Not so ‘Super’dry

Wednesday, 12 December: Moments before the opening bell rang on London trading floors it was announced that a no-confidence vote had been triggered after tory rebels reached the 48 required signatures. Conservatives will vote later, and we will receive the result ofthe secret ballot tonight. The Prime Minister was scheduled to visit the IrishPM later this afternoon, in a continuation of talks with European leaders afterTuesday’s scrapped vote, but now she will remain in London and in her wordscontest the vote with everything she’s got. Of course, this is yet anotherspanner in the works in terms of the overall Brexit process, and arguablyTheresa May is correct when she claims that a new leader won’t have anyfundamental change on the negotiations. Many have been coining the phrase ofwanting to change the song by changing the singer today, and it’s true. Predictablythe pound was rocked from the news and hit 20-month lows against the dollarearly this morning, with investors given a day to position themselves for theanticipation of the result from tonight’s vote.

As the day progressed it seemed more apparent that the belief was May would survive yet again tonight. The FTSE100 steadily gained ground through the day, also buoyed from higher oil prices and optimism over US and Chinese trade tensions. The bookies have the implied probability at around 90% for May to win tonight, if there is another shock in British politics though, the leaders to replace her according to bookmakers are Jeremey Corbyn, Boris Johnson and Dominic Raab.

As mentioned, the FTSE 100 began the day well, as the pound was rocked from the news of the no-confidence vote. Eventually sterling managed to reverse early losses, with some believing May is unlikely to lose and others believing that there’s an increased possibilityBrexit will be scrapped if she does lose. Either way, it gave unexpected support to the pound and the FTSE closed the day’s trade 1.08% higher.

Some of the main stories on the markets today included Dixons Carphone, whose shares dived over 10% at the open after announcing a first half pre-tax profit loss. This is their first update as the transformation plan gets underway, one element of which targets cost savings of £200m. The group have written down the value of the mobile businessCarphone Warehouse, hence the share price decline, as well as no immediate signs of relief to consumer facing retailers. They have had a rough time of late, with profit warnings and store closures just some consequences of thetough consumer environment facing many businesses alike. Shares recoveredsomewhat to finish the day -5.96%.

Superdry shares wobbled yesterday ahead of what many expected to be a downbeat update….. and they were correct. Shares plummeted over 38% today as they attributed the poor sales to warm weather, affecting sales of coats and hoodies, which are historically their core products. Sales have remained under pressure in the early stages of the peak Christmas trading season and this is expected to drag on profits into fiscal 2019 with the business now expecting annual profits to be between £55mand £70m, below analyst expectations of c.£84m. As we mentioned yesterday it has been a very tough year for Superdry, who have certainly been impacted from unseasonably warm weather in the UK, consumer headwinds and problems with their product mix as they look to close stores in order to save costs – a common theme across many high-street retailers.

Wood Group shares were resigned to the bottom of the FTSE 100 today after expressing belief that revenue would be 10% higher than in 2017 as they returned to growth, with EBITDA in line with market expectations. Shares closed over 10% lower.

British American Tobacco today reported that deleverage efforts were on track as they backed full year guidance, as shares finished 0.5% higher.

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