Next pulls dividend, WPP cuts staff costs and headcount

London open

The FTSE 100 is expected to open 23 points higher on Wednesday, having closed up 1.91% at 5,958.50 on Tuesday.

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Fashion retailer Next pulled its dividend and said it did not anticipate paying one in January 2021 in response to the coronavirus pandemic as full price sales fell 41% in the three months to April 25. The company said the fall off in sales to date had been “faster and steeper than anticipated in our March stress test and we are now modelling lower sales for both the first and second half of the year”.

WPP announced further cost-cutting measures in response to the Covid-19 crisis on Wednesday, including voluntary salary sacrifice from more than 3,000 senior roles, as well as part-time working and some permanent headcount reductions. The FTSE 100 advertising conglomerate said its like-for-like revenue was down 3.8% in first quarter, although it still won $1bn in new business in the period. It has already suspended its 2019 final dividend and share buyback programme, adding it had plans in place to “flex costs” against a range of economic scenarios, to ensure cash flow and profit remained well-managed.

Barclays profit fell by more than a third in the first quarter as the bank set aside £2.1bn for bad debts during the Covid-19 crisis. Pretax profit for the three months to the end of March dropped 38% to £913m as revenue rose 20% to £6.3bn. The charge for impaired loans increased to £2.1bn from £448m a year earlier.

Newspaper round-up

The UK government’s plan to subsidise the wages of workers affected by the Covid-19 lockdown should be extended until at least autumn to prevent it from becoming a “waiting room” for redundancy, employers groups have argued. Demanding the chancellor, Rishi Sunak, make urgent changes to protect workers, firms and the wider economy, the Chartered Institute of Personnel and Development (CIPD) said the Treasury’s multi billion-pound coronavirus job retention scheme needed to be made more flexible to allow furloughed staff to work reduced hours. – Guardian

The families of bus drivers , shop workers, prison officers and other frontline staff who have died from coronavirus should be entitled to the £60,000 life assurance alongside those of healthcare workers, according to employees and unions. The trade union Unite has reported that 27 of its bus driver members have died after contracting the disease. Concerns have been raised about the financial protections offered to their relatives and those of other workers running essential services in direct contact with the public. – Guardian

Airbus is facing the “gravest crisis the aerospace industry has ever known”, the pan-European plane-maker said as it slumped to €481m (£418m) loss because of coronavirus. Posting figures for the three months to the end of March, chief executive Guillaume Faury said group revenues fell 15pc to €10.6bn. – Telegraph

Britain’s biggest lobby group for property companies has started to thrash out a deal with the Treasury to secure support for landlords facing billions of pounds in lost or deferred rents. John Glen, economic secretary to the Treasury, and Robert Jenrick, the communities secretary, held emergency talks with the British Property Federation yesterday to respond to landlords’ fears of a mass non-payment of rent at June’s quarter rent day. – The Times

The government’s new loans for small businesses may fail to launch on Monday as planned because of legal problems and the need to create new digital systems, according to senior bankers. The “bounceback” scheme offering 100 per cent government-backed loans of up to £50,000 is expected to plug unmet demand among micro businesses locked out of existing coronavirus loans. – The Times

US close

Wall Street closed weaker on Tuesday, as investors digested a number of earnings reports and several US states began the process of reopening their economies.

The Dow Jones Industrial Average ended down 0.13% at 24,101.55, the S&P 500 was off 0.52% at 2,863.39, and the Nasdaq Composite was 1.4% lower at 8,607.73.

Equities had opened on the other side of the line, with the Dow adding 148.54 points at the start of the session, initially continuing a rally started late last week after Donald Trump signed off on another economic stimulus package.

Investors were focussed on news that the states of Alaska, Georgia, South Carolina, Tennessee, Texas and others were all in the process of reopening their economies and getting residents back to work.

“Naturally the mood is helped by reports of cities and states around the world either starting to reopen or at least planning for it,” said Oanda's Craig Erlam.

“We appear to have moved beyond peak virus, for now, in the worst affected parts of Europe and North America, which is a relief, but any reopening is going to be extremely gradual so a return to normal is not going to happen any time soon.

“The 'new normal', that is.”