44 2GM Friday August 7 2020 | the times
BusinessMarkets
news in brief
Wetherspoon job cuts
The slump in trading in the pub
sector has prompted JD
Wetherspoon to put its head
office employees on notice of
more than 100 job losses. The
pub operator said it had written
to all 417 head office staff,
including those based regionally,
to tell them that between 110 and
130 positions were at risk. Pub
workers would be unaffected.
John Hutson, chief executive,
said: “The decision is mainly a
result of a downturn in trade in
the pub and restaurant industry.”
Shares in the company closed up
16½p, or 1.8 per cent, at 934p.Pensions lift Phoenix
Phoenix Group posted an 11 per
cent rise in half-year earnings
and raised its 2020 cash
generation target as it benefited
from deals with UK companies
selling their legacy pension
schemes. The FTSE 100 insurer
said the value of such pension
scheme deals more than doubled
to £1.1 billion during the first half.
Operating profit climbed to
£361 million for the six months to
June from £325 million last time.
The interim dividend was an
unchanged 23.4p.Cardboard delivers
Demand for home deliveries in
cardboard boxes during the
pandemic has kept business
going, albeit at a reduced level,
for Mondi, the multinational
packaging group. The FTSE 100
company reported interim pre-
tax profit down 26 per cent at
€466 million on revenues off
8 per cent at €3.7 billion. It is now
ready to pay its suspended 29.75
cents final dividend for 2019 and
said it will make a 2020 interim
payment of 19 cents, down from
27.28 cents this time last year.Shoppers still at home
High street sales were still 39.4
per cent lower last month than a
year ago, denting hopes of a
quick bounceback once shops
reopened. Slower sales dragged
total retail sales down by 4.6 per
cent in the sixth consecutive
month of falls, BDO’s high street
sales tracker showed. The
reopening of shops led to a small
rebound in footfall, with visits
down by 42.1 per cent in July
compared with a 62.6 per cent fall
in June, according to figures from
the British Retail Consortium.returns, he says, should match the
needs of long-term investors. In
Britain and America, the owner of
song rights is entitled to collect
royalties for 70 years after the death
of the composer.
Hipgnosis earns fees when its
songs are played on the radio,
performed live and used in TV, films,
adverts and computer games.
Streaming, however, is its biggest
money-maker, accounting for 45 per
cent of revenue, according to
Liberum, the broker.
Thanks to Spotify and Apple, this
market is booming and the
commissions due to rightsholders are
set to increase in the US over the
coming years. Mr Mercuriadis hopesEurythmics to contemporary
material from the Chainsmokers and
Ed Sheeran. Over the past week he
has added three more catalogues to
Hipgnosis’s bulging songbook,
including all 197 of Blondie’s songs
and Barry Manilow’s entire output.
Including its listing, the Hipgnosis
fund has raised £860 million from
investors and Mr Mercuriadis will
soon be tapping investors again. He
plans to double the size of the fund
by next year.
Blue-chip investors such as
Schroders and Invesco like the sound
of Mr Mercuriadis’s tune. The pitch
is that songs are robust financial
assets that generate steady income in
fair economic weather or foul. TheM
erck Mercuriadis is not your
typical fund chief. And
neither is his investment
vehicle (Simon Duke writes).
The former manager of Elton
John, Iron Maiden and Beyoncé
floated Hipgnosis Songs Fund, a
music royalties specialist, two years
ago and has barely stopped to draw
breath since.
The 56-year-old has spent more
than $1 billion acquiring the rights to
more than 13,000 songs, from hardy
perennials such as Sweet Dreams byTempus
Buy, sell or hold: today’s best share tipsNaked truth is normality will return
I
t is only a fortnight since the
previous trading update from
Naked Wines and a mere six
weeks since its half-year results,
so yesterday’s annual meeting
update told us little we didn’t already
know (Dominic Walsh writes).
Which is a good thing, as this is a
company that, amid the turmoil of a
pandemic, continues to decant very
strong sales figures.
In the first four months of the
year, which more or less coincides
with the beginning of lockdown, total
sales are tipped to show growth of
76 per cent on the back of growth of
73 per cent last month. Being a
cautious lot, Naked’s management
are forecasting full-year growth of
40 per cent, although it is doubtless
sensible to factor in a return to more
normal trading patterns.
All of which adds to a company
that has emerged as one of the
beneficiaries of the lockdown. Nick
Devlin, 35, who took the helm last
year, said at its full-year results in
June that after a “steady trend of
improvement” the company had
experienced demand “typically only
seen during peak seasonal trading”.
The Naked boss said he believed
that the crisis would “likely serve as
an inflection point for consumer
migration online for wine purchases”,
particularly in America, where its
full-year revenues rose by 20 percent last year. According to James
Crawford, 43, who is moving from
chief financial officer to UK
managing director, the penetration
of online wine sales in the US went
from 5 per cent of sales to 25 per
cent in the space of only 12 weeks,
“which took ten years to do in the
UK”.
The numbers support the thesisthat persuaded Rowan Gormley, the
founder, to unpick the deal he had
forged in 2015 bringing together
Naked and Majestic Wine. The
combination of bricks-and-mortar
retailer with online retailer never
really worked and both now appear
to be doing much better as separate,
focused entities. The main
difference from before is that it is
Naked that has the stock market
listing rather than Majestic, which
was sold to Fortress Investment
Group at the end of last year for
£95 million.
The share price trajectory also
suggests it was a good call. Since the
beginning of January the shares have
doubled to 426p as the market hasLooking exposed
Share price Sales (% change)Source: Refinitiv600,000
customers in UK, US, Australia200+
winemakers1,000+
wines19
countries+81%+67%+73%
+76%
+40%April/May
June
July
First four
months
Full year*SONDJFMAMJ JA200240280320360400440p20190 20200000
*estimatedweaned itself off the plodding
progress of Majestic’s retail story and
bought into Naked’s growth tale. Like
its customers, the market has also
bought into the Naked strategy of
funding independent winemakers via
a network of customers known as
“angels”. Dismiss it as marketing
flannel if you like but the idea of
financing small winemakers making
limited amounts of interesting wines
beats going for the big brands.
To continue its impressive growth,
Naked, which operates in the UK,
the US and Australia, needs to spend
more on enticing new customers.
Last year it raised its investment in
customer acquisition by 20 per cent
to £22.9 million, and expects to
increase that to at least £35 million
this year. That spend is clearly being
deployed effectively, with new
customer sales since April up 185 per
cent on the back of a 115 per cent
increase in spend. It was not always
so. Four years ago Naked
precipitated a profit warning at
Majestic after admitting its US unit
had spent £2 million on a failed
direct marketing campaign.
Despite the Naked team’s assertion
that lockdown has accelerated the
shift to online, some analysts believe
the recent surge will moderate as
lockdown eases and that, while
customer retention is strong, it is too
early to gauge the quality of
customers acquired. In fairness, the
group is itself forecasting full-year
sales growth of a more modest 40 per
cent but the increased investment
could mean further losses this year.ADVICE Avoid
WHY The shares have had a
strong run but could drift
lower amid continuing Covid
uncertainty in the second halfto earn extra cash by unearthing
hidden gems and signing more
licensing deals.
Hipgnosis is an interesting fund
that justifies its “alternative” tag. But
its prospects hinge on the judgment
of Mr Mercuriadis, acquisition costs
and whether its more recent tracks
will have enduring appeal. Hipgnosis
has not been around long enough to
prove itself on any of these scores. It
would be wiser to wait until it does.ADVICE Avoid
WHY An interesting fund but
its model is unprovennaked wines
New customer
sales +185%Repeat customer
sales +58%hipgnosis
NAV per share
+13% yr to Mar 31Dividend 5p vs
2.25pCommodities
ICIS pricing (London 7.30pm)Crude Oils ($/barrel FOB)
Brent Physical 45.37 +0.25
BFOE(Oct) 45.19 -0.08
BFOE(Nov) 45.58 -0.11
WTI(Oct) 42.20 -0.23
WTI(Nov) 42.56 -0.20Products ($/MT)Spot CIF NW Europe (prompt delivery)
Premium Unld 363.00 365.00 -6.00
Gasoil EEC 370.00 372.00 -15.00
3.5 Fuel Oil 242.25 243.00 -6.75
Naphtha 380.00 382.00 -6.00ICE Futures
Gas Oil
Aug 374.75-374.25 Nov 386.50-386.00
Sep 377.50-377.25 Dec 389.00-388.75
Oct 382.75-382.50 Volume: 600810Brent (9.00pm)
Oct 45.19-45.18 Jan 46.24-46.21
Nov 45.55-45.54 Feb unq
Dec 45.90-45.89 Volume: 1548952LIFFECocoa
Sep 1688-1687 Dec unq
Dec 1685-1683 Mar unq
Mar unq May unq
May unq
Jul unq
Sep unq Volume: 73504RobustaCoffee
Sep 1370-1367 May unq
Nov 1353-1351 Jul unq
Jan 1365-1351
Mar unq Volume: 27007White Sugar (FOB)
Reuters May unq
Aug unq
Oct 377.90-377.80 Oct unq
Dec 377.50-376.90 Dec unq
Mar unq Volume: 42651PRICES
Major indices
New York
Dow Jones 27386.98 (+185.46)
Nasdaq Composite 11108.07 (+109.67)
S&P 500 3349.16 (+21.39)
Tokyo
Nikkei 225 22418.15 (-96.70)
Hong Kong
Hang Seng 24930.58 (-171.96)
Amsterdam
AEX Index 558.46 (-4.59)
Sydney
AO 6180.30 (+44.40)
Frankfurt
DAX 12591.68 (-68.57)
Singapore
Straits 2559.10 (+26.41)
Brussels
BEL20 3308.63 (-21.86)
Paris
CAC-40 4885.13 (-48.21)
Zurich
SMI Index 10067.13 (-30.84)
DJ EURO Stoxx 50 3240.39 (-27.99)London
FTSE 100 6026.94 (-77.78)
FTSE 250 17479.38 (-158.92)
FTSE 350 3395.41 (-41.59)
FTSE Eurotop 100 2660.97 (-24.11)
FTSE All-Shares 3358.54 (-40.40)
FTSE Non Financials 4088.17 (-53.51)
techMARK 100 5626.69 (-20.41)
Bargains n/a
US$ 1.3139 (+0.0014)
Euro 1.1070 (+0.0016)
£:SDR 0.98 (+0.00)
Exchange Index 78.00 (-0.10)
Bank of England official close (4pm)
CPI 108.58 Jun (2015 = 100)
RPI 292.70 Jun (Jan 1987 = 100)
RPIX 290.10 Jun (Jan 1987 = 100)
Morningstar Long Commodity 486.56 (+4.58)
Morningstar Long/Short Commod3951.51 (+10.61)London Financial Futures
Period Open High Low Sett Vol Open Int
Long Gilt Sep 20 137.89 138.60 137.86 138.47 224548 524315
Dec 20 136.90 137.51 136.88 137.48 431 80
3-Mth Sterling Sep 20 99.905 99.910 99.890 99.910 124679 470402
Dec 20 99.920 99.920 99.880 99.895 173991 532818
Mar 21
Jun 21
Sep 21
3-Mth Euribor Sep 20 100.46 100.47 100.46 100.47 65654 468952
Dec 20 100.46 100.47 100.46 100.47 53343 430711
Mar 21
Jun 21
Sep 21
3-Mth Euroswiss Sep 20 100.71 100.72 100.71 100.72 434 45074
Dec 20 100.73 100.73 100.72 100.73 1207 35994
Mar 21
Jun 21
FTSE100 Sep 20 6031.0 6068.0 5948.5 6001.5 91039 747458
Dec 20 5999.5 6030.0 5999.5 5970.5 5 5126
FTSEurofirst 80 Sep 20 4390.0
Dec 20 4384.5© 2019 Tradeweb Markets LLC. All rights reserved.
The Tradeweb FTSE Gilt Closing Prices information contained
herein is proprietary to Tradeweb; may not be copied or
re-distributed; is not warranted to be accurate, complete or timely; and does not constitute
investment advice. Tradeweb is not responsible for any loss or damage that might result
from the use of this information.