14th Jan 2016 11:15
LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Tesco said group like-for-like sales in the third quarter of its financial year fell, but they rose over the key Christmas period to January 9, leaving the supermarket chain on track for full-year profit. The UK's largest retailer said group like-for-like sales in the 13 weeks ended November 28 fell 0.5% year-on-year as a 1.5% decline in the UK offset 2.9% growth internationally. However, over the Christmas period in the six weeks to January 9, group like-for-likes rose 2.1%, with 1.3% growth in the UK and 4.1% growth internationally. Together, covering the 19 week period to January 9, group like-for-like sales increased 0.4%, which Tesco said was its first reported increase in over four years.
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Burberry Group said like-for-like sales were flat in the third quarter of its financial year, a better performance than in the second quarter, as its key market of mainland China returned to growth. The brand, known for its scarves and trench coats, said its retail revenue for the quarter was GBP603.0 million. Retail revenue was flat on a like-for-like basis, an improvement on the 4.0% decline seen in the second quarter. Total retail revenue was up 1.0% in constant currencies. The group saw an improvement in its Asia Pacific business. Though Hong Kong and Macau remained weak, mainland China returned to growth. Burberry shares have suffered in recent months from concerns about a slowdown in sales in China and Hong Kong, two key markets for Burberry.
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Associated British Foods reported a fall in revenue in the 16 weeks to January 2 as it continued to be hit by unfavourable currency exchange rates, which it said will hit adjusted earnings for the full year. The group, which owns discount fashion retailer Primark as well as British Sugar, along with agriculture and consumer goods businesses, said group revenue in the 16-week period fell 2.0% year-on-year, though grew 3.0% in constant currencies. At Primark, sales rose 3.0%, somewhat hit by a drag from the weak euro. At constant currency, sales would have risen 7% year-on-year.
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Sports Direct International disclosed hedge fund manager Crispin Odey has raised his stake in the company to around 5.0%, coming after consistent falls in the company's share price and less than a week after it issued a warning on Christmas trading. In a stock exchange filing, Sports Direct said Odey Asset Management has increased its stake in the business to 5.0% from 1.4% previously.
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Distribution and outsourcing group Bunzl said Chief Executive Michael Roney will step down after its annual general meeting in April and will be replaced by Frank van Zanten. The FTSE 100-listed group said Roney will leave after the AGM, due to be held on April 20, having served as chief executive for more than a decade. Van Zanten moves from the role of managing director of Bunzl's Continental Europe business. He will join the board on February 1 and take over when Roney retires in April.
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Home Retail Group said its pretax profit for the year to the end of February will be at the lower end of market expectations as it posted a mixed trading performance for its Argos catalogue retail business but a rise in like-for-like sales at Homebase, its DIY and garden centre retail arm that has been put up for sale. The company said its pretax profit for the year will be at the lower end of market expectations of GBP92.0 million to GBP118.0 million. This would be down from GBP132.1 million a year earlier. Home Retail said total sales for Argos in the 18 weeks to January 2 rose 0.9%, though like-for-like sales fell 2.2%, with the group's new digital concession locations the main contributor to the sales growth. For Homebase, Home Retail said total sales fell 4.0%, even as like-for-like sales grew 5.0%, as the restructuring of its store base, including the closure of underperforming stores and a focus on a smaller overall portfolio, paid dividends.
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Separately, Home Retail late Wednesday confirmed it is advanced talks for the potential sale of its Homebase business to Australia's Wesfarmers Ltd for a cash consideration of GBP340 million. Home Retail said that it had begun talks with Wesfarmers in September, and had received a firm offer letter in November from Wesfarmers. Wesfarmers has completed its due diligence, and the two companies are currently finalising the transaction documentation, Home Retail said, although it cautioned there can be no certainty any transaction will be agreed.
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Sports and outdoor clothing retailer JD Sports Fashion said trading remained good during the key Christmas period, with like-for-like sales rising, and upgraded its expectations for the year to the end of January again. JD Sports, which upgraded its full-year expectations twice last year thanks to strong trading, said like-for-like sales in its core estate, including in Europe, rose 11% in the five weeks to January 2. As a result, the group said its headline pretax profit, before exceptional items, for the currently financial year is anticipated to be higher than the GBP136.0 million markets currently expect.
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ASOS reported growth in revenue in the four months to the end of 2015 as sales rose both in the UK and internationally, boosted by price investments and record sales over 'cyber weekend'. The online fashion retailer said total group revenue in the four months ended December 31 grew 23% to GBP459.7 million from GBP374.7 million in the same period the year before, as total retail sales rose 22% to GBP446.9 million from GBP365.2 million.
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SuperGroup reported growth in revenue in the Christmas period as it continued with expansion plans and store roll-outs in Europe. The clothing retailer and owner of the Superdry brand, said retail revenue in the 11 weeks ended January 9 rose 15% year-on-year to GBP143.5 million from GBP125.2 million. In the 37 weeks to the same date, retail sales increased to GBP315.6 million from GBP256.8 million. SuperGroup said revenue in the Christmas period was boosted by its European store roll-out programme. It opened 11 net new stores in the period, of which four were in Germany.
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B&M European Value Retail reported growth in revenue in the third quarter of its financial year as strong sales in the UK offset a weaker performance in Germany, the latter hit by the weak euro. The discount retailer said total sales in the 13 weeks ended December 26 rose 23% to GBP647.8 million from GBP527.9 million in the same period the year before.
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Alliance Trust named Robert Smith, Lord Smith of Kelvin as its new chairman, marking the appointment of a successor to Karin Forseke, whose departure was revealed in November last year as part of big changes at the group. Currently the chairman of UK Green Investment Bank PLC, Forth Ports Limited and IMI PLC, Smith is known for his time as chief executive and then vice chairman of Morgan Grenfell Asset Management, which was eventually renamed Deutsche Asset Management, between 1996 and 2002.
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Bookmaker William Hill said its operating profit for 2015 was in line with market expectations and said it is well positioned to deliver growth in 2016. The group, which is contending with a wave of consolidation in the gambling industry in which it has yet to participate, said its operating profit for the full year will come in around GBP290.0 million, in line with market expectations. The group said its gross win margin in the fourth quarter, covering the 13 weeks to December 29, was broadly in line with its expectations, while its net revenue from its core online gaming markets, including the UK, Italy and Spain, rose 14% year-on-year.
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Building products distributor SIG said it recorded only marginal like-for-like sales growth in 2015 and that its reported revenue has taken a hit from the weak euro and a tough UK market. The FTSE 250-listed company said group sales for 2015 hit GBP2.57 billion, down 1.4% due to the group taking a hit in its European operations from the weak euro. In constant currencies, revenue rose 3.6%, though the majority of this was derived from acquisitions, with only 0.2% like-for-like, constant currency growth in sales. SIG also maintained its underlying pretax profit guidance for the year and said its gross margin should be broadly flat year-on-year.
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Booker Group reported growth in sales in the four months to January 1 as its newly-acquired Budgens and Londis convenience store chains were successfully integrated into the business, although like-for-like sales declined. The food wholesaler and convenience store operator said total sales in the 16 weeks to January 1 rose 11% year-on-year, while non-tobacco sales grew 12% and tobacco sales increased 7.4%. Like-for-like sales including the Makro wholesale chain declined 3.1%, while non-tobacco like-for-likes fell 1.3%, and tobacco like-for-likes decreased 6.9%.
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MARKETS
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Despite some positive Christmas trading updates from UK retailers, stocks in London were trading mostly lower, with the FTSE 100 falling to its lowest level since August 2015. Brent oil slipped below USD30 overnight before recovering, hurting oil-related stocks. Investors were looking ahead to the Bank of England interest rate decision at 1200 GMT. Wall Street was pointed to a lower open.
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FTSE 100: down 1.9% at 5,849.18
FTSE 250: down 1.8% at 16,396.09
AIM ALL-SHARE: down 1.0% at 711.23
GBP: down at USD1.4369 (USD1.4415)
EUR: up at USD1.0916 (USD1.0824)
GOLD: up at USD1,090.92 per ounce (USD1,088.10)
OIL (Brent): flat at USD30.44 a barrel (USD30.62)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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US President Barack Obama and Russian President Vladimir Putin discussed the Syrian conflict ahead of peace talks later this month, the White House said. In a telephone call on Wednesday, the leaders discussed "the urgent need to implement" a UN Security Council resolution agreed last month that provided a road map for the peace process, spokesman Josh Earnest said. They also talked about the need for "productive discussions" between the Syrian opposition and government and the importance of humanitarian aid reaching besieged communities.
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The US economy continued to expand at a modest pace despite problems in the energy and manufacturing sectors, according to the Federal Reserve's Beige Book. The Beige Book, a collection of anecdotal reports from the Fed's 12 district, revealed that consumers remained in a relatively upbeat mood amid low gas prices. Economic activity has expanded in nine of the districts since the previous Beige Book report.
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Germany's wholesale prices continued to fall in December but the pace of decline slowed further, Destatis reported. Wholesale prices decreased 1% year-on-year in December, slower than the 1.1% drop seen in November. Nonetheless, the index has been falling since July 2013.
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Bomb attacks in the Indonesian capital Jakarta may have been the work of militants linked to Islamic State, deputy police chief Budi Gunawan says. Budi says there were communication between an Islamic State operator in Syria and militants arrested in Solo, Central Java, in August for allegedly planning attacks. "The Solo group has prepared cells to carry out what they called a 'bomb concert' that was supposed to be played on New Year's Eve," Budi is quoted by BBC Indonesia as saying."
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Iran expects the 13-year-long dispute over its nuclear ambitions to finally come to an end this weekend, Deputy Foreign Minister Abbas Araghchi said. While Western diplomats did not discount the possibility that the implementation of the nuclear deal between Tehran and six world powers could start then, they told dpa that no day had yet been fixed. In Washington, Secretary of State John Kerry said implementation day, when sanctions relief will begin under the deal, would take place "very soon, likely within the next coming days somewhere."
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A car bomb blast outside a police building in south-eastern Turkey killed a police officer and five civilians, including a 5-month-old baby, Prime Minister Ahmet Davutoglu said. The governor's office in Diyarbakir province also reported 39 people were injured in the attack, which authorities were blaming on the Kurdistan Workers' Party. The police headquarters and surrounding buildings were heavily damaged in the blast, which took place in middle of the night. The assault on the police station in Cinar district lasted 40 minutes and also involved attacks with firearms and rockets. Members of security forces and civilians were among the injured.
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The European Commission launched an investigation to check whether Polish constitutional court reforms breach fundamental EU values, under a previously unused mechanism aimed at preventing serious threats to the rule of law. The procedure allows the EU's executive to analyse the situation in a member state and draw up recommendations. In the case of non-compliance, Poland could ultimately face a suspension of voting rights in the EU, although few expect this to happen. Poland's new conservative government, which took office in November, has come under fire for a string of measures that critics say aim to strengthen its grip on the judiciary and the media.
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Argentina's Finance Ministry said the country will make an offer to US hedge funds later this month to end a legal standoff that has locked the country out of global credit markets for more than a decade, The Wall Street Journal reported. Plans to make the offer come after Argentina on Wednesday resumed talks in New York with a group of hedge funds that sued Argentina in US courts.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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