FTSE LIVE: Melrose ups the ante in GKN pursuit

Report lists shops at risk if interest rates rise

Nearly 400 retailers, including big high street names like New Look and Mothercare, could struggle to make higher debt repayments if interest rates go up as expected this year, a new report has claimed.

A study by financial analytics firm Company Watch of 1,625 retailers found that 392 companies were in its ‘warning area’, meaning they were 25 times more likely than fellow retailers to suffer financial distress.

Among those at risk were also Carpetright, Caffe Nero, fashion chain Forever 21, Poundland, Debenhams, Conviviality, AO World, House of Fraser and Paperchase.

Official Receiver: Further 78 Carillion workers redundant; 305 found new jobs

A further 75 workers have been made redundant after the collapse of Carillion according to the Official Receiver managed the wind down of the construction giant.

Those that have lost their job have been referred to the job centre service.

However 305 employees have been found new positions in facilities management, defence and construction.

So far 8,521 jobs have been saved and there have been 1,536 redundancies as part of the liquidation.

Close to half (46%) of the pre-liquidation workforce have now found secure employment, the Official Receiver confirmed.

Dropbox to float on US stock market

Dropbox, the service to share and store photos and large files, is set to float on Wall Street.

The company plans to offer 36million shares priced between $16 and $18, with the initial public offering valuing the company at more than $7billion.

Dropbox reported revenues of $1.11billion in 2017, up 31 per cent from $844.8million in 2016, but it remains loss-making – it made a loss of $111.7million in 2017, an improvement from $210.2million loss in 2016.

AJ Bell reveals flotation plans

Investment platform AJ Bell has revealed plans to list on the London Stock Exchange with an exclusive offer for existing customers.

It has appointed Numis Securities to explore its initial public offering (IPO) which looks set for late 2018 or early 2019.

Co-founder Andy Bell and Invesco Perpetual will remain ‘cornerstone’ shareholders after the IPO and the group isn’t looking to raise new capital.

Bell said: ‘An IPO is a natural next step in our journey and will provide a further boost to our future growth through the increased profile a stock market listing will give us.’

Cafe Nero in hot water over tax affairs

Caffè Nero has not paid a penny in UK corporation tax for a decade despite selling around £2billion of lattes and flat whites.

The company that controls the chain’s 637 shops in the UK and Ireland, Italian Coffee Holdings, has just reported sales of £288million for the 12 months to May 31, 2017 – but paid zero corporation tax for the year.

Italian Coffee Holdings, which has its headquarters in London’s Covent Garden, made a profit of just under £26million. But it paid no UK corporation tax because its parent company made a £25.5million loss.

The red ink was caused by interest payments on its large borrowings from banks.

US markets looking positive

Following last week’s solid jobs numbers, US markets look set to continue their positive rise.

Connor Campbell of Spread Ex said: ‘Investors were greeted with a blockbuster non-farm number AND a worse than forecast wage growth reading, a combination that allowed the markets to celebrate the US economy without having to fear the hawkish implications of an earnings increase. Those jobs figures were so good that the Dow Jones is threatening to cross 25500 for the first time in almost a fortnight when it opens later this Monday.

‘The European indices have shown themselves more than willing to ride the bullish wave that followed that jobs data this Monday. The CAC climbed 0.6%, and is now lurking promisingly around 5300, while the DAX shot up around 110 points and is eyeing 12500 for the first time since the end of February.

Just Eat shares drop after broker downgrade

Shares in food delivery app Just Eat have fallen 4.11% today, the biggest fall on the FTSE 100, after analysts at Deutsche Bank cut their rating of the stock to ‘sell’.

‘Just Eat is expanding into food takeaway delivery, an already crowded market, versus the company’s existing position as an order aggregation platform,’ Deutsche Bank analysts said in the note.

It is trading at 755p, but is still 37% up over the last year.

FTSE dips

After a positive opening, the FTSE 100 has dipped back into the red, losing 5 points to 0.07% lower than its opening level.

Shares dip at Eve Sleep despite strong sales as losses grow

Shares in Eve Sleep have fallen on its results today, down 0.16% to 127p a share.

Its losses grew to £19million last year, shaking shareholders’ confidence despite boss Jas Bagniewski claiming the company was still on track to make a profit in the next two years.

We are building a sizeable business across Europe that we believe will continue to win market share from traditional operators as the £26 billion sleep market continues to transition online,’ he said.

Eve Sleep mattresses posts 132% sales leap as losses widen

Online mattress retailer Eve Sleep has shrugged off widening losses amid a 132% surge in sales as its chief executive confirmed plans to post a profit by the end of 2019.

The company saw its statutory pre-tax loss grow from £11.3 million in 2016 to £19 million over the year to December 31, knocked by heavy investments in marketing and £2.1 million in one-off costs associated with its initial public offering (IPO) last May.

But sales more than doubled to £27.7 million over the period from £12 million a year earlier, with revenue growth in the UK and Ireland rising 109% to £16.1 million and international sales up 174%.

Drug company share price hit in regulatory setback

Shares in the FTSE 250-listed firm Vectura Group have fallen more than 7% this morning after a regulatory setback in the US.

The company says it is an ‘industry leading inhaled airways disease focused business’ and has been hit by news the US Food and Drug administration has asked for an additional study to be done into the development of a generic version of a Glaxsmithkline product.

Hikma Pharmaceuticals has also fallen on the news, but to a lesser degree with its share price down 1.8%.

Visa survey shows households are being ‘squeezed from every direction’

Samantha Seaton, CEO of Moneyhub, said three consecutive months of lower spending showed the economic climate is taking its toll on consumer confidence.

Household finances are still being squeezed from every direction and there appears to be no immediate end in sight. Wages aren’t rising fast enough to keep up with prices, borrowing looks likely to increase with another interest rate rise, and there remains a lot of uncertainty around what the reality of Brexit is going to be.

‘But there are some really innovate solutions available to help navigate this tricky time for household finances. By utilising the advances in technology, digital tools can make it easier to manage all financial assets in one place. These lead to smarter money decisions being made in the long run.

‘The introduction of Open Banking also opens up a wealth of opportunities for consumers to take charge of their financial future and improve the financial wellness of themselves and their family.’

GKN ‘is evaluating the revised offer’

GKN has responded to Melrose’s new offer saying: ‘The board of GKN is currently evaluating the revised offer.

‘Shareholders are advised not to sign any document which Melrose or its advisers send to them.

‘GKN directors will do the same in respect of their own beneficial shareholdings.

It said a further announcement will be made in due course.

Prada shares up 14%

Shares in Hong Kong listed Prada jumped 14 per cent this morning after the firm said sales had improved during the second half of 2017, in part due to the launch of a new range of trainers.

However, sales at the Italian fashion house still dipped 3.6 per cent in 2017 to £2.8billion as the brand fell out of fashion with US and Japanese customers.

Earnings at the luxury firm came in at £522.6million, declining by 10 per cent compared to 2016.

Prada is hoping a new range of £560 trainers, called Cloudbust, will continue to boost sales after its performance flagged last year.

More on this story here.

Cloudbust trainers from Prada

Consumer spending suffers weakest start to the year since 2012

Consumer spending had the weakest start to the year since 2012 as Britons tightened their belts last month.

The latest figures from Visa show expenditure in February was 1.1 per cent lower than last year, after a 1.2 per cent decline in January.

‘Rising living costs, lacklustre wage growth and relatively subdued consumer confidence are all likely playing a part in the ongoing reduction in household spending,’ said Annabel Fiddes, an economist at IHS Markit, which compiled the data for Visa.

‘As we look ahead into March, consumer spending is at risk of posting one of the worst Q1 results on record. Retailers will no doubt be hoping that the milder weather will put a spring in shoppers’ steps.’

The £58bn cost of Brexit to companies

British companies and the EU could be slapped with £58billion of extra costs if no deal is struck ahead of Brexit and the financial sector would be the worst hit according to a report published today.

Firms across the EU’s 27 countries will have to pay £31 billion pounds a year in tariff and non-tariff barriers if Britain leaves the bloc without a deal, the report by Oliver Wyman management consultants and law firm Clifford Chance said.

In return, British exporters to the EU will have to pay £27billion pounds a year.

‘These increased costs and uncertainty threaten to reduce profitability and pose existential threats to some businesses,’ the report said.

Melrose ups offer to GKN shareholders

Melrose Industries has raised the stakes in the takeover battle for GKN with a “final offer” that values the UK engineering giant at £8.1 billion.

In a twist in the ongoing GKN saga, Melrose has upped its offer from the £7.2billion bid it previously put forward.

The new bid offers GKN shareholders a total of £1.4 billion in cash and the chance to own a 60% stake in Melrose.

Melrose chairman Christopher Miller said in a letter to shareholders: ‘We are nearing the end of the customary offer timetable and it is now time for you to decide.’

It follows GKN’s announcement late last week that it had struck a deal with Driveline which would see Dana shareholders own 52.75% of the company and GKN the remainder, with the combined company set to be domiciled in the UK but traded on the New York Stock Exchange.

The deadline for shareholders to accept Melrose’s increased offer is 1pm on Thursday March 29.

FTSE shoots higher

The FTSE 100 has risen 0.2% this morning as the positive sentiment that spurred last week’s increases continued.

Markets have recovered somewhat from Donald Trump’s trade tariffs which sparked a global market shock.


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