Mike Coupe is to stand down as chief executive of Sainsbury (J) (SBRY), a year after its failed £12 billion merger with Asda. Mr Coupe, 59, who has been at the company for 15 years and boss for six, will hand over to Simon Roberts, 48, in June. Mr Roberts joined Sainsbury’s as its retail and operations director in 2017 after 13 years at Boots.
London’s insurers were given a boost yesterday after it emerged that the amount they paid out in natural disaster claims had fallen sharply last year. Not all of the total damages of $232 billion were covered and the global insurance industry was on the hook for “only” $71 billion — still a lot of money, clearly, but much lower than the bill insurers faced in previous years. In 2018, they paid out $100 billion and in 2017 a record $157 billion. Over the past decade, the average annual cost to the insurance industry from earthquakes, hurricanes and the like has been about $85 billion. Analysts said that many in the industry had hoped for an even lower figure to help to offset a rise in casualty claims in the United States, where litigation and big jury awards have hurt insurers, but the news was welcomed all the same. Shares in Hiscox Limited (DI) (HSX) closed 28p up at £13.68, while those of Beazley (BEZ) rose 17½p to 552½p.
M&G PLC (MNG) became a victim of its own success as Barclays downgraded it to “equal weight”. Analysts at the bank said that M&G had “surpassed expectations” since its demerger last October, with its shares up by almost a quarter in that time. One of their concerns was the asset management business, from which investors have been pulling their money over the past couple of years. Barclays reckons that this trend will need to reverse if the shares are to move higher, but it doesn’t think M&G’s funds have performed well enough for investors to start piling back in.
Investors thinking about taking a punt on Tullow Oil (TLW) after its recent woes were deterred from doing so by Investec. Even with the shares down 65% over the past six weeks, its analysts said they saw “limited scope for investment” in Tullow. It helped to send Tullow shares down another 3½p to 49½p.
Shares in Consort Medical (CSRT) closed flat at £10.10, the level at which Recipharm, its Swedish rival, has tabled a £505 million cash offer. Recipharm yesterday swept up almost 4.9 million shares in Consort, representing 9.9% of the stock, at that price, and a further 118,563 shares at £10.
A quarter of investors in Mitchells & Butlers (MAB) have voted against the re-appointment of a trio of board directors, including the son of Daniel Levy, the Tottenham Hotspur chairman. Just shy of 23% of shareholders voted not to re-elect Josh Levy, while a little more than 25% did not want Eddie Irwin and Ron Robson, the deputy chairman, to return to their roles. The three non-executive directors all have links to the pubs group’s two largest shareholders: Piedmont, the investment vehicle of Joe Lewis, the billionaire owner of Tottenham Hotspur; and Elpida Group, which is run by JP McManus and John Magnier, the Irish horse racing tycoons. Despite the rebellion, with the backing of the two largest shareholders, who between them own more than half of the company, the three directors were successfully re-appointed to their positions.
Berkeley Group Holdings (The) (BKG) has announced a £1 billion payday for shareholders and pledged to sell more new homes as it bets on the recovery of the housing market in London and the southeast. Berkeley Group said that it planned to return £1 billion to shareholders over the next two years, an increase of £455 million on a previous promise. It also has committed to increasing its delivery of homes by 50% over six years across its 25 large regeneration sites in London and the South East. The announcement marks a shift in strategy at the builder, which has shown a strong eye for a change in market mood in the past. It has cut back its investment in recent years amid a slowdown in the housing market caused by Brexit uncertainty, high stamp duty costs and a crackdown on buy-to-let landlords. That has led to an increase in its net cash position from £107.5 million in 2016 to a record high of £1.1 billion.
Demand for Riccardo Tisci’s striking designs gave Burberry Group (BRBY) the confidence yesterday to look beyond challenges in its key Hong Kong and Chinese markets and boost its growth forecasts. Nevertheless, the luxury brand spelt out the impact of pro-democracy protests in Hong Kong, where sales halved in the 13 weeks to December 28, and addressed fears that the emergence of the coronavirus in China could disrupt its business across Asia. Julie Brown, its finance officer, noted that Hong Kong was an important market for Burberry, previously accounting for 8% of its sales. “This quarter we’ve seen a halving of those sales,” she said. Of the coronavirus outbreak, she said that Burberry was “keeping the situation under review. We monitor it every single day.”
An accounting scandal at Ted Baker (TED) deepened yesterday when the fashion chain revealed that the value of its inventory had been overstated by £58 million, more than double its original estimate. Accountants were brought in to examine the books last month after Ted Baker said that the value of stock on its balance sheet at the end of its previous financial year had been overvalued by an estimated £20 million to £25 million. Ted Baker said yesterday that Deloitte, the Big Four accountancy firm, had “largely concluded” its review and that the non-cash overstatement was “materially higher” than the board’s initial assessment.
Animal lovers who wanted their dogs to look their best for Christmas family photos helped to push festive sales higher at Pets at Home Group (PETS). The retailer increased its sales by 7.9% to £255.9 million over the 12 weeks to January 3. Shop like-for-like sales rose by 5%, while online sales went up by 10% to account for almost a quarter of revenues. Peter Pritchard, 49, chief executive, said the figures meant that Pets at Home was “a shining light in an otherwise depressed environment”. A record 27,555 dogs were groomed by the chain in the week before Christmas. “I book myself in for a Christmas haircut and pet owners want to do the same for their dogs to make sure they look great in photos and not smelly when guests come,” Mr Pritchard said.
WH Smith (SMWH), the world’s oldest national retail chain, has defied the blues affecting many of its rivals to report a 7% rise in revenue over the holiday period, boosted by its travel business. WH Smith, founded in 1792 by Henry Smith, said that in the 20 weeks to January 18 its travel revenues had risen by 19%, led by the acquisition of Marshall, the American travel retailer, for £305 million in December which nearly doubled Smith’s presence in the United States.
The chairman of Wetherspoon (J.D.) (JDW) renewed his attack on City corporate governance practices yesterday as the pubs company reported strong sales over Christmas and the new year. In the 12 weeks to January 19, Wetherspoons’ like-for-like sales rose by 4.7%, taking growth for its first half to 5% — a slight slowdown from the first quarter but ahead of most of its competitors. Tim Martin, the company’s founder, took issue with the failure of fund managers and proxy advisers to apply relevant “comply or explain” provisions on corporate governance relating to the length of service of non-executive directors.
Investors in Close Brothers Group (CBG) took fright after the merchant banking group reported slowing growth in loanmaking alongside rising costs and bad debts. Close Brothers unveiled a 0.4% increase in its loan book to £7.68 billion in the last five months of last year, a slowdown from the 0.9% growth it had reported for the three months to the end of October. It also disclosed that bad debts at its banking operations had edged up to 0.8%, albeit from historic lows of 0.6%, and that costs at the division were expected to grow faster than income this year. The net interest margin slipped from 7.9% last year to 7.8%. Total client assets at the asset management division rose to £14 billion from £13.3 billion at the end of last July and Winterflood, the equities market-maker that it runs, enjoyed “an improvement in trading activity towards the end of 2019” after a slow start.
Tempus – Derwent London (DLN): Avoid. High-quality developer with attractive portfolio, but richly valued after a very strong post-election run
Tempus – The Gym Group (GYM): Hold. Low-cost operator taking advantage of growth of budget fitness
