Yahoo Finance What to Watch: BT earnings fall, Morrisons sales rise, and Superdry profit warning
Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:
BT earnings fall
BT (BT-A.L) annual underlying earnings fell by 2% to £7.4bn, the telecoms giant said on Thursday.
The company warned sales and profits are set to fall over the year ahead amid a “very challenging and competitive UK market.” BT expects underlying earnings to fall to between £7.2bn and £7.3bn over 2019-2020, with adjusted revenues expected to drop by around 2%.
On a statutory basis, pre-tax profits lifted 2% to £2.7bn in the year to 31 March on revenues 1% lower at £23.4bn.
“We need to invest to stay ahead in our fixed, mobile, and core networks, and we need to invest to overhaul our business to ensure that we are using the latest systems and technology to improve our efficiency and become more agile,” BT’s recently appointed chief executive Philip Jansen said.
Jansen said the group was keeping its investor dividend payout unchanged for both this year and next year “given our outlook for earnings and cash flow.”
Morrisons sales rise
Morrisons (MRW.L) has reported like-for-like sales growth of 2.3% for the 13 weeks to 5 May.
“We are improving the shopping trip and becoming more competitive for customers, and are pleased with another quarter of positive like-for-like sales,” chief executive David Potts said.
The supermarket also said its online business is temporarily suspending its capacity at a London Ocado warehouse.
This follows the fire at Ocado’s Andover facility, which has left the online grocer looking for more capacity. It is expected that Morrisons will be reintroduced to the facility in 2021.
Superdry profit warning
Superdry (SDRY.L) has warned that its pre-tax profits will be lower than the current range of market expectations.
It comes after group revenue declined 4.5% in the fourth quarter, due to weaker wholesale and online performance.
Wholesale revenue declined 9.3% in the period, while e-commerce revenue was down by 3.9%.
“My first priority has been to stabilise the situation, and all of us in the business are putting all our energy into getting the product ranges right and improving the e-commerce proposition, which are two important steps towards addressing Superdry’s recent weak performance,” interim chief executive Julian Dunkerton said.
“The impact of the changes we are making will take time to come through in the numbers but I’m confident we are heading in the right direction.”
Barratt upgrade
Housebuilder Barratt Developments (BDEV.L) has said its full-year outlook is “modestly” above expectations after a strong start to the year.
The group said total forward sales were up 2.4% to £3.4bn, while weekly net private reservations remained largely stable at 0.79 against 0.8 a year earlier.
But it became the latest builder to outline rising cost pressures, with build inflation set to be 3% to 4% in 2018-2019 and remaining at a similar level throughout 2019.
Ajax shares crash
Shares in AFC Ajax (AJAX.AS), which is listed on the Amsterdam stock exchange, fell by as much as 21.5% at the open on Thursday after Ajax were knocked out of the Champions League by Tottenham Hotspur FC on Wednesday evening.
Before Thursday morning’s fall, Ajax shares had rallied over 50% since March as the team went deeper in the European competition. The share price is still 23% higher than it was at the start of March despite Thursday’s fall.
Watches of Switzerland to float
Luxury watch retailer Watches of Switzerland has announced plans to list on the London Stock Exchange.
Watches of Switzerland said it plans to raise £155m in an initial public offering to help the company pay down its net debt of £120m.
"Our transformation is complete, the Group is now the UK's leading luxury watch retailer and has successfully entered the significant, but underdeveloped US market,” CEO Brian Duffy said.
“I am very excited for what lies ahead and the opportunity to take our growth strategy to the public markets."
Ross McEwan’s ‘patchy’ record
Outgoing Royal Bank of Scotland (RBS.L) CEO Ross McEwan leaves a “patchy” record with one “huge blot in his copy book,” according to the man who wrote one of the most in-depth books about the lender.
RBS announced last month that McEwan plans to leave the bank after almost five years in charge. McEwan said in a statement at the time that he was leaving the bank on “a strong and profitable footing.” Chairman Howard Davies thanked him for “one of the biggest UK corporate turnarounds in history.”
However, author and journalist Ian Fraser told Yahoo Finance UK he thinks McEwan’s record is “patchy” and said his handling of the bank’s Global Restructuring Group (GRG) scandal has been “a huge blot in his copy book.”
“Almost every single response that he has made to the GRG scandal has been flawed and part of a determined effort to downplay, minimise, and/or whitewash the entire thing,” Fraser told Yahoo Finance UK.
European markets
European stock markets were sharply lower on Thursday, amid continued fears about trade tensions between the US and China.
“The FTSE has been hit with a double whammy of trade war tensions and a few big names trading without the rights to their dividend including Centrica and Admiral,” according to Russ Mould, investment director at stockbroker AJ Bell.
“UK shares followed Asia lower after comments from US President Donald Trump about how China ‘broke the deal’ during trade negotiations,” Mould said.
Trump made the comments at a rally in Florida on Wednesday evening.
Britain's FTSE 100 (^FTSE) was down by 0.4%, Germany's DAX (^GDAXI) was down by 0.8%, France's CAC 40 (^FCHI) was down by 1.3%, and the Euronext 100 (^N100) was down by 1.1%.
Overnight, Asian markets suffered big losses too. Japan's Nikkei 225 (^N225) was down by 0.9%, Hong Kong's Hang Seng index (^HSI) was down by 2.3%, and China's benchmark Shanghai Composite (000001.SS) was down by 1.4%.
What to expect in the US
US stock futures were pointing to a lower open later on Thursday. S&P 500 futures (ES=F) were 0.8% lower, Dow Jones Industrial Average futures (YM=F) were down by 0.7%, and Nasdaq futures (NQ=F) were down by 0.9%. The VIX volatility-tracking index (^VIX) was up by 12.8%.
Companies reporting later on Thursday in the US include:
