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Strong results boost FTSE, Jimmy Choo soars on Michael Kors takeover

Published 25/07/2017, 17:34
© Reuters. People walk through the lobby of the London Stock Exchange in London
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By Helen Reid

LONDON (Reuters) - Strong results and buoyant basic resource stocks boosted Britain's blue-chip index on Tuesday and small-cap luxury shoemaker Jimmy Choo soared 17 percent after an agreed bid by U.S. retailer Michael Kors.

The FTSE 100 (FTSE) jumped 0.8 percent, erasing the previous session's losses as results from Informa and Segro impressed.

Media company Informa (L:INF) rose as much as 7 percent to a record high before paring some gains and ending up 2.7 percent.

"Informa has successfully repositioned itself in recent years through a combination of investment and acquisition activity," said Roddy Davidson, media analyst at Shore Capital, reiterating a "hold" view on the stock.

"We believe this process has improved the performance and prospects of the group's underlying businesses and enhanced its ongoing organic growth potential."

Informa's focus on exhibitions space has helped it outperform the broader European media sector (SXMP), one of the worst-performing in the year-to-date.

Property developer Segro (L:SGRO) leaped to a nine-year high, up 2.9 percent after the value of its assets increased as online shopping boosted demand for warehouses.

Leading blue-chip losers was subprime lender Provident Financial (L:PFG), down 5.8 percent after reporting first-half profit fell 22.6 percent due to a reduction in the number of debt collection agents at its home credit division.

Jimmy Choo (L:CHOO) was thrown into the spotlight, hitting a record high after Michael Kors (N:KORS) swooped in to buy it for $1.2 billion. Its shares rose 17 percent.

"The move from Kors doesn't surprise us as it shows the increasing ambition of U.S. accessible luxury peers to build multibrand groups similar to those in the European luxury space," said Zuzanna Pusz, luxury analyst at Berenberg.

Miners Anglo American (L:AAL), Antofagasta (L:ANTO), BHP Billiton (L:BLT), Glencore (L:GLEN) and Rio Tinto (L:RIO) bolstered blue-chip gains, with London copper hitting its highest level since mid-February after China's economy showed unexpected strength.

Disappointing updates from Domino's Pizza and Virgin Money kept gains on the mid-cap index (FTMC) more modest.

Domino's (L:DOM) fell 5.6 percent after underwhelming results.

"Order count growth has lagged store opening growth, and mature like-for-like sales have fallen behind a rise in average ticket growth, suggesting volumes in mature stores are running at around -3 percent," said Liberum analysts, who rate the stock a "sell".

Woes multiplied for crisis-hit gold miner Acacia Mining (L:ACAA), whose shares dropped more than 15 percent to an 18-month low after the Tanzanian government demanded $190 billion in unpaid taxes, penalties and interest.

Acacia said it did not believe it owed the money. The stock has been suffering for months since Tanzania banned gold exports in a surprise move that crippled the firm's business in the East African state.

© Reuters. People walk through the lobby of the London Stock Exchange in London

Challenger bank Virgin Money (L:VM) dropped 8.8 percent after a subdued outlook shifted the focus away from stronger first-half figures.

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