Asos slumps on profit alert as retail bloodbath spreads online. The travails engulfing the High Street on Monday spread online, with fashion giant ASOS (ASC) warning on profits. In an unscheduled trading update, the retailer admitted it was not immune to the difficulties experienced by its bricks-and-mortar peers. The shock warning sent Asos’ shares tumbling 41%, or 1712p, to 2474p, and triggered a sell-off in other retail stocks. Rivals including Boohoo.com (BOO) (down 10.3%), Debenhams (DEB) (5.8%), JD Sports Fashion (JD.) (5.2%), Brown (N.) Group (BWNG) (5.1%), Marks & Spencer Group (MKS) (4%) and Next (3.1%), all fell. The alarm comes after Sports Direct International (SPD) Mike Ashley warned on Thursday that other big retail names faced “being smashed to pieces” because Brexit jitters stopped shoppers from spending and fewer people bought coats and jumpers in November. Associated British Foods (ABF) – Primark, usually seen as one of the industry’s more resilient names, sent a shiver through the High Street the week before after it warned of “challenging” trading conditions. Analysts’ now expect other brands to follow suit. Sophie Willmott, a retail analyst at Global Data, said: “Considering two of the stars of British retail, Asos and Primark, have experienced a slowdown in trade in November, other mid-market players must be in dire straits.” Clothing brand Bonmarche Holdings (BON) saw its shares halve last week after it said it will make a loss of up to £4 million next year, down from an expected £5 million profits. Ashley (Laura) Holding (ALY) said it had too many shops, and plans to cut 40 of them in the UK. Asos, a former stock market darling, blamed the warning on the unseasonably warm weather in November as well as the “unprecedented” level of discounting by competitors. Chief executive Nick Beighton said the number of promotions was “something I’ve not seen before”. He added: “We’ve responded but we’ve not gone as far as we’ve seen in our peer group.” This wasn’t helped by “fragile” consumer confidence, which meant his customers were spending less or buying cheaper clothes. Sales were poor in France, Germany and Australia too.
Plans for the biggest energy company merger since privatisation have fallen apart after SSE (SSE) said it would not set up a new listed energy supplier with its rival Npower. The pair called time on the eleventh hour talks to save the troubled merger after they failed to agree on new terms needed to fortify the nascent company against deepening energy market woes. The new company was expected to debut on London’s premium stock listing within months, after more than a year of negotiations, as the second largest energy utility in the market. But the Government’s looming cap on energy bills, combined with rising costs and competition, have made the deal “unsustainable” in its current form. Both energy suppliers have been wracked by customer losses and rising costs ahead of the Government energy price cap which will take effect this winter. The same pressures have caused multiple energy supply minnows to fold, leaving hundreds of thousands of customers temporarily without a supplier.
Just Eat (JE.) on Monday came under attack from a US activist investor, which called on the online takeaways giant to sell parts of the business and shake up management pay. Hedge fund Cat Rock Capital Management, which has a 2% stake in Just Eat worth around £80 million, claimed the firm has “become the worst-performing public equity in online food delivery globally”. The activist investor’s founder Alex Captain has written a letter to the Just Eat board. He said there is “shareholder frustration with management’s lack of accountability” for delivering on “significant growth potential”. The share price at Just Eat has slid by some 25% this year amid warnings it will invest more as competition from rivals such as Deliveroo and Uber Eats heats up
The Gym Group (GYM) on Monday opened its latest branch moments from Tottenham Hotspur FC’s new stadium, and told landlords it can help them fill space left vacant as retailers downsize or collapse. The listed firm’s new 16,000 square feet outpost will be next to Sainsbury’s on White Hart Lane in part of the building the grocer no longer needs. It will also launch a Monument site this month, bringing its estate size to over 150 gyms. The budget chain’s property director Jonathan Spaven said he is on the hunt for more London locations to open in next year
Safestyle UK (SFE) was a notable riser. ES backed this stock in the minnows column just two weeks ago. The double glazing firm issued yet another profit warning, but investors have clung onto hopes of a recovery next year. The AIM-listed firm forecast losses in 2018 will be between £8.2 million and £8.6 million rather than the £6.3 million analysts had been expecting. But it seems the worst is behind it after a legal battle this year which managed to put an end to its biggest rival Safeglaze — started by its former founder Mitu Misra. Safeglaze was eating into the company’s market share and poaching its staff. That matter was settled in October and a confidential non-compete agreement with Misra signed. Since then Safestyle said orders have improved
Norway’s central bank has raised its stake in West End landlord Shaftesbury (SHB) to almost a quarter as its battle with rival shareholder Sammy Tak Lee to dominate central London’s retail property intensifies. Norges Bank has picked up an extra 4m shares in the company, worth around £35m, taking its total stake to 24.5%, not far below the 26.5% controlled by Mr Tak Lee. The two parties have been ramping up their holdings in Shaftesbury, which owns swathes of Soho and Covent Garden, as they seek to tighten their respective grips on some of the country most high-profile high streets. Mr Tak Lee, who owns the Langham Estate of properties north of Oxford Street, first tried to buy Shaftesbury in 1991 and has been building up his stake over the past few years, leading to speculation he could be readying a takeover bid.
