By Live Commentary
The FTSE 100 closed down 74.71 points at 7532.95. Among UK companies with reports and updates are Frasers Group, Dr. Martens, GSK and Wood Group. Read the Wednesday 1 June Business Live blog below.
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No one could accuse Unilever chairman Nils Andersen of being ageist. The invitation to 79-year-old American activist Nelson Peltz to become a non-executive director of Britain’s biggest and most established fast moving consumer group smacks of desperation.
If everyone who had a 1.5 per cent stake in the UK’s top companies were to be invited on to the board, it would give a whole new meaning to shareholder democracy.
The FTSE 100 is flat heading into mid-afternoon trading.
Rolls-Royce, ITV and BAE Systems are leading the way with gains of more than 3 per cent each, while National Grid, AVEVA Group and Flutter are all down more than 3 per cent.
The FTSE 250 is up 0.3 per cent with a 20.3 per cent gain for Dr Martens offsetting losses led by Wood Group.
Travel sector shares took a hit as fears over impending chaos at airports and rising fuel prices weighed on the industry.
EasyJet shares descended 3.3 per cent or 17.6p, to 517.6p, Wizz Air tumbled 5.6 per cent, or 174p, to 2920p and British Airways owner IAG fell 5.5 per cent, or 7.4p, to 127.64p.
British manufacturing activity expanded in May at the weakest rate since January 2021, as producers of consumer goods struggled against a worsening cost-of-living crunch.
The final estimate of the S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) fell to 54.6 in May from 55.8 in April, as costs paid by manufacturers and selling prices again rose rapidly last month.
‘Growth in the UK manufacturing sector eased during May, as rates of expansion in output, new orders and employment all decelerated,’ S&P Global, which produces the PMI, said.
France is in recession as the cost of living crisis in the eurozone mounts, analysts warned last night.
The country’s national statistics agency INSEE said output fell by 0.2 per cent in the first quarter of the year – a downgrade from the stagnation that was previously reported.
London-listed stocks have retreated into late morning trading, with the FTSE 100 now down 0.1 per cent and the FTSE 250 up 0.1 per cent.
Energy firms lead losses on the blue chip index, with National Grid and Harbour Energy down 4.3 per cent and 4 per cent respectively. Losses are softened by gains for Rolls-Royce, Reckitt and BAE Systems.
The FTSE 250 is led by a 26.5 per cent gain for Dr. Martens after the firm posted a record year.
Freddy Khalastchi, business recovery partner, at accountancy firm Menzies:
‘Missguided’s demise is no real surprise – the company has been struggling to compete with fashion retail giants such as Boohoo and Shein. Alteri Investors bought a 50% stake in the company at the end of 2021, and has since ploughed in more funding in an attempt stave off insolvency.
‘The administrators’ decision to sell the business to Mike Ashley’s Frasers Group is a last-ditch attempt to turn its fortunes around, by securing jobs and allowing the brand to live on.
‘Missguided has not been able to keep up with the strategic growth of competitors in the sector. The big players are getting bigger while the small operators are getting swallowed up. For online fashion retailers, having a watertight returns policy is vital to solidify their financial position, as costs in this area can easily get out of control.
‘Recent cost hikes in relation to energy and fuel have impacted many retailers, especially those that were already teetering on the brink of insolvency. Missguided is not the first online-only retailer to feel the strain and others could follow as consumers tighten their belts to deal with economic shockwaves and cost of living increases, the likes of which have not been seen for many years.
‘It is possible for online fashion retailers to achieve growth in the current climate, but the situation at Missguided proves that just funnelling money into a business won’t help. Investing in a solid long-term growth strategy, close cost management and looking for ways to differentiate the business are vital to stay ahead of the competition.’
Wood Group has agreed to sell its built environment consulting business to Toronto-based WSP for $1.9billion (£1.5billion).
The sale follows a recent strategic review by the FTSE 250 energy services provider, which is working to raise funds and slash its debt pile.
Dr. Martens has defied inflationary pressure and is now ‘stronger than ever’ after reporting a huge jump in profits.
The FTSE 250 footwear brand sold 14.1million pairs of shoes, up 10 per cent on the previous year, as revenues jumped 18 per cent to £908.3million and profits rose 43 per cent to £214.3million in the year to 31 March.
House price inflation remains in double-digits, according to Nationwide Building Society, but it said there were early signs the red-hot property market was cooling.
Annual house price growth slowed to 11.2 per cent in May from 12.1 per cent in April, according to Nationwide’s index, but that still means the average home costs £27,082 more than a year ago, at £269,914.
Chris Daly, CEO of the Chartered Institute of Marketing.:
‘Dr Martens has bounced back from a difficult period due in large part to the relationship it has built with its customers – which fosters a shared purpose of pursuing social justice and supporting sub-cultures.
‘Importantly, the shoemaker has shifted its positioning as new trends have emerged and worked alongside its customers rather than preach to them. These ties with various subcultures, especially the music industry, has fed into the brand’s recent social media marketing – #TeamUpOnTheTrack – an Instagram Reels campaign that invites Dr Martens’ followers to use their creativity to create music visuals.
‘Whilst there may have been some hiccups due to supply chain issues, these do not take away from the fact that Dr Martens has a very engaged customer base, which is a great foundation from which to build upon.’
London-listed shares are on the rise this morning, with Dr. Martens surging 20 per cent after the footwear brand lifted its annual revenue forecast.
The FTSE 100 is up 0.2 per cent, extending gains for a sixth consecutive session, while the FTSE 250 is up 0.4 per cent.
Shares of Tullow Oil have added 1.8 per cent after the London-listed energy group launched plans to acquire Capricorn Energy in an all-stock deal valued at £656.9million.
Meanwhile, BT Group has slipped 0.2 per cent after the Competition and Markets Authority revealed it is investigating the telecoms group’s deal to combine its sports broadcasting business with Warner Bros Discovery.
The Czech billionaire in line to take over the National Lottery will have to wait an extra three months for a bumper payout after his company’s stock market listing in New York was delayed.
Allwyn Entertainment, which beat Camelot to the next National Lottery licence, has told investors its £7.4billion float has been pushed back to the third quarter of 2022 and its timing is ‘dependent’ on the US Securities and Exchange Commission.
Frasers Group has made a last-minute acquisition of Missguided after the women’s fashion retailer fell into administration earlier this week.
The firm, which was formerly known as Sports Direct under then-boss Mike Ashely, told investors on Wednesday it had bought ‘certain intellectual property’ of the retailer for a cash consideration of £20million.
Upon completion of the deal, Missguided is expected to be operated by its administrator Teneo for a transitional period of eight weeks before then operating as a standalone business within Frasers Group.
Centrica will storm back into the FTSE 100 in the latest reshuffle.
Shares in the FTSE 250 British Gas owner have risen more than 10 per cent this year following a surge in energy prices fuelled by the Ukraine war.
That is enough to see the business promoted to the top flight having lost its blue-chip status in June 2020.
Ships carrying Russian oil have been hit by a coordinated insurance ban from the UK and EU.
The prohibition will strive to keep the Kremlin out of the Lloyd’s of London market.
This latest embargo, which was first reported by the Financial Times, forms part of a new batch of sanctions from the EU and will impact Russia’s ability to export crude.
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