📉 ASOS Struggles Continue

The eCommerce retailer saw shares slump 23% as losses widened, Wetherspoons posted bumper bank holiday-fuelled quarterly results and TUI shares sunk, despite nearing pre-pandemic summer bookings.

May 11, 2023

Good morning. In today’s update - ASOS shares slumped 23% as losses widened, Wetherspoons posted bumper bank holiday-fuelled quarterly results and TUI shares sunk despite nearing pre-pandemic summer bookings.

Markets

London markets remained nervous for the second day in a row as investors digested the latest inflation figures from the US, and kept one eye on the BoE’s interest rate meeting on Thursday. Consumer retail fared particularly badly, with Ocado (-4.2%), Tesco (-2.4%), Unilever (-1.7%) and B&M European Value (-1.7%) all helping to drag markets lower. Overall, the FTSE 100 fell -0.3% whilst the FTSE 250 finished broadly flat.

Top Stories

📉 ASOS shares slump on widening losses

The online retailer swung to a loss before tax of £87m for the six months to February, as consumers cut back on spending and returned more products. Sales dropped 8% in what CEO José Antonio Ramos Calamonte described as “challenging” conditions, and the outlook isn’t much brighter - the company expects revenue to fall “low single digits” in the second half of the year as it focuses on more profitable sales. Shares dumped 23% after the update. (Official)

🍺  Wetherspoons’ bumper quarter

The pub chain hailed strong trading over the bank holiday weekends, reporting its busiest ever recorded day on the 29 April and posting a 9.1% jump in sales for the last quarter. Despite the “intractable issue” of higher labour, energy and food costs, JDW now expects profit to be at the top of market forecasts for the full year ending in July. In a fairly bizarre addition to the market update, JDW also took shots at the government and said there was a “lack of understanding” from MPs regarding inflation, and a need to “encourage” a free market economy. Shares jumped 5.2% on the update. (Official)

🛫  TUI nears pre-pandemic holiday bookings

Revenue jumped 52% in the last quarter compared to 2022, as the London-listed travel firm reported “strong” bookings momentum for summer holidays, despite increasing prices. TUI now believes summer bookings will reach around 96% of pre-pandemic levels, and reiterated their full year expectations to “significantly” improve profits for 2023 (they did €408m in EBIT for 2022). Despite what seemed like a positive update, shares dropped 5.2% with some suggesting markets were looking for an even more optimistic summer bookings outlook. (Official)

What Else Happened?

Economics / Politics / General

In a bid to push beyond ride-booking and create a travel “super app”, Uber is rolling out the ability to book flights for UK users.

Permanent hiring fell for the seventh month in a row in the UK as businesses remained cautious over economic uncertainty; staff availability also rose for the second month in a row, in signs of an easing labour market. (See report here)

Deals

Private equity house Apollo Global Management is eyeing a deal for Kent-based social housebuilder United Living Group, in a potential £300m deal.

Latest VC round up:

  • Odin - a startup investment platform that helps manage key transaction processes - raised a $3m seed round.

  • Value.Space - an insuretech startup using satellites to detect infrastructure risks - raised a £1.8m seed round.

  • Spend management platform Polyloop raised £1.2m to fund expansion into Europe and the US.

Company News / Trading Updates

FTSE 100 caterer Compass Group benefitted from a return to the office and sports events as revenue jumped 25% over the last six months. Separately, the company also announced plans to switch reporting currencies to the US dollar to reflect its business mix, but confirmed it had no plans to move its listing. (Official)

Transport company National Express is changing its name to ‘Mobico’, in keeping with its “global reach” and ambitions.

Outsourcing group Capita said March’s cyber attack will cost them up to £20m.

🌎 Global Snapshot

Google announced the launch of its AI-powered search engine revamp, hoping to regain ground lost to Microsoft; unfortunately, it’s only available in the US for now.

US inflation came in slightly weaker than expected in April, in signs that rate hikes are bringing prices under control; CPI hit 4.9% for the year, the lowest level since April 2021.

Price increases helped to offset a dwindling subscriber base at Disney+, as streaming losses narrowed in the last quarter; the media group also reported strong growth at its theme parks. (Official)

Topgolf Callaway shares tumbled 13% amid worries that golf’s popularity is waning, driven by cuts to 2023 profit projections. (Official)

Microsoft is skipping salary increases for employees this year.

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