Majestic Wine Turnaround Remains On Ice

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Thursday, 13 June: At the open this morning the FTSE 100 treaded water, with a host of factors for investors to vet early doors. Oil prices had shown a brief resurgence through the early hours but they remained relatively low, keeping the energy heavyweights subdued. Global trade fears also rumbled on, after yesterday’s announcement by Trump in which he declared he was the sticking point in agreeing on a deal with China (nothing about that was hardly breaking news). The FTSE 100 was also held lower by a raft of shares going ex-dividend as well as retailers displaying further weakness. News surrounding oil tankers in the Gulf of Oman developed through the day to push oil prices further after what appeared to be a deliberate attack on two oil tankers. Tensions have been rising since an attack in May that involved four tankers, and these have subsequently caused supply issues to help push oil back above $62 p/bbl. This spurred the FTSE to modest gains intraday before we ended more or less where we started, up a huge 0.01% for the session.

Tesco issued their Q1 update today and displayed LFL growth of 0.2% but analysts had been expecting more. After a stellar festive period for the supermarket, which really confirmed their return from the grave, the supermarket has continued to show they’re making progress but the market nonetheless remains competitive. It is likely analysts are worried about the faster progress being made among their smaller rivals. Shares eventually made ground on the day to finish 0.88% higher.

M&S shares also fell today after they stated a planned rights issue to fund their joint venture with Ocado Group received acceptances from 85% of shares issued. They closed -1.46%. Next also fell on the day, to the tune of 2.13%, assumingly down to the weakness of fellow retailers. The retailer updates didn’t stop there though. Morrison’s announced that they have expanded their delivery collaboration with Amazon across more UK cities leading shares to climb 2.15%. The winner on the FTSE 100 today was Ferguson, who saw their shares close 5.88% higher after London listed Trian Investors 1 Ltd acquired a 5.98% for £736m.

Majestic Wine’s update wasn’t toasting to success, as they revealed they swung to a pre-tax loss for fiscal 2019 and that they would focus on the Naked business. The investments into customers seem to have been a swing and a miss, with online competition rendering them ineffective. They have suspended the dividend and have chosen to pay a special dividend on the contingent that the Majestic business is sold. Shares declined 8.18%.

Just Group were the biggest climber on the FTSE 250 with shares climbing over 12%. The retirement specialist is focused on being capital self-sufficient by 2022 as it looks to improve shareholder value. The company announced that all of their directors were in the process of increasing their shareholdings as a demonstration of their confidence in the firm’s ability to execute the plan. Happy days.

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