Willie Walsh, the outgoing chief executive of International Consolidated Airlines Group SA (CDI) (IAG), is in a relationship with a colleague, which could raise questions over governance at the British Airways owner. IAG announced the retirement of the 58-year-old aviation veteran last week after 15 years during which he built an aviation powerhouse. In an announcement that surprised investors, IAG said Walsh would stand down in March and be replaced by Iberia boss Luis Gallego. Just two months ago, Walsh said he planned to retire before his 60th birthday on October 25, 2021. However, IAG did not interview external candidates for the job, which is one of the most high-profile roles in the aviation industry. Walsh will leave the board in March and officially retire from the company in June. Last night, IAG said that Walsh’s relationship with his subordinate, who is understood to work in the finance department, was not connected to his departure. “Willie’s personal life has nothing to do with the timing of his retirement,” said the company. “IAG has an excellent internal candidate in Luis Gallego, which is why no external candidates were interviewed.”
Concerns over the Chinese telecoms giant Huawei, Donald Trump’s trade war and Brexit have delayed the launch of a £1bn British business fund planned by HSBC Holdings (HSBA) and a Chinese sovereign wealth giant. The fund, announced last June by then chancellor Philip Hammond, is a collaboration between the $200bn (£150bn) China Investment Corporation (CIC) and the Asia-focused bank. Its intention is to invest in British companies with ambitions to grow in China. However, sources close to the plan said geopolitical tensions last year, including Brexit, had delayed the fund’s launch.
Britain’s biggest bookmakers are braced for a ban on credit-card betting as the backlash against the perceived exploitation of vulnerable customers intensifies. The crackdown — which will involve a full ban or curbs such as spending limits — is likely to see gamblers forced to use debit cards to place bets, which will limit how much they can wager. The new rules will be set out in a report from the Gambling Commission. “We’re all expecting a ban,” said a senior industry source, who added that the announcement could come as soon as this week. Websites such as Bet365, 888 Holdings (888), PokerStars and Betfair all allow customers to make deposits using credit cards. That has been cited as a key factor in the rise of problem gambling, as it allows punters to rack up huge debts online. The commission said it would recommend a ban or restrict the use of credit cards. Industry sources said they were preparing for a ban or, at the very least, heavy restrictions, such as limiting customers to the use of one card only. The move is likely to hit the shares of betting operators, which have already taken a hammering from the clampdown on fixed-odds betting terminals, dubbed the “crack cocaine” of gambling because of their addictiveness. The maximum stake on one spin was slashed from £100 to £2, prompting William Hill (WMH), Betfred and GVC Holdings (GVC), owner of brands such as Ladbrokes, to warn that profits would be destroyed and hundreds of betting shops would close. Experts have likened the reform sweeping through the industry to the crackdown on banks for the mis-selling scandals that emerged after the financial crisis. It has prompted operators to strengthen their controls.
Aston Martin Holdings (AML) is said to have attracted interest from a Chinese electrical vehicle battery maker. James Bond’s favoured marque stunned the City with a profit warning last week, saying it was in talks “with potential strategic investors which may or may not involve an equity investment”. Sky News reported that China’s CATL had held talks with Aston Martin. This weekend the Financial Times reported China’s Geely, which owns a stake in Daimler, was also considering injecting cash, but the paper said Lawrence Stroll, a billionaire Formula One team owner, was closest to making an investment of £200m to take a 20% stake.
ITV (ITV) wants to buy rights to some Champions League games from BT Group (BT.A) to bring live coverage of Europe’s most prestigious football competition back to terrestrial television. The broadcaster has begun talks with the former telecoms monopoly after being left empty-handed in the TV rights auction in November. The telecoms giant, led by Philip Jansen, has the power to sell on rights to rivals, but must weigh that against the benefits of remaining the only place to watch the competitions. ITV’s latest attempt to get its hands on Champions League football is part of a broader fightback against American streaming giants such as Netflix, which are luring viewers away from terrestrial TV with their on-demand services.
The online fast-fashion retailer Boohoo.com (BOO) is set to leave its high street rivals in the dust when it reports Christmas sales this week. Analysts at Jefferies estimate that its sales will have leapt by a third in the final four months of the year amid heavy marketing spending by the company to win customers. Primark, Associated British Foods (ABF), is expected to report on Thursday that like- for-like sales across its stores in the UK, continental Europe and America were flat over the Christmas period, which would be a robust showing for a business that sells exclusively on the high street. Growing awareness of the environmental impact of fast fashion poses potential problems for the sector, yet there is little sign that British shoppers have lost their appetite for cheap and trendy clothes. The war for customers is heating up online, squeezing profit margins at the likes of ASOS (ASC) and Missguided. Boohoo.com (BOO), led by executive chairman Mahmud Kamani, recently teamed up with the supermodel Cara Delevingne for a “party collection”, which includes tiger-print miniskirts and crop tops. Investors will also be keen to hear about sales at Karen Millen and Coast. Boohoo bought the two brands out of administration to broaden its age appeal beyond teenagers and young women.
The founder of Amigo Holdings (AMGO) has banked a £2.9m dividend despite a profit warning at the guarantor lender, a surge in customer complaints and fears of a regulatory crackdown. James Benamor, who controls listed Amigo through Richmond Group, banked the dividend after profits at his holding company edged up to £70.8m in the year to the end of last March, from £66.9m the year before.
Embattled travel money firm Travelex is thought to be aiming to start resuming services this week — although it could be much longer before it resumes normal operations after a cyber-attack on New Year’s Eve. Yesterday its website continued to show a message saying its online travel money service was not available and that the National Crime Agency and the Metropolitan Police were investigating, after ransomware crippled Travelex’s systems. Hackers are believed to have demanded $6m (£4.6m). The company will start to tell big customers tomorrow about a resumption of services during the week. It would not comment on whether it has paid a ransom or expand on a statement by its parent company, Finablr PLC (FIN), which said there was no evidence that “any data had been exfiltrated”.
Wealth managers have had a tough time of late. The screw has been turned on fees, tightened by the rise of tracker funds. Although investors kept some of their powder dry last year, because of political uncertainty, Brewin Dolphin Holdings (BRW) still saw net inflows of £1.4bn into its discretionary funds run by managers. Analysts at Liberum said the inflows were “well ahead of peers”. The company has its roots in a stockbroking firm established by John Dawes, a member of the London Stock Exchange, in 1762. It has amassed £45bn of funds under management, positioning it as one of the top-10 largest wealth managers in the UK. Shares have risen 6% over the past year to 352.8p. Costs have jumped too, however, to £266m last year, up from £252m in 2018, as Brewin poached more staff to expand, opening an office in Tunbridge Wells and expanding in Cambridge. That dented profit before tax, which came in at £63m last year, down from £69m the previous year. “Brewin is not as efficient as it could be,” said Stuart Duncan at broker Peel Hunt. “It needs to grow into its cost-base, by generating more revenues.” Liberum said, “Our estimates assume 2020 net flows at the same level of 2019,”. Still, Brewin has an attractive dividend yield at 4.7%, compared with a sector average of 3.6%. With economic uncertainty and higher costs, it is not a steal, but not worth ditching. Hold.
Julian Dunkerton’s dreams of delivering a festive turnaround lay in tatters as Superdry (SDRY) warned that its profits could be wiped out after a nightmare Christmas performance. The fashion retailer blamed “unprecedented” levels of discounting by rivals along with subdued consumer demand for a collapse in sales, and warned that it would now make between zero and £10 million of underlying profits this year. Analysts had already lowered their expectations to £20 million after poor half-year results last month.
Better late bookings over the Christmas and new year period than had been expected, and at higher prices, mean that Ryanair Holdings (RYA) stalling profits will not be as bad as the discount airline had feared. However, the carrier’s attempt to crack Germany took some of the gloss off the holiday figures, with losses in Europe’s largest aviation market rising during a cut-throat price war with Lufthansa and Easyjet. In an unscheduled trading update, Ryanair said that it expected to carry 154 million passengers in the year to the end of March, a million more than had been estimated previously. Those higher fares mean that Europe’s busiest short-haul airline now expects after-tax profits of about €1 billion. That compares with previous guidance of between €800 million and €900 million.
Investors in Joules Group (JOUL) took fright after a shock profit warning, admitting that “a wrong number incorrectly entered into a spreadsheet” had caused a shortage of stock for online orders. Shares in Joules tumbled after it said that this year’s underlying profits would be “significantly below market expectations”. Liberum, its house broker, slashed its share price target to 260p from 400p and lowered its profit forecast from £16 million to £10 million.
JD Sports Fashion (JD.) lived up to its “king of trainers” slogan by defying the wider retail gloom to reveal that its profits will be at the top of City expectations. The sportswear chain declined to give a sales figure for its performance over Christmas, other than to say that it had achieved “positive like-for-like trends” across its sports stores, particularly overseas. It said that it was confident that its headline pre-tax profits would be in the upper range of between £403 million and £433 million, which would be a 20% rise on last year’s £355.2 million. Analysts at Berenberg said that it was a typically “qualitative” trading statement from the retailer, which is run by Peter Cowgill, 66. “We also note that management are typically conservative with guidance at this stage, anyway, having gone on to beat January guidance at full-year results by around 2% in each of the last two years,” Graham Renwick, an analyst at Berenberg, said.
Sluggish growth dragged shares in B&M European Value Retail S.A. (DI) (BME) lower after its sales over the festive period left investors decidedly unimpressed. Simon Arora, 50, defended B&M’s performance and said that “against the backdrop of a difficult UK retail environment, with reduced shopper footfall and political uncertainty, our core B&M UK business generated continued growth and delivered a record level of peak season sales.” B&M is understood to have suffered from a weakness in toy sales, echoing Sainsbury’s complaint that an industry slump was behind lower sales at Argos, its catalogue retailer. Analysts at Peel Hunt said: “B&M thinks that there’s been a general malaise among shoppers — has the average child been naughtier this year than last? — and also that the lack of a blockbuster film or product hasn’t helped. Could it be more structural and that kids want an app rather than Buckaroo?”
