FTSE 100 Live: Warnings from Walmart and Wickes trigger retail sell-off

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etail stocks have fallen sharply after warnings from Walmart and DIY retailer Wickes hit investor confidence.

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US giant Walmart downgraded its profits guidance due to the impact of higher prices on non-food sales, while Wickes cut profits guidance amid signs of a slower DIY market.

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In other updates, Marmite maker Unilever reported better-than-expeted sales growth of 8.1% for the first half of the year as higher prices offset a 1.6% fall in volumes.

Live updates

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Spending fears hit retail stocks, Wickes down 19%

Warnings from Walmart and the DIY chain Wickes triggered a wave of selling across the retail sector today as fears mount about a consumer spending slowdown.

B&Q owner Kingfisher was the biggest casualty in the FTSE 100 index, with shares tumbling by as much as 7% after rival Wickes revealed signs of a softer DIY market.

The disappointing trading update from Wickes came hours after US giant Walmart sent a shudder through the US retail sector by downgrading its annual profits guidance.

It blamed the impact of higher prices for slower demand in general merchandise, causing its shares to fall almost 10% in extended hours trading on Wall Street.

Fellow retailers Macy’s and Target were caught in the sell-off, while the downgrade did little for the nerves of UK investors after supermarket chains Tesco and Sainsbury’s joined Next and B&M European Value Retail in falling by around 2%.

In the FTSE 250, Marks & Spencer lost 5% and the Sports Direct owner Frasers Group surrendered a chunk of last week’s gains with a drop of 3%.

Wickes shares slumped 19% or 32.1p at 136.9p after it reduced its profit forecast to between £72 million and £82 million, a cut of up to 17% on City forecasts.

As well as slower DIY demand, it reported a softening of orders in the do-it-for-me home improvement market. Howden Joinery and Travis Perkins were impacted as their shares fell 3% and 5% respectively.

The FTSE 100 index held on to positive territory despite the retail sell-off, rising 55.36 points to 7361.66 thanks to stronger mining and energy stocks.

The UK-focused FTSE 250 dropped 51.42 points to 19,751.57, even though Hobbycraft’s private equity backer Bridgepoint rallied 11% after interim results.

Fallers included the Warhammer miniatures firm Games Workshop, having reported a 4% rise in full-year profits to £156.5 million and an improved dividend of 90p a share.

Shares lost 170p to 7360p but analysts at Peel Hunt have a target of 9500p based on opportunities for growth in North America and Asia. The broker added: “Hobbies tend to be pretty resilient during a recession and Games Workshop has plenty of new product to engage its hobby base.”

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City Comment: Time for a big tech clampdown

A WARM welcome to Sarah Cardell, who starts as interim CEO at the Competition and Markets Authority today.

What should be top of her inbox is a proper crackdown on our tech lords.

As General Counsel, Cardell launched a probe into Amazon earlier this month, looking at if the way it treats other retailers on Amazon Marketplace.

We need more.

Chris Philp, who was Minister for Tech until the other day, recently gave a speech calling for “lighter touch regulation” to make Britain’s regulatory regime “a source of national competitive advantage”.

Ministers always think that less regulation equals more business, but it equally often favors the established companies with all the lawyers.

Far better would be to empower Cardell to clamp down on the big boys wherever she can. They plainly won’t stop otherwise.

Google is expanding into retail, education and enterprise. Apple is now a payment service provider and Microsoft is a behemoth in cloud computing and gaming.

Despite recent headwinds, Facebook still commands the attention of over three billion users. Microsoft has 1.4 billion active devices running Windows 10 or 11. This reach provides the tech giants with an insurmountable advantage over any start-up.

The power of these giants is difficult for any upstart to overcome. And when they start offering ‘free’ services (or adopt predatory pricing strategies) in a competitor’s space it’s game over for the newcomer.

The fight amongst streaming services is one thing. What happens when the battle turns to cybersecurity? Microsoft’s security business is growing fast. It has committed to spending a further $20 billion over the coming years. How is that competitive, and what happens if Microsoft falls victim to hackers from China, Iran, or North Korea?

Cardell should go for it.

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More strife in the air trade

STRIFE in the air trade grew today when easyJet and Heathrow both reported fresh losses that might at least convince customers that they are not the only ones suffering from travel chaos.

Amidst a war of words between airlines and airports as to who is to blame, easyJet’s woes show little sign of ending.

With arch rival Ryanair yesterday moving back into the black with a quarterly profit of £145 million, easyJet today reported a £114 million loss for the last three months.

CEO Johan Lundgren said: “The unprecedented ramp up across the aviation industry, coupled with a tight labor market, has resulted in widespread operational challenges culminating in higher levels of cancellations than normal.”

Since Covid, easyJet’s losses have soared past £2 billion. It was unable to say today when it might return to profit. Further flight cancellations seem likely. It said it will “continue to fine tune our schedule if required”.

Lundgren says Brexit is partly to blame for hiring problems that have led to staff shortages on the ground.

Yesterday Ryanair’s punchy CEO Michael O’Leary rounded on Heathrow boss John Holland-Kaye. He said: “Heathrow is an airport that couldn’t run ap***-up in its own brewery.”

read more here

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DIY retailers lower, commodity stocks boost FTSE 100

A warning from Wickes that the DIY market has softened in recent weeks sent shares in B&Q owner Kingfisher down by 6% today. Howden Joinery also dipped 4% and Travis Perkins fell by 7%, while All-Share stock Wickes slid 17% after its trading update.

Other retailers including Tesco and Sainsbury’s were also under pressure, falling by around 2% after last night’s profits warning from US giant Walmart.

Stronger commodity-focused stocks and a rise of 3% for Unilever meant the FTSE 100 index stood 35.87 points higher at 7342.17. The FTSE 250 dropped 100.42 points to 19,702.57, with big retail fallers including Marks & Spencer after a decline of 5%.

Shares in easyJet were close to their opening mark at 375p following the airline’s first quarter trading update, while Hobbycraft’s private equity backer Bridgepoint rose 5% after interim results.

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OneWeb agrees merger with Eutelsat in £2.8 billion deal

British satellite firm OneWeb has agreed a merger with French firm Eutelsat in £2.8 billion deal as the pair look to take on rival Elon Musk to provide global internet connectivity from space.

Under the terms of the deal OneWeb would be wholly owned by Eutelsat, with OneWeb shareholders trading their stakes for Eutelsat shares.

OneWeb, which is part-owned by the UK government, would remain headquartered in the UK, while Paris-listed Eutelsat would seek an additional London listing.

The move means the companies would share a combined 464 satellites, giving them the muscle power to take on the likes of Elon Musk’s SpaceX Starlink or Amazon’s Project Kuiper satellite program.

OneWeb was bailed out by the British government in 2020 to the tune of £400 million after it filed for bankruptcy.

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Unilever “treading fine line” as sales rise

Unilever shares are 2% higher after the consumer goods giant said underlying sales growth for 2022 will be higher than its previous guidance in the range of 4.5% to 6.5%.

The increase comes after it reported a figure of 8.1% in the first half, against expectations of 7% growth. This comprised 9.8% price growth and was offset by a decline of 1.6% in volumes.

The sales progress was offset by the impact of cost inflation on its operating margin, which declined by 180 basis points to 17% in the first half. Operating profits rose 4.1% to 5 billion euros (£4.24 billion).

Richard Hunter, head of markets at Interactive Investor, said: “Unilever is treading a fine line between growth and pricing out some of its customers, but for the moment the strategy is holding up.”

Read more here

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Rolls-Royce appoints new CEO

Engines giant Rolls-Royce has appointed former BP executive Tufan Erginbilgic as its next chief executive.

He will take up the role on 1 January, succeeding Warren East who announced his intention to step down in February.

Erginbilgic is currently a partner at Global Infrastructure Partners, a private equity firm focused on large-scale investments in the infrastructure sector.

He previously led BP’s downstream business, having spent 20 years with the oil giant prior to his departure in 2020.

Rolls-Royce chair Anita Frew said: “He is a proven leader of winning teams within complex multinational organizations, with an ability to drive a high-performance culture and deliver results for investors.”

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Walmart warning hits US shares, FTSE 100 steady

Shares in US retailers were sharply lower in extended trading on Wall Street last night after grocery giant Walmart downgraded its annual profit guidance.

The chain blamed the impact of rising prices on consumer spending in its general merchandise operation for the cut to quarterly and full-year estimates.

Walmart shares fell by just under 10% and dragged other retailers lower, including Macy’s and Target. US futures markets are pointing to a weak opening later after Monday’s session saw the Dow Jones Industrial Average and the S&P 500 close moderately higher.

In an otherwise robust…

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Credit: www.standard.co.uk /

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