While the week promises to be a busy one for the UK’s retailers – with a slew of post-Christmas updates from the likes of Morrisons (LON:MRW), Sainsbury's (LON:SBRY), Tesco (LON:TSCO), Marks and Spencer (LON:MKS) and boohoo.com plc (LON:BOOH) – Monday gets thing off to a far slower start.
Not that the lack of economic action is preventing the markets from picking up from where they left off last week. The DAX and CAC are continuing their 2018 recovery, while the FTSE held above 7700 with a 0.1% increase. The UK index’s growth perhaps would have been a bit more robust, however, if a) the pound wasn’t 0.2% higher against the euro (sterling is admittedly down the same amount against the dollar), and b) Micro Focus hadn’t fallen 10% off the back of its interim results.
Micro Focus (LON:MCRO) actually posted some attention-grabbing numbers, namely a 28.7% surge in revenue to $145.7 million and an 80.3% jump in revenue to $1.23 billion. Yet the fact that revenue dropped 2.9% year-on-year to $664.7 million when the effects of its HPE Software merger were stripped out, alongside its group results coming in at the bottom end of expectations, soured investors on the tech firm, who sent the stock to a 4 month low.
Though the brunt of the week’s retail news comes from Tuesday onwards, investors did get a bleak sector preview in the form of Mothercare's (LON:MTC) latest results. Very much in the Debenhams (LON:DEB), rather than Next (LON:NXT), school of post-Christmas updates, the baby specialist unveiled an ugly 7.2% plunge in like-for-like sales, with an especially ominous 6.9% drop in online sales. This inevitably led the firm to issue a profit warning, with expectations for the full year now standing between £1 million and £5 million against the £10 million estimated by analysts, news that caused the stock to haemorrhage nearly 26% in value. It really does seem as if 2018 is going to be a race to the bottom between Debenhams, Mothercare and any other bricks and mortar retailer that hasn’t already successfully pivoted online.
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