Revenue falls at M&S, Sophos swings to interim loss
London open
The FTSE 100 is expected to open 17 points lower on Wednesday, having closed up 0.25% at 7,388.08 on Tuesday.
Stocks to watch
Interim revenue at retailer Marks & Spencer fell 2% due to weaker home and clothing sales as the company posted a 17% decline in profits before tax and adjusted items. Food like-for-like sales grew 0.9% driven by volume, while clothing & home like-for-like sales fell 5.5%, reflecting “first half shape of buy and supply chain issues”, M&S said on Wednesday. Group revenue fell to £4.8bn from £4.9bn. Pre-tax and adjusted items profit was £176.5m, down from £213m a year earlier.
Student accommodation provider Unite Group said its £1.4bn acquisition of Liberty Living from the Canada Pension Plan Investment Board has been unconditionally approved by the Competition and Markets Authority. The deal is now expected to complete at the end of November.
Sophos swung to an interim loss before tax of $1.5m, compared with a profit of $26.0m in the first half of 2018, as finance and administrative expenses jumped by 62% to $72.3m. Turnover for the period rose by 5% to $365.8m, driven higher by 8% growth in subscription revenue and a particularly strong performance in the Americas.
Redrow told shareholders on Wednesday that for the first 18 weeks of the current financial year, trading had remained “encouragingly resilient,” despite ongoing Brexit uncertainty and relatively weak demand in the wider housing market. The FTSE 250 housebuilder said the value of net private reservations in the first 18 weeks to 1 November, excluding a £119.5m private rented sector sale at Colindale Gardens, was 2% ahead of last year at £598m. The sales rate per outlet per week on a like-for-like basis, excluding the Colindale sale, was 0.67, compared to 0.64 last year.
Newspaper round-up
More than 9,000 of the richest people in the UK collected more than £1m each in capital gains last year, exploiting a loophole that could result in them paying tax at a rate as low as 10%. Economists at the Institute for Fiscal Studies (IFS) thinktank said wealthy professionals often chose to form companies and partnerships to be eligible for lower capital gains tax (CGT) rates rather than collect salaries that would be subject to the top rate of income tax. – Guardian
The UK betting industry has devised five safer gambling commitments, as the embattled sector attempts to avoid having new regulations imposed on it by central government. The announcement comes in the same week that shares in UK gambling firms lost nearly £1.2bn in value, after the Guardian revealed that MPs had recommended curbs on online casino games worth more than £2bn a year to the industry. – Guardian
Walgreens Boots Alliance has been mulling a deal to go private in what could potentially be the largest ever leveraged buyout. The US drug store chain, which has a market value of $55bn (£43bn) and $16.8bn of debt, has had preliminary discussions with some of the world’s largest private equity firms, according to Reuters. – Telegraph
The government pressured Royal Bank of Scotland to foreclose on business customers and acquire their properties, according to the executive who ran the bank’s disgraced restructuring unit. Derek Sach, former head of RBS’s Global Restructuring Group, told the High Court yesterday that a Treasury agency had tried to influence many of the decisions taken by the division. – The Times
Sports Direct has said it will not rescue any more distressed retailers until politicians introduce better protection for shareholders facing losses from collapsed companies. Mike Ashley, the billionaire founder and chief executive of the sportswear chain, has a record of buying British retailers out of administration. He bought Jack Wills, a fashion brand, for £12.8 million in August. He also has snapped up House of Fraser, the department stores chain, Sofa.com, which sells furniture online, and Evans Cycles, the bicycle seller. – The Times
US close
Stocks on Wall Street finished in a mixed state on Tuesday, amid continued positive comments coming out of the ongoing US-China trade talks, and after the release of some surprising economic data.
The Dow Jones Industrial Average ended the session up 0.11% at 27,492.63 and the Nasdaq Composite was ahead 0.02% at 8,434.68, while the S&P 500 turned negative to fall 0.12%, closing at 3,074.62.
Speaking overnight, in remarks ahead of the opening of the second annual China International Import Expo, Chinese leader Xi Jinping said: "We must all put the common good of humanity first rather than place one’s own interests above the common interests of all."
At the same time, citing people briefed on the discussions, Bloomberg reported that Chinese and US officials were "wrangling" over to what degree Washington needed to roll-back previous trade tariffs.
That came even as US commerce secretary, Wilbur Ross voiced "reasonable optimism" that the two sides could get "something done" and that a phase one accord would be a precursor for a much more robust set of agreements.
On the economic front, the Institute for Supply Management’s (ISM) non-manufacturing purchasing managers’ index (PMI) surprised market watchers, coming in at 54.7 for October.
That was an improvement from the 52.6 print in September, and was well ahead of consensus expectations for a reading of 52.5.