spend their money”. He said that the Conservatives’ victory in the general election, which removed some political uncertainty, had not noticeably boosted sentiment. “There was nothing discernible to see post-election that was anything out of the ordinary,” he said.
Card Factory (CARD) has sounded a profit alert and warned that it does not expect to pay a special dividend next year after enduring tough Christmas trading. The card retailer said trading over the festive season had been “challenging”. It told investors that adjusted underlying earnings before interest, taxes and other items was expected to fall to £81 million for the year to the end of January, down from £89.4 million in 2019. Adjusted profits will also take a hit of as much as £10 million next year from market headwinds, it added. Like-for-like sales during the 11-months to the end of December were down 0.6%, compared with a 0.1% decline a year earlier. Analysts at Peel Hunt, the stockbroker, described the trading update as “truly shocking” and said the figures showed that like-for-like sales had “collapsed in recent weeks”.
Dunelm Group (DNLM) improved sales ahead of Christmas and forecast a one-fifth increase in first-half profits. An upgrade to the homeware retailer’s website meant that it could sell more online during the crucial period than last year. Nick Wilkinson, chief executive, said: “We are really pleased with our performance in the first half.” Like-for-like sales jumped 5.6% and growth including from new stores was 6% in the half year to December 28. The retailer boosted its gross margin through savings from sourcing and sticking to its “everyday great value” policy and avoiding discounting before Christmas.
Dixons Carphone (DC.) has been fined £500,000 after failing to prevent cyberattackers from accessing the personal details of 14 million customers. The Information Commissioner’s Office said the electronics retailer had failed to implement “basic, commonplace security” procedures, showing “complete disregard” for customers. The data watchdog said hackers had installed malware on 5,390 tills at Currys PC World and Dixons Travel stores. They were able to access 5.6 million payment cards and collect sensitive personal information of about 14 million people, including their full names, postcodes, email addresses and failed credit checks.
Strong demand for pub meals and drinks on key days including Christmas Day and New Year’s Eve drove like-for-like sales growth of 5.6% at Mitchells & Butlers (MAB) over the three-week festive period. The All Bar One and Miller & Carter operator said that it had achieved record growth of 6.5% across the five key days, which also included Christmas Eve, Boxing Day and New Year’s Day, selling 1.5 million meals and 6.4 million drinks. Phil Urban, 56, M&B’s chief executive, said that the performance over the festive trading season was particularly pleasing given the strong comparative trading in the previous year. Analysts praised the performance, with Nigel Parson, at Canaccord Genuity, headlining his research note “another Christmas cracker” and noting that M&B was “starting to make real progress in reducing its debt burden”. He said that over the next decade it could pay off £1.5 billion of its £2 billion debt.
An end-of-year bout of Brexit uncertainty and disruptions caused by last month’s general election have hit profits at Robert Walters (RWA). The international recruitment firm told investors yesterday that the pro-democracy protests in Hong Kong and the trade stand-off between America and China had also hit the confidence of its customers. In a downbeat trading update that sent its shares more than 10% lower at one point, the recruiter said that its fee income in the UK slid by 23% to £20.7 million over the three months to the end of December against the same period the previous year. Although a 4% drop in fees from placing staff in Asia Pacific was in part offset by business in continental Europe, it left the group’s net fee income down 8% to £94.2 million.
SIG (SHI) yesterday said business vanished in December as a result of the general election and companies closing early for Christmas. SIG, a provider of roofing materials and building insulation, issued its second profit warning in three months, this time slashing estimates on its earnings for 2019 by more than a third. It follows a previous alert in October and SIG shares have now halved in price over the past two years, leaving its market value at just over £550 million.
Roger White had to issue his first profit warning as chief executive of Barr (A.G.) (BAG), the Scottish drinks-maker, last summer. “I’m not having another one if there’s anything I can do about it,” he quipped. Well, according to Barclays, he may be forced to eat his words. Analysts at the investment bank have slashed their forecasts for AG Barr’s financial year, which runs until the end of this month. A plunge in profits was expected but Barclays thinks it will be worse than feared and is pencilling in a 26% drop to £34.1 million. It said it had no choice because of continued weak sales data for Irn-Bru, the company’s star brand. Sales of the drink fell in the first half of the year when a price rise dented volumes by more than expected. Management was confident that sales would pick up as the year wore on, but recent data from Nielsen, the market research group, has suggested that they remain poor, with volumes down “double-digits”.
Ocado Group (OCDO) fell 57½p to close at £12.77. It was Waitrose, which supplies Ocado, that was doing the damage. The pair’s relationship is coming to an end in September, when Marks & Spencer will start supplying Ocado instead. In anticipation of that move, Waitrose has been trying to beef up its delivery business. It reported a jump in online sales over Christmas, suggesting that some Ocado shoppers may be jumping ship before the big switch.
Building suppliers were dumped as a shocker of an update from SIG (SHI), the insulation specialist, rattled the sector. SIG had warned on profits in October because of a slowdown in construction activity, but the deterioration “accelerated” last month, meaning that profits for 2019 will come in at about £42 million, £26 million short of what the market had been expecting. SIG fell to 94¼p, and the shockwaves were felt throughout the industry. Grafton Group Units (GFTU), owner of Selco builders’ merchants, was down 35p to 845p, while Kingfisher (KGF), B&Q’s parent company, gave up 6½p to 217½p.
Consort Medical (CSRT) investors’ confidence that another bid for the medical device maker would be forthcoming looks to have been misplaced. A bid of £10.10 from its Swedish rival Recipharm was accepted by Consort bosses in November, although many in the City felt it was a low-ball offer. Both Panmure Gordon and Numis, the stockbrokers, described the bid as “opportunistic”, with the latter speculating that an offer of £12-plus would be closer to fair value. “Let the bidding commence,” proclaimed analysts at RBC, who also raised their price target to £12. The rhetoric galvanised Consort investors and sent the share price above the offer price, implying that the market also thought another suitor would come out of the woodwork. Six weeks on and a rival to Recipharm has yet to show its hand. “We believe that this is a cheap deal for Recipharm,” said Charles Weston, a healthcare analyst at RBC. “We believe that another purchaser would have made a bid before this time, and thus [expect] that the deal will now complete at £10.10 per share.”
Tempus – Cineworld Group (CINE): Hold. As long as it can reduce debts it has a viable future and is very attractively valued
Tempus – YouGov (YOU): Avoid. High quality, digitally-driven business but too costly
