FTSE 100 Live: Corporate insolvencies hit 13-year high, Pets at Home and AG Barr raise profits guidance
Pets at Home and Irn-Bru owner AG Barr today became the latest firms to upgrade profits guidance following robust Christmas trading.
The pet products retailer reported like-for-like sales growth of 8.3% in the 12 weeks to 5 January and said trading momentum had continued since then, meaning annual profits are likely to top previous guidance of about £131 million.
AG Barr, whose other drinks brands include Rubicon and San Benedetto, said an estimated 17% rise in sales for the year to Sunday left annual profits ahead of 2022’s level and slightly ahead of current City expectations.
Snap shares tank after losses top $280 million
Tuesday 31 January 2023 21:47 , Simon Hunt
The scale of the struggle facing the world’s largest social media firms was laid bare today after Snapchat owner Snap Incposted a whopping $288 million (£234 million) loss for the fourth quarter, reversing profits of $23 million it made in the previous year and sending its shares down as much as 12.6% in after-hours trading.
That brings its total losses to the year to over $1.4 billion, rounding off a difficult year for the firm which saw its share price lose about two-thirds of its value.
Snap boss Evan Spiegel said: “We continue to face significant headwinds.”
“We expect the headwinds we have faced over the past year to persist throughout Q1,” the company said.
FTSE 100 closes down 13 points: Evening wrap
Tuesday 31 January 2023 16:57 , Simon Hunt
The FTSE 100 closed down 13 points to 7,772 as investors braced for the next Bank of England interest rate rise on Thursday.
Ocado was the biggest loser of the day, down 5.3% to 646p. That means the stock is down since the start of the year, despite its promising start earlier in January which saw it rise past 800p.
Gurpreet Gill, Macro Strategist, Global Fixed Income, Goldman Sachs Asset Management, said: “With underlying inflationary pressures, including wage growth, picking up since the Bank’s December meeting, a 0.5% rate rise this week is largely priced in by markets.
“Looking ahead, we think the Bank of England may remain concerned around second-round inflation effects given high inflation expectations and firm wage growth. However, we think a slowdown in inflation over the coming months would support the case for a pause in policy tightening after a terminal rate of 4.25% is reached in March.
“We will also be looking out for any softening in forward guidance which currently indicates a commitment to act “forcefully” to tame inflation.”
Homeowners and housing market on watch for signs of peak rates into Bank of England hike
Tuesday 31 January 2023 16:25 , Simon Hunt
Mortgage holders across London are bracing for the Bank of England’s first decision on interest rates of 2023, in a move this week that will set the tone for the housing market and consumer spending into the rest of the year.
Decision makers in Threadneedle Street will join a busy run of action for major central banks, with the announcement due at high noon on Thursday. It will affect the repayments of thousands on variable rate home loans.
Most City experts expect the BoE’s Monetary Policy Committee to hike the base rate by 0.50% for the second meeting in a row, taking the rate to 4.0%. Much attention will also focus on the likely peak to BoE rates, where there is less agreement among economists, who are mainly split between 4.25% or 4.50%, probably reached around March.
Paperchase fails to find a buyer for its entire business and appoints administrators
Tuesday 31 January 2023 12:05 , Michael Hunter
Paperchase became the latest well-known name to appoint administrators to wind the business up after it failed to find a buyer for itself as a going concern.
The move puts the future of the 100-strong stationery chain’s shops at risk, along with around 800 jobs. Insolvency specialist Begbies Traynor will now try and sell parts of the business. Tesco confimed reports today that it is interested in buying the Paperchase brand, to take it into its existing shops.
Jan Marchant, Managing Director of Home and Clothing at Tesco said: “Paperchase is a well-loved brand by so many, and we’re proud to bring it to Tesco stores across the UK. We have been building out plans to bring more brands and inspiration to the ranges we currently offer, and this will help us to take those plans further.”
A well-known presence at London stations, the company took a hit from pandemic travel restrictions. Paperchase began in Kensington in the late 1960s.
Begbies said customers holding Paperchase gift cards had two weeks to redeem them. Paperchase joined clothing retailers Joules and M&Co alongside coffee chain AMT on the list of companies moving into the hands of receivers.
Lunchtime recap: New City fund swoops on £2.7 million shares in Hut Group
Tuesday 31 January 2023 12:01 , Simon Hunt
A £2.7 million swoop for the shares of Hut Group business THG was today revealed as the first move by a new City fund targeting “trapped” value in the stock market.Kelso Group, whose boss John Goold used to run small-cap broker Zeus Capital, described THG as “a hugely exciting but significantly undervalued business”.
The activist investor, which was set up at the end of last year, took a 0.4% stake in the nutrition and beauty products retailer and e-commerce platform at a price of 54.5p.
THG is currently worth just over £700 million, which compares with £5.4 billion when founder and current chief executive Matt Moulding listed the tech venture on the London stock market in September 2020 at a price of 500p.
Kelso believes that the nutrition division, which incorporates the MyProtein and MyVegan brands, could alone be worth in excess of THG’s current market value. Goold said the transition from entrepreneurial start up to a large listed company was never easy but that THG now had the building blocks in place for success. THG shares rose 4% or 2.3p to 56.8p following today’s maiden investment by Kelso, a performance that came during another downbeat session for the London market.
The FTSE 100 index fell 48.85 points to 7736.02, a decline that reflected worries that this week’s meetings by central banks including the Federal Reserve could signal the need to keep up their hawkish stance for some time yet.
The economic uncertainty weighed on housebuilder Berkeley Group, which dropped 102p to 4079p, while silver miner Fresnillo fell 24.8p to 811.6p.The FTSE 250 weakened another 97.15 points to 19,840.05 but there was cheer from Irn Bru firm AG Barr as shares jumped 16p to 543p on the back of a stronger-than-expected trading update.
Barr, whose other brands include Rubicon and San Benedetto, forecast an estimated 17% rise in sales for the year to Sunday.Small-cap investors also toasted English sparkling wine producer Gusbourne, which rose half a penny to 72p after it said a strong Christmas performance meant it expected to report revenues growth of 48% to £6.2 million for 2022.
Revolut to hire 1,700 more staff as London fintechs defy global jobs cull
Tuesday 31 January 2023 11:45 , Simon Hunt
While the tech layoffs headlines might be gloomy, recruitment is continuing in certain areas, notably in London’s world leading fintech sector, which appears to be remarkably resilient.
Just five of the 20 biggest London-based fintechs have had to reduce their headcount over the past six months, an Evening Standard analysis of LinkedIn data suggests, amounting to at least 250 redundancies. But many of their peers, including Zeps, Wise and Starling, are bucking the global layoff trend and have each added hundreds of new staff to their workforce in recent months.
As a whole, some 7,000 new jobs have been created by the UK’s biggest fintechs since January last year, with the lion’s share based in London. Revolut alone is responsible for almost half these new jobs, having doubled in size over the past year to 7,078 staff according to LinkedIn. And there’s no sign they’re slowing down.
Corporate insolvencies hit 13-year high
Tuesday 31 January 2023 10:27 , Simon Hunt
A staggering 22,109 companies became insolvent in 2022, new government figures show today, hitting a 13-year high and representing an increase of 57.3% from 2021’s figure of 14,059.
Christina Fitzgerald, President of R3, the insolvency and restructuring trade body and Partner at Edwin Coe LLP, said: “2022 was the year the insolvency dam burst. After two years of being supressed by Government support programmes, corporate insolvency numbers hit a 13-year high last year. This was mainly due to Creditors’ Voluntary Liquidations reaching their highest level in 62 years as more and more directors turned to this process to close down their businesses.
“After nearly three years of trading through a pandemic, and in the face of the end of Government support, rising costs and a cost-of-living crisis, many directors simply ran out of road this year and chose to close their businesses before the choice was taken away from them.”
Pets at Home breaks revenue records as Brits pamper their dogs and cats at Christmas
Tuesday 31 January 2023 09:43 , Michael Hunter
Pets at Home raised its full-year profit guidance after record revenue from its retail division in the third quarter, as customers continued to treat their pets despite a challenging economic environment.
Overall revenue was up 8.8% to £347.5 million for the three months to 5 January. Revenue from Pets at Home’s retail division was up by 8.0%, thanks in part to a record £8 million in a single day.
The company’s vets division -- made up of the Companion Care and Vets4Pets brands -- saw an 18.1% increase in revenue. As a result, the group now expects profit before tax for the full year to be “towards the upper end” of consensus estimates of between £126m and £136m, having previously expected profits in the middle of that range.
CEO Lyssa McGowan said a key reason for the growth was customers buying accessories for their pets in the lead-up to Christmas.
“We delivered a really pleasing Q3 with acceleration in sales momentum across the platform,” she said. “It was particularly pleasing to see our accessories category return to growth, supported by the strong performance in our Christmas range, demonstrating that consumers still want to treat their beloved pets in these challenging times.”
Gold on the up as investors fear inflation
Tuesday 31 January 2023 09:36 , Simon English
The price of gold is soaring as demand for the precious metal from both central banks and small investors rockets.
Today the price of gold was at £1.548 an ounce, a rise of more than 16% on the year, as investors sought to protect themselves from runaway inflation.
That’s a reflection of investor nerves about the future, with fears that major economies around the world are faltering.
Gold is seen as a safe haven investment that holds its value in the bad times.
The World Gold Council today says that annual gold demand increased 18% in 2022 at 4,741 tonnes.
That’s the highest since 2011. This demand was driven by “colossal” central bank buying and strong retail investment.
Demand for gold bars and coin in particular is high.
Louise Street, Senior Markets Analyst at the World Gold Council, said: “Last year we saw the highest level of annual gold demand in over a decade, driven in part by colossal central bank demand for the safe haven asset.”
As interest rates rise, gold’s allure ought to fade, however.
Street adds: “Gold’s diverse demand drivers played a balancing act as rising interest rates prompted some tactical ETF outflows, while elevated inflation spurred on gold bar and coin investment. In the end, overall investment demand was up 10% on the previous year.”
Some investors fear that many governments including the UK are over-borrowed with unsustainable levels of spending based on issuing new debt.
Neil Wilson at markets.com said: “Investors loaded up on gold as they sought shelter from soaring inflation and a major selloff in risk assets.”
Plug Power gives Johnson Matthey a boost with fuel cell partnership
Tuesday 31 January 2023 09:21 , Simon Hunt
International ambitions for growing the green economy got a boost today after a partnership was signed between British technology manufacturer Johnson Matthey and American renewable energy business Plug Power.
The deal, aimed at expanding Plug’s hydrogen power capability, will see Johnson Matthey supply catalysts and membranes to Plug – an essential component of a fuel cell which allows it to collect and store energy through the conversion of hydrogen and oxygen into water.
New York-listed Plug Power, which develops hydrogen fuel cell systems, is eyeing revenue of $5 billion by 2026 and $20 billion by 2030 amid a surge in the scale of the renewable energy industry. The firm, which also has facilities in Washington, has over 60,000 fuel cell systems and is the world’s largest buyer of liquid hydrogen.
Liam Condon, CEO of Johnson Matthey said: “For the rapidly developing hydrogen economy, this partnership is a game-changer.
“By bringing together one of the largest green hydrogen and fuel cell companies in the world with JM’s technology and manufacturing capabilities, we’re creating volume and scale for green hydrogen that hasn’t existed until now.”
Pets at Home jumps 13%, FTSE 100 lower
Tuesday 31 January 2023 09:08 , Graeme Evans
Profit upgrades have boosted Pets at Home shares by 13% or 42.8p to 374.2p and AG Barr by 3% or 18p to 545p at the top of the FTSE 250 index.
The pair’s better-than-expected trading updates were among the highlights of a largely downbeat session, with the FTSE 100 index down 0.6% or 46.23 points to 7738.64 and the FTSE 250 off 69.77 points at 19,867.43.
The top flight fallers board included several stocks from the banking sector as Barclays slipped 3.1p to 183.6p and Standard Chartered lost 12.8p to 675.2p.
One of the stronger performances in the FTSE 100 was achieved by Johnson Matthey, which lifted 4p to 2172p after its announcement of a long-term strategic partnership with Plug Power to accelerate the hydrogen economy.
Battle of the bankrupts as FTX sues Voyager for $446 million
Tuesday 31 January 2023 08:35 , Simon Hunt
Further signs of the fallout from last summer’s crypto crash emerged today as one bankrupt crypto business, FTX, has sued another bankrupt crypto business, Voyager Digital for $446 million (£361 million) as the pair battle for the scraps of their collapsed digital empires.
Voyager, which filed for bankruptcy in July, had demanded repayment of loans to FTX and Alameda, the hedge fund run by FTX founder Sam Bankman-Fried.
FTX, which went bankrupt four months later, said it duly complied, paying Voyayer $249 million September and $194 million in October, as well as making interest payments on the debt.
But since the repayments came only weeks before FTX’s collapse, the company argues they can be clawed back and used to pay off FTX creditors.
In a court filing, FTX accepted that Alameda used customer assets to help pay off its risky borrowing and lending, but suggested that Voyager had a shared responsibility.
Rate rise worries continue, FTSE 100 seen lower
Tuesday 31 January 2023 07:57 , Graeme Evans
The prospect of further interest rate hikes later this week by the Federal Reserve, Bank of England and European Central Bank has put markets in a cautious mood.
Investors are worried that inflation could prove more persistent than feared, meaning that central banks would need to keep up their hawkish stance for some time yet.
US markets closed lower last night, with a 1.3% fall for the S&P 500 being its second worst session so far this year.
Deutsche Bank strategist Jim Reid said: “Clearly there’s still plenty to navigate over the course of the week, but with US financial conditions having eased to their most accommodative in months, there’s an awareness that the Fed could seek to reassert their hawkish credentials through tomorrow’s decision.”
Wall Street futures markets are pointing to a moderately positive start when trading resumes later, although CMC Markets has forecast that the FTSE 100 index will open 18 points lower at 7767.
Energy saving products help sales at DIY chain Wickes
Tuesday 31 January 2023 07:46 , Michael Hunter
Growing demand for energy saving products has helped stop a decline in DIY sales at building products group Wickes as customers react to rising energy bills.
The 230-outlet chain launched a range of advice on cutting bills for every room in the house, its Sustainable House Guide, which offered easy online access to relevant products, helping boost demand for a range of products from draught excluders to loft insulation.
Overall DIY sales remained lower year-on-year, but sales to the building trade helped core like-for-like sales rise by over 5% year-on-year in the fourth quarter, the first increase of the year. For the full year, they were down 2%, but up a third from pre-pandemic levels. It also said a trend for quarter-on-quarter growth stuck into the fourth quarter and stood by existing profit guidance.
Wickes said its own energy costs were expected to be around £10 million higher in 2023 after the recent decline in energy prices.
Pets at Home lifts profit guidance
Tuesday 31 January 2023 07:37 , Graeme Evans
Pets at Home boss Lyssa McGowan described the retailer’s performance as “really pleasing” after annual like-for-like sales growth accelerated to 8.3% in the 12 weeks to 5 January.
The company operates 457 stores, many of which have vet practices and grooming salons.
Today’s trading update showed a record trading day of over £8 million for the retail side of the business, with all trading categories posting growth over the quarter.
Like-for-like revenues from veterinary services increased by 18% as the company’s general practices broke the £10 million weekly sales barrier for the first time.
A resilient margin performance, “strong grip” on operating costs and robust trading at the start of the current quarter mean the company is on track for the upper end of City forecasts of £126 million to £136 million. This is ahead of previous guidance of about £131 million.
Boost for Barr as energy drink acquisition helps sales
Tuesday 31 January 2023 07:35 , Simon Hunt
Barr’s acquisition of energy drink Boost has helped its sales soar over the past year, the company said today.
The drinks brand, which was acquired at the beginning of December last year in a £20 million deal, has strengthened the firm’s revenue, which it said was up 17% to £315 million for the year to 29 January.
Irn Bru maker Barr also said profits were set to come in ahead of analyst expectations.
In a trading update Barr said: “Our core brands have once again proven their strength and relevance to consumers. The newly acquired Boost and MOMA businesses will provide further room for growth as they develop both their consumer base and customer distribution.”
