City news: Tesco, Moneycorp, small business investment and Sky TV
TESCO chief executive Dave Lewis is expected to say this week that efforts to turnaround the supermarket are gaining momentum, with analysts tipping earnings and revenues to be higher.
The firm will unveil its half-year results on Tuesday and according to a consensus forecast compiled by Reuters, it should report a pre-tax profit of £333million, excluding exceptional items and pension costs.
That compares with the £158million it registered for the same period last year. Additionally, revenues for the six months to the end of August are forecast to be 1.2 per cent higher at £27.5billion.
The market also expects Tesco to say that the recovery in its like-for-like sales is continuing. In June, Tesco announced that it had seen back-to-back quarterly sales growth for the first time in five years.
According to data from market research group Kantar Worldpanel, Tesco’s grocery market share fell by just 0.3 percentage points during the first half to 28.1 per cent, whereas rivals Asda and Sainsbury’s saw larger declines. Meanwhile, last week Sainsbury’s blamed the ongoing supermarket price war for a 1.1 per cent fall in its like-forlike second-quarter sales.
Aside from food price deflation, Sainsbury’s sales have been impacted by its the move to scrap multibuy and other promotional offers earlier this year.
Chief executive Mike Coupe has replaced the offers with cuts to the cost of thousands of everyday items, which he said has helped the firm narrow the price gap between itself and the German discounters, Aldi and Lidl. Coupe believes that the combination of lower prices and Sainsbury’s £1.4billion acquisition of Argos and Habitat will help the firm outperform its rivals.
FX dealer eyes Spanish move
Foreign exchange dealer Moneycorp is drawing up plans to become regulated by Spanish authorities as it fears that City firms will lose their access to Europe under a “hard Brexit”.
Chief executive Mark Horgan said that the firm is operating on the assumption of a hard Brexit, which would see the UK lose its membership of and unrestricted access to the European single market.As a result, Moneycorp is in the process of getting its Madrid office licensed by Spanish authorities. It would enable the firm to carry on with providing services to the rest of Europe without any barriers.
Last week the currencies group said its gross income for the first half had risen 12 per cent to £68million. Horgan said the firm is keen to expand into at least two new countries a year. He added: “We’re in good shape for 2017. We’ve got businesses in Spain, Romania, the US, Brazil, we have stuff in the pipeline and no worries about our liquidity. We’re in a position to look through the uncertainty.”
Firms should not delay investment
Small businesses need to proceed with their investment plans despite Brexit-induced uncertainty if they are to thrive, Hitachi Capital chief executive Robert Gordon says. While he understands why many small-to-medium sized firms have put off investment decisions, they risk stagnating. He said: “My message is do not pause, make that investment decision, because there is a danger that you will get left behind.”
Sky suffers in shares sell-off
Pay-TV giant Sky endured a selloff on Friday, after its share price had climbed during the week from 846½p to 910p on Thursday. But the firm, which is controlled by Rupert Murdoch, fell back on Friday to 894p after credit ratings agency Standard & Poor’s downgraded it. If he wished to acquire more of Sky, this fluctuation would be to his advantage , but Mr Murdoch is not accused of any wrongdoing.