Debenhams Gives Retail Sector Reality Check With Post-Xmas Profit Warning
The FTSE wasn’t the best index this Thursday – however, after nudging up by 0.1% it’s only 20 points away from 7700, the next landmark level on its recent all-time high hitting journey. Sterling was similarly quiet, rising 0.1% against the dollar, where it now sits above $1.352, while sitting flat against the euro, just below €1.125.
Both index and currency may see a bit more movement once the services PMI is released. December’s manufacturing and construction figures have already disappointed, while also managing to remain relatively strong compared to much of 2017. The services PMI is somewhat expected to buck the trend, with analysts forecasting a rise from 53.8 to 54.1 month-on-month – not a bad note to end 2017 on, but still a way away from October’s muscly 55.6 reading.
After Wednesday saw Next (LON:NXT) provide its retail peers with some post-Christmas optimism, Debenhams (LON:DEB) gave the sector a reality check this Thursday as it became the first casualty of 2018. A 2.6% drop in like-for-like sales following a ‘volatile and competitive’ festive period forced the firm to issue a profit warning, with the ailing high street staple forecasting its full year figures to come in somewhere between of £55 million to £65 million, way off the £83 million expected by analysts. Inevitably this caused a wave of investors to jump ship, the stock plunging 20% to a sub-28p all-time low – Debenhams now faces an uphill battle to avoid becoming the next BHS.
As for the DAX and CAC, they picked up where they left off on Wednesday, jumping 0.8% and 0.7% respectively. That’s send the German index back above 13100 for the first time in over a week, with the CAC re-crossing 5350. In terms of the region’s services data, the PMI is expected to be confirmed at a very strong 56.5, something that may hamper the DAX and CAC if the euro decides to celebrate.
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