Thursday, 17 May: If we’d published today’s blog this morning it would have read very differently to what it does now. UK gambling stocks were hit with the news this morning that the £2 maximum stake on fixed-odds betting terminals had been agreed under new rules by the UK government. As the London index opened stocks such as Paddy Power and William Hill were falling as investors jumped ship after bookmakers had previously warned the cut could lead to multiple shop closures; William Hill itself generates around half of its revenues from FOBTs, further warning that 900 of its shops could ultimately become loss making. Come lunch time, there was a sea of green across the gambling stocks on the London index with GVC (who have recently acquired Ladbrokes Coral) and William Hill >4% higher at the close.
British online supermarket Ocado dominated over the course of the day, gaining more than 50% intra day after announcing its partnership with America’s largest retailer Kroger. The deal means Kroger will get use of Ocado’s home delivery technology while also buying a stake (5%) in the British company. This latest partnership is Ocado’s 4th deal in 6 months, although its first in to the US. Three new locations for new warehouses this year will begin the expansion, with further locations for a further 20 warehouses over the next 3 years. Ocado shares closed 44.42% and takes it to near secured promotion to the FTSE 100 at the next quarterly review.
Mothercare’s initial restructuring plans don’t seem to have been enough as the once dominant British retailer has today announced it is set to close a further 50 stores as part of its restructuring plans. The additional closures mean the baby and children’s retailer will have 78 outlets by 2020, less than the 92 it expected to have by 2023 at its last restructuring announcement.
Few UK stocks went ex-dividend today and Royal Mail’s >7% loss after full year results couldn’t dampen the mood across the index. The FTSE 100 closed +0.70%, while the 250 (where Ocado is currently listed) rose 0.92%. A pension charge in the UK hurt Royal Mail’s full year profits while warning that it expects GDPR to impact letter volumes in the 2018/19 year.