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What to Watch: Greggs hit by sales slowdown, Footasylum takeover in doubt, and Sainsbury exec poached

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
A Greggs branch in Liverpool, UK. Photo: Phil Noble/Reuters

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Greggs hit by sales slowdown

Shares in Greggs (GRG.L) sunk by 5.5% on Tuesday after the bakery chain said costs were rising and sales growth was slowing.

Greggs said Britain’s planned exit from the European Union was pushing up staffing and ingredient costs. The company also revealed slowing growth, although total sales still rose by 12.4% in the 13 weeks to the end of September.

“While sales continue to be very good, the pace of new store openings has been scaled back to a net 90 from previous guidance of net 100 additions,” said Russ Mould, investment director at stockbroker AJ Bell. “It has also highlighted cost pressures from staff and food input costs.

“Interestingly the word ‘vegan’ isn’t even mentioned in the latest update, which might suggest that the buzz around its alternative sausage rolls is starting to die down. There is also no mention of plans to introduce vegan versions of the rest of its product range.”

Footasylum takeover in doubt

The Competition and Markets Authority (CMA) has launched a full probe into JD Sports (JD.L) proposed takeover of shoe shop Footasylum.

The CMA said the deal could “result in a substantial lessening of competition.”

JD Sports executive chairman Peter Cowgill said: “I strongly disagree with this. This transaction will not result in any price increases or a reduction in product ranges or service quality.

“The focus of all of our Group businesses is to ensure we deliver a best in class, multichannel experience to our consumers by offering a compelling product proposition."

Shares in JD Sports fell by 1.9%.

Sainsbury’s exec poached by WPP

Ad giant WPP (WPP.L) has poached a senior Sainsbury’s (SBRY.L) executive to become its new chief financial officer.

Sainsbury’s said that John Rogers, the CEO of Argos, will leave the company at the end of the month.

"John is not only an accomplished CFO, but also a leader with extensive experience of business transformation,” Mark Read, CEO of WPP, said. “His priority will be to lead a finance function that best fosters investment in creativity, technology and talent in support of WPP's new strategy for growth."

Mike Coupe, CEO of Sainsbury’s, said Rogers had “made an outstanding contribution to the business.”

“He leaves Sainsbury's with our best wishes for the future,” Coupe said.

Sainsbury’s said Rogers’ responsibilities will be split between two Argos executive. It gave no update on succession.

"I have thoroughly enjoyed my time working at Sainsbury's over the last fourteen years and, in particular, the last three years as CEO of Sainsbury's Argos,” Rogers said. “The opportunity to work with WPP, however, was too good to miss and I look forward to being a part of WPP's leadership team as it embarks on its new strategy for growth."

UK manufacturing suffers longest slump since financial crisis

UK factory production shrank for a fifth month in a row in September, according to new figures that suggest the longest manufacturing downturn since the financial crisis.

A widely watched purchasing managers’ index (PMI) on manufacturing performance across Britain showed a reading of 48.3 for September.

The figure was up from 47.4 in August, above expectations and with analysts highlighting increased stockpiling for Brexit.

But output still shrank, with figures below 50 on the index, by IHS Markit and the Chartered Institute of Procurement & Supply (CIPS), indicating a decline in trading conditions. Readings above 50 indicate growth.

A global slowdown, trade tensions and uncertainty over Brexit have been widely blamed for the woes of manufacturing firms in Britain and Europe.

Thomas Cook auditor EY investigated

The auditing watchdog has launched an official investigation into EY over its work on collapsed travel operator Thomas Cook.

The Financial Reporting Council said on Tuesday it had launched an investigation into EY’s auditing of Thomas Cook’s last set of results for the 12 months to September 2018.

If the FRC finds against EY, the company could face millions in fines. The watchdog can fine firms up to £10m and ban individuals involved in flawed audits from the industry. The FRC hit auditors with £43m in fines last year.

Credit Suisse exec quits over spying scandal

The chief operating officer of Credit Suisse (CS) has resigned over a spying scandal that rocked the buttoned up world of Swiss banking and threatened to topple the bank’s CEO.

Credit Suisse said on Tuesday that Pierre-Olivier Bouée had resigned as COO and stepped down from the board of directors and executive board. It follows an independent investigation into the tailing of a high-flying Credit Suisse banker who was poached by rival UBS.

Iqbal Khan, formerly head of Credit Suisse’s wealth management division, was tailed by private investigators working on behalf of the bank last month. Khan spotted his observers and eventually publicly confronted one of them in Zurich, leading to press accounts of the event. The story quickly spiralled and the board of Credit Suisse last week launched an independent inquiry to find out who was responsible.

Credit Suisse said on Tuesday that the investigation found Bouée ordered the observation of Khan without consulting any other senior executives or board members. Bouée authorised the tailing because he was concerned Khan may try to poach members of his former team to join him at UBS.

Titanic shipyard saved

A buyer has been found for the iconic Belfast shipyard Harland and Wolff, with the new owner pledging to save all its workers’ jobs.

UK-listed infrastructure company InfraStrata (INFA.L) plans to purchase two Harland and Wolff companies’ principal assets for £6m, it confirmed in a statement on Tuesday morning.

The company said all 79 employees who did not take voluntary redundancy earlier this year when their employer into administration will be kept on at the shipyard, where the Titanic was built. A new management team will be hired by the end of the year.

Markets quiet

Global markets were quiet on Tuesday.

Britain’s FTSE 100 (^FTSE) was down by 0.1%, while the France’s CAC 40 (^FCHI) was flat, Germany’s DAX (^GDAXI) was flat, and the Euronext 100 (^N100) was up by 0.1%.

Overnight in Asia, Japan’s Nikkei (^N225) closed up by 0.5%, the Hong Kong Hang Seng Index (^HSI) was up by 0.5%, and China’s Shanghai Composite (000001.SS) was down by 0.9%

What to expect in the US

US stocks future are pointing to a higher open. S&P500 futures (ES=F) were up by 0.3%, Dow Jones futures (YM=F) were up by 0.3%, and Nasdaq futures (NQ=F) were up by 0.4%.