UK share prices watch: Burberry in the red
Luxury goods retailer Burberry (LON:BRBY) and electricity and gas utility National Grid (LON:NG) are weighing on the FTSE 100 index today, with the companies’ respective results disappointing the market. Tomorrow’s UK share prices to watch meanwhile are set to include London-listed budget airline easyJet (LON:EZJ), whose half-year results will follow a challenging quarter for European carries.
Burberry and National Grid slide
Shares in Burberry are under pressure this Thursday after the luxury goods retailer posted a small drop in full-year revenue on a constant exchange rates basis, while confirming its guidance for broadly stable revenue and adjusted operating margin in FY 2020. Bloomberg reported that Morgan Stanley analyst Elena Mariani had said in a note that while the London-listed retailer’s sales in the previous year were in line with expectations, the outlook suggested that earnings before interest and taxes would decrease by a low single-digit percentage.
Ian Forrest at The Share Centre meanwhile commented that Burberry’s full-year results “were seen as disappointing with weaker sales growth, especially in its key growth markets in Asia,” as quoted by Proactive Investors. The analyst, however, reckons that investors should not overlook the positives in today’s statement.
“The company confirmed its previous full-year guidance, raised its target for cost savings and announced a £150mn share buyback along with an increase in the dividend,” he pointed out, forecasting that “the increased use of social media such as Instagram should also help to drive sales with younger consumers”. Burberry’s shares are trading more than five percent lower in early afternoon trade in London, underperforming a marginally positive FTSE 100 index.
National Grid’s results have also disappointed London investors this Thursday as the company posted a two-percent drop in underlying operating profit for the financial year ended March 31. The British utility, which also has activities in the Northeastern US, explained that the result reflected return of Avonmouth allowances and US tax reform, partly offset by higher property profit and favourable US legal settlements. National Grid’s share price has given up nearly 2.5 percent.
On the positive side, private equity and infrastructure company 3i Group (LON:III) is outperforming the market after reporting that its net asset value per share had climbed to 815p in the financial year ended March 31, up from 724p in the prior-year period. The group’s shares have gained more than one percent in intraday trading.
Lloyds Banking Group (LON:LLOY) is also in focus today, with the market awaiting the outcome of a highly-anticipated annual general meeting which could see the company face investor pressure over its pension arrangements for executives. The bailed-out lender meanwhile has unveiled plans to introduce quarterly dividends starting next year. Lloyds’ shares are steady, changing hands about 0.4 percent higher.
Outside the FTSE 100 risers and fallers, Thomas Cook (LON:TCG) has tanked as it disclosed that its underlying EBIT loss had increased by £65 million to £245 million in the six months ended March 31, reflecting margin pressure in its Tour Operator business. The company further booked a goodwill impairment of £1.1 billion relating to its 2007 merger with MyTravel, taking its loss before tax to £1.46 billion.
“Thomas Cook’s latest trading statement makes for grim reading,” said Laith Khalaf, senior analyst at Hargreaves Lansdown, as quoted by Proactive Investors. “The measures Thomas Cook is taking to get itself back on track look sensible, but with so many challenging factors outside its control, it’s still a hostage to fortune.” Thomas Cook’s stock has tumbled more than 17 percent this Thursday.
UK share prices to watch tomorrow
easyJet is due to post its half-year results tomorrow, which will come after FTSE 100 peer and British Airways owner IAG (LON:IAG) recently disclosed a fall in quarterly profits, which it attributed to fuel and foreign exchange headwinds, market capacity impacting yield and the timing of Easter which impacted European airlines in the first three months of 2019.
IG reports that easyJet’s first-half earnings are expected to be a negative, at -56p per share, while revenue is forecast to come in at £2.3 billion. The broker’s analyst Chris Beauchamp said in a note last week that Brexit and economic uncertainty continued to weigh on the airline.
The Sage Group (LON:SGE) also enters the UK share prices to watch tomorrow with an interim update which will come after in January, the software specialist posted a rise in revenue for the first quarter of its financial year, underpinned by growth in subscriptions. Hikma Pharmaceuticals (LON:HIK) is due to post a trading announcement tomorrow, ahead of its annual general meeting later in the day.
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