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FTSE 100 Live: BoE Governor hints at interest rate peak; Shares in Dr Martens skid

 (Evening Standard)
(Evening Standard)

Bank of England Governor Andrew Bailey today insisted “the corner has been turned” on inflation after two consecutive monthly falls in the rate of price rises.

Mr Bailey was speaking in Wales the day after the Consumer Prices Index fell to 10.5% for December, down from 10.7% in November and a 41 year high of 11.1% in October.

Meanwhile, the Christmas trading performances of Deliveroo, Boohoo and Dunelm are in the spotlight today during another busy session for corporate updates.

Deliveroo boss Will Shu said the food delivery business had seen a significant improvement in profitability, while Dunelm told investors that it expected profits ahead of market expectations. Boohoo reported a performance in line with hopes.

FTSE 100 Live Thursday

  • Shares in Dr Martens slide after profits warning

  • Recession fears hit stock market performance

  • Deliveroo hails profitability progress

That’s all folks. Tomorrow: Retail sales, PMI

16:30 , Simon Hunt

That conculdes our liveblog coverage for today, after an unhappy set of results from some of the country’s best-known retailers, with Boohoo shares falling 10% and Dr Martens dropping 30%.

The Evening Standard City Desk will be back at 7am tomorrow, where we’ll get a better-rounded picture of the UK’s retail landscape with national retail sales figures, while PMI numbers will shed light on the health of the wider economy.

Aston Martin creating more than 100 jobs with sports car plans

15:34 , Simon Hunt

Aston Martin is creating more than 100 new jobs ahead of launching new sports cars.

The jobs, for technicians, will be based at the company’s headquarters in Gaydon, Warwickshire.

The recruitment drive will include an offer of full-time permanent employment to agency staff currently working at Aston Martin sites on a temporary basis.

Simon Smith, chief people officer at the car-maker, said: “As Aston Martin prepares to ramp up production and launch the first of our next generation of sports cars, we are delighted to have the opportunity to increase our team at Gaydon as well as offer high-quality permanent employment opportunities for our valued agency colleagues.”

Shares fall in New York: Wall Street open

15:00 , Simon Hunt

US stocks continued their run of losses in the opening minutes of trading on Wall Street as investors weighed a gloomy outlook for the global economy.

Reports out this week indicated a softening in consumer demand and business investment, increasing the changes of a near-term recession.

The S&P 500 index fell 0.7%, while the Dow Jones fell 0.6% and the Nasdaq fell 0.9%.

The US dollar was little changed against the pound.

Superdrug boss hails “tremendous” Christmas trading

14:32 , Simon Hunt

High Street chain Superdrug has delivered one of the strongest Christmas trading updates seen so far with like for like sales up 16% in December.

Britain’s second biggest health and beauty retailer after Boots said it benefitted from rhe return to “bricks and mortar” shopping after the pansdeic with a particularly strong performance from fragrance, cosmetics and “beauty services” such as piercing. Cosmetic sales were back at pre-Covid levels,

The strong figures provide further evidence that retail enjoyed a better than expected end to the year with most big players reprting healthy increaases in nominal sales, albeit at a time of high inflation. They come ahead of official retai lsales data from the Office for National Statistics (ONS) tomorrow.

BofE Governor Bailey insists “corner has been turned” on inflation

13:37 , Simon Hunt

Bank of England Governor Andrew Bailey today insisted “the corner has been turned” on inflation after two consecutive monthly falls in the rate of price rises.

Mr Bailey was speaking in Wales the day after the Consumer Prices Index fell to 10.5% for December, down from 10.7% in November and a 41 year high of 11.1% in October.

In an interview with the Western Mail published on the BusinessLive website Mr Bailey said the dip in the CPI was “the beginning of a sign that a corner has been turned,

“What we think is the most likely outcome is that it (inflation) will fall quite rapidly this year, probably starting in the late spring, and that has a lot to do with energy pricing.”

Mr Bailey also suggested that the financial markets’ expectations that interest rates would peak at 4.5% was more closely aligned with the Bank’s own thinking.

He said: “I am not endorsing 4.5%, but what you may have noticed in December is that we did not include the comment that we made in November about the market being in our view rather out of line.”

read more here

FTSE down 100 points: Lunchtime update

12:59 , Simon Hunt

Halfway through today’s trading session in London, the FTSE 100 is down 100 points to 7,730, its third consecutive day of losses, killing off any hopes that the blue chip index could hit a record high this week.

Raw materials stocks have fallen the most, down an average of 2.72%, closely followed by energy stocks which are down 2.39%.

Here’s a look at some of the biggest stock movers so far today:

City Comment: Business must act to block a bumper year for fraud

12:31 , Simon Hunt

Business editor Jonathan Prynn writes

Even in a downturn there is always someone doing well. According to an eye-catching headline on The Lawyer news website today it is going to be a “bumper year” for fraud lawyers with many of the biggest cases scheduled in London courts this year involving a crime that does not get the attention it should.

In a speech in the City last night James Thomson, who chairs the City of London Police Authority Board, made the astonishing claim that while half of all offences in England and Wales fall under “fraud and economic crime” only 2% of police funding is dedicated to tackling it.

Fraud only rarely attracts the headlines generated by violent crime and physical theft and to some degree police resources will always follow public concern and outrage. But as Thomson argued fraudsters — sometimes acting on behalf of hostile states —are “endlessly innovative”.

Thomson, who also chairs the National Cyber Resilience Centre Group, said the City of London Police, the National Lead Force for fraud and cybercrime, had prevented nearly £750 million going into the pockets of fraudsters and secured 1000 convictions. Yet only £3 million of assets have been recovered and returned to victims.

Thomson wants proposed legislation in the Online Safety Bill to be toughened up to include a duty of care on businesses to prevent fraud. That may not be what those busy fraud lawyers want to hear but economic crime ultimately hits all of us through higher prices and insurance premiums. And that is the last thing we need during the misery of a cost-of-living crisis.

Derelict mill to be £3.5bn Docklands new town

11:58 , Simon Hunt

A new £3.5 billion master plan to revive one of London’s biggest remaining derelict sites and create around 6500 new homes and 10,000 jobs has been submitted to Newham council.

The latest bid to bring life back to the 50 acres of land around the vast Millennium Mills building in Silvertown near the Royal Docks comes more than 40 years after it fell into disuse.

The former flour mill — once described as a “great industrial monolith” — has been used a backdrop to films and TV shows including Ashes to Ashes, London’s Burning, The Man From U.N.C.L.E, and Derek Jarman’s The Last of England.

It has been the subject of numerous proposals including plans to create a huge business park with brand pavilions for leading companies, and a “peace theme park.”

Under the latest scheme the site would become a Docklands new town with 780,000sq ft of work and creative spaces inside and around the Millennium Mills building, arts and leisure venues, restaurants, bars, public squares and green spaces.

Wintry weather brings seasonal boost for Dunelm

11:00 , Simon Hunt

The pre-Christmas cold snap and sky-high energy bills helped warm up sales at homeware retailer Dunelm, which saw red-hot demand for its Winter Warm range, from the Teddy Bear Throw to weighted blankets and thermal curtains.

As Brits turned the thermostat down, the FTSE 250 company also noted a rise in sales of heated indoor clothes airers.

This was one example among what it called “innovative ways to manage rising heating costs”.

An £18 Teddy Oversized Blanket Hoodie has been a bestseller. Sales in the second quarter of Dunelm’s financial year increased by almost a fifth year-on-year to £478 million, taking the figure for the first half of its year to £835 million, up 5%.

Second-quarter sales were up almost 50% from pre-pandemic levels. It said it had “a good level of visibility” on its own costs for the rest of 2023.

Dunelm started as a market stall selling curtains in 1979 and opened its first shop in Leicester, where it remains based, in 1984.

The homeware retailer is well-placed to attract budget-conscious shoppers moving away from pricier designer shops and department stores.

FTSE 100 loses ground amid US fears, Antofagasta down 3%

10:25 , Graeme Evans

Mining and oil stocks fell today after investors were unnerved by poor figures from the US economy and warnings by Federal Reserve policymakers that interest rate hikes are far from over.

Microsoft’s plan to cut 10,000 jobs and weak earnings updates in the US added to the downbeat mood as the FTSE 100 index slipped 0.6% or 43.59 points to 7787.11.

London’s top flight had started the week near to an all-time high after China reopened its Covid-hit economy and signs emerged that inflation pressures had peaked. Copper futures also reached their highest level in seven months on hopes for stronger demand, but fell back today amid the renewed uncertainty.

This put pressure on Chilean miner Antofagasta as its shares topped the FTSE 100 fallers board, losing 3% or 60.5p to 1739p. Glencore dipped 2% or 13.6p to 563p and silver miner Fresnillo weakened 29.8p to 912p.

The weak session limited progress for FTSE 100-listed business information group Informa after it extended its recent run of strong updates.

The host of events including London Tech Week reported revenues of around £2.4 billion and said it expects growth in 2023 as it positions for the return of trade events in China.

Informa’s shares are up by around 15% since November and added another 7.6p to 667.6p today. Others on the risers board included several defensive plays, with BAE Systems up 8.8p to 846.2p and British American Tobacco ahead 27p to 3097.5p.

The FTSE 250 index lost 1% or 200.06 points to 19,690.84, with oil stocks Harbour Energy and Energean 3% lower.

Among smaller stocks, Gear4Music lost 13% or 18.25p to 120.25p as it highlighted the impact of December’s Royal Mail strikes as well as a “subdued” margin performance.

Despite the challenges, the online retailer of musical instruments said festive trading was in line with expectations as revenues rose 5% to £49.5 million in the final quarter of 2022.

Dr Martens takes a kicking

10:19 , Simon English

Dr Martens, the iconic UK shoe and boot maker, saw its shares crash today after warning of “significant operational issues” at a Los Angeles warehouse,

That and warm weather at the end of last year will lower profits by up to £25 million this year.

The company has been around for more than 75 years, floating two years ago in a deal that was seen as a fillip to the London market.

The stock floated at 370p and initially boomed. Today it fell 50p, nearly 25%, to 158p, which leaves the business valued at £1.6 billion. City analysts were shocked by the news and were scrambling to revise advice to investors.

The shares are down more than 50% in the last 12 months. This is the second profit warning in two months.

At the end of last year Dr Martens said strikes at the port in Felixstowe and staff shortages in Holland would hurt sales.

Today’s additional woes are a big hit to investors which include private equity kings Permira, who still own 36% of the business.

Chief executive Kenny Wilson blamed a “bottleneck at our new LA distribution centre” and weaker US sales.

It transferred inventory to the new LA hub faster than planned, leading to an over-supply of goods. There were “people and process” problems, it said.

Relatively warm weather in October and November didn’t help either.

Dr Martens has been trying to move upmarket while staying true to its heritage.

The company is proud of its background as a maker of boots for “workers”, that were adopted by “diverse youth subcultures and associated musical movements”.

It says of itself: "Docs or DM’s are worn by people around the world who use them as a symbol of empowerment and their own individual attitude.”

Susannah Streeter at Hargreaves Lansdown said the business “has been caught seriously on the back foot”. She added: “This is another big migraine for the company, which was also dealing with the headache of disappointing US sales in the fourth quarter, which is viewed as a key market for growth.”

CMA takes action against HSBC for breaching Part 2 of the Retail Banking Order

10:11 , Simon Hunt

HSBC has been rebuked by the UK competition regulator over sharing incorrect information with customers.

HSBC breached Part 2 of the Retail Banking Order, set out by the Competition and Market Authority (CMA), by publishing inaccurate information, or not publishing required information, through its Open Data APIs on more than 50 occasions, according to the CMA.

The incorrect information related to fees, charges and rates, as well as to eligibility criteria and features and benefits of accounts and loans.

HSBC said it had agreed to take action to put things right for customers.

Hotel Chocolat hails return of high street shopping after sales boost

10:01 , Simon Hunt

Hotel Chocolat hailed the bounce-back of the high street today after it reported an uptick in in-store sales.

The Hertfordshire-based business and seller of boozy liquer chocolate, luxury hampers and hazelnut pralines, reported like-for-like revenue growth of 10% across its UK and Ireland stores in the nine weeks to Christmas day, with fresh plans to expand its retail footprint in London over the next three years.

Hotel Chocolat boss Angus Thirlwell said: “The stand-out success for us was the velvetiser hot chocolate drinking system – it really caught the mood.”

“We have very obvious gaps in our portfolio and one of our appetites is to really improve our representation across London as rents have normalised.”

Hotel Chocolat shares rose 7.3% to 199p.

Miners lead FTSE 100 lower, Dr Martens down 22%

08:55 , Graeme Evans

Recession fears and a weak handover from Wall Street mean the FTSE 100 index is trading 0.5% lower, off 39.23 points to 7791.47.

Mining stocks dominate the blue-chip fallers board following falls of up to 3% for copper specialist Antofagasta, silver producer Fresnillo and commodities giant Anglo American. BP and Shell shares are also 2% lower.

Business information company Informa was one of the best performers in the FTSE 100, with its robust end-of-year update helping shares to continue their recent strong run by adding another 11p to 671p.

Dr Martens shares slumped 22% or 45.5p to 163.7p in the FTSE 250 index after the boot maker lowered its profits outlook due to operational issues, including at its new LA distribution centre.

The FTSE 250 fell 108.50 points to 19,872.40, with Dunelm shares down 1.5% or 17p to 1057p despite its latest strong trading update.

Premier Foods announces factory closure as it stands by full-year profit guidance

07:52 , Michael Hunter

Premier Foods said today that a third-quarter rise in sales left in on course to hit full-year profit guidance and announced proposals to close one of its factories.

The FTSE 250 maker of Angel Delight and Birds Custard said its powdered foods plant at Knighton in Staffordshire could shut in mid-2023. Staff consultations are starting at the loss-making facility, which mainly makes “non-branded powdered beverages”,

Overall group sales rose 12% in the third quarter, with its grocery products up over 17%, helping offset a 0.9% decline in sales at its Sweet Treats unit.

Alex Whitehouse, chief executive officer, said: “Many of our leading brands grew strongly, with established seasonal favourites including Ambrosia custard and new launches such as Bisto pigs-in-blankets gravy granules all proving very popular.”

FTSE 100 seen lower on Wall Street weakness

07:49 , Graeme Evans

Sterling continues to trade above $1.23 after weak figures from the US economy and a robust inflation reading in the UK combined to put pressure on the dollar.

Speculation that the US Federal Reserve will be in a position to ease its approach on interest rates was fanned by figures showing bigger-than-expected declines in US retail sales and producer prices.

In contrast, traders expect the Bank of England to hike rates by 0.5% next month after this week’s evidence of a tight labour market and persistent price pressures.

The updates from the US economy led to weakness on Wall Street yesterday as the Dow Jones Industrial Average and S&P 500 fell by more than 1.5%.

The FTSE 100 index, which started this week near a record high, is forecast by CMC Markets to open 38 points lower at 7792.

Deliveroo UK orders top £1 billion for the first time

07:44 , Simon Hunt

Quarterly orders in the UK and Ireland at Deliveroo topped £1 billion for the first time, as the fast food delivery business hailed strong demand despite the more troubled economic conditions.

Gross transaction value, a measure of the size of total orders, climbed 9% to £1.03 billion, while GTV for the group as a whole was also up 9% to £1.8 billion.

Will Shu, Founder and CEO of Deliveroo, said: "I am proud of the team delivering significant improvements in profitability whilst also still delivering growth in a difficult macroeconomic environment.

“I am particularly pleased that we have done so while improving our consumer value proposition, meaningfully increasing the selection of restaurants and grocers available on the platform.”

Dunelm profits set to beat City hopes

07:37 , Graeme Evans

Homewares chain Dunelm continues to be one of the strongest performers in UK retail, telling investors today that full-year profits will be ahead of City forecasts.

Sales of £478 million in the second quarter of its financial year were 18% higher than the same period last year and up 48% compared to the pre-pandemic period.

It said its Christmas offer sold well and that it benefited from customers seeking ways to mitigate higher heating costs.

The company left its guidance for 2023 profits unchanged from September, which places it ahead of current consensus market expectations of around £172 million.

Boohoo says delivery times hurt demand as sales fall 13%

07:27 , Simon Hunt

Boohoo has said delivery troubles are hurting demand as it saw a 13% drop in sales in 2022.

The online fashion retailer, whose shares have fallen 55% in the past 12 months, said “extended delivery times compared to pre-pandemic levels [were] continuing to affect the proposition.”

Sales in the UJ fell 13% at constant currencies to £401 million, the firm said, while sales in the US decline further – down 17% to £129 million.

Boohoo rival Asos last week said it had to bring forward the cut-off date for Christmas orders because of ongoing disruption to delivery times caused by strikes.