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Wetherspoons swings to annual loss, Serco lifts guidance after strong third quarter

By Josh White

Date: Friday 16 Oct 2020

(Sharecast News) - London open

The FTSE 100 is expected to open 34 points higher on Friday, having closed down 1.73% at 5,832.52 on Thursday.
Stocks to watch

Pub chain Wetherspoons swung to an annual loss as it felt the full impact of the coronavirus lockdown and said the government's latest set of curbs had led to a 15% fall in like-for-like sales in the first 11 weeks of the current fiscal year. The company on Friday reported a pre-tax loss of £34m compared with £102m profit a year ago. Revenue fell by a third to £1.26bn and the final dividend was scrapped. "The recent curfew and introduction of table service only have been particularly damaging for trade, depressing sales for customers who find it too much 'faff', at the same time as substantially increasing costs," the company said.

Serco reported strong revenue growth in the third quarter on Friday, which in conjunction with good cost control, meant it was upgrading its full-year revenue guidance to around £3.9bn, and underlying trading profit to between £160m and £165m. The FTSE 250 outsourcing specialist said that would represent organic growth in revenues of around 15%, growth in underlying trading profit of over 30%, and an underlying trading profit margin of just above 4%. It said all of its regions globally were performing better than expected, and had increased their forecasts for 2020.

Jupiter Fund Management saw its assets under management jump by 42% in the third quarter to reach £55.7bn, although the increase was entirely due to the consolidation of assets from recently acquired Merian. Net outflows for the three months to 30 September meanwhile printed at £953m, partly offset by £0.8bn of market returns. Nevertheless, Jupiter branded products did see net inflows of £56m, even if market returns on this side of the business amounted to just £74m. The bulk of the outflows at Merian originated from its Systematic strategy funds, which saw £0.4bn walk out the door, while the Global Equity Absolute Return fund saw outflows of £0.2bn.

Newspaper round-up

New lockdown restrictions to be imposed across much of England from Saturday could be the "death knell" for many pubs and restaurants, the government has been told, as business groups voiced concerns about a wave of job losses within weeks. London, Essex, York and parts of Derbyshire are among the regions that will be subject to tier 2 curbs, meaning people from multiple households will not be allowed to mix in venues such as pubs, restaurants and bars. - Guardian

The bill for private consultants hired by the government to help combat the coronavirus pandemic has climbed to £175m, as the chair of an influential parliamentary committee revealed that MPs would investigate the multimillion pound use of management consultancies. The government has bought consulting services from almost 90 different companies as it scrambled to fill gaps in the civil service's pandemic response. - Guardian

Two of Britain's largest airlines were paid more than £70m of taxpayer cash to fetch PPE from China, according to new data which threatens to reignite the row over tendering at the height of the Covid crisis. The deals with British Airways and Virgin Atlantic were part of a massive drive to replenish stocks of protective kit from sources all over the world. They will have provided vital funding to the airlines at a time when almost no passengers were travelling. - Telegraph

The future of John Lewis and Waitrose will not be exclusively in retail, Dame Sharon White has said as she prepares to unveil a strategy for the group. Dame Sharon, chairwoman of the John Lewis Partnership, said yesterday that while it was premature to sound the death knell of the high street, the employee-owned business needed to find "some balanced sources of profit". - The Times

High street lenders are steeling themselves for a wave of mortgage and business defaults in the coming months. The Bank of England's quarterly credit conditions survey found that the volume of delinquent loans in the three months to September changed little from earlier in the year but suggested a reckoning is coming as jobs are lost and companies go bust in the final quarter. - The Times

US close

Wall Street stocks finished weaker on Thursday, making for the third consecutive day of losses in US equities.

At the close, the Dow Jones Industrial Average was down 0.07% at 28,494.20, the S&P 500 lost 0.15% to 3,483.34, and the Nasdaq Composite was off 0.47% at 11,713.87.

The Dow closed 19.8 points lower on Thursday, extending losses recorded in the previous session amid a flurry of corporate earnings.

Market participants left questioning whether a Covid-19 aid deal was still possible during the session, after Treasury Secretary Steven Mnuchin said on Wednesday that reaching a stimulus agreement before the election would be difficult.

However, Mnuchin did state that both he and Donald Trump were committed to getting a stimulus deal done.

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