Primark has said it will lose an additional £220m in sales as more stores are forced to close under new restrictions to control the spread of Covid-19 in the UK.
The cut-price fashion chain’s owner, Associated British Foods, said it expected to lose £650m in sales in the year to September, up from the £430m it had announced on 4 December, after the government said major cities including Manchester and Birmingham must join London and the south-east of England in closing non-essential shops.
Primark said 253 of its stores would now be temporarily closed from 1 January, just over two-thirds of its outlets globally.....
UK local newspapers sold in £10m deal
Dozens of the UK’s best-known newspapers, including The Scotsman and The Yorkshire Post, have been bought by David Montgomery’s National World for just £10.2m in the latest round of consolidation of the ailing local newspaper market.
JPI Media, which owns 100 local newspapers across the country including the Edinburgh Evening News, Lancashire Post, Sheffield Star and Sunderland Echo, has reached a deal with National World, and will take control on 2nd January.
Montgomery, the former chief executive of the parent of the Daily Mirror, has been aiming to strike a takeover deal since launching National World as a publishing consolidation vehicle on the London stock market in 2019.
“JPI ‘s historic publishing brands represent the best in journalism and have reliably served their communities and supported local businesses, in some cases for centuries, and never more than in the last year,” said Montgomery.
“National World will uphold this tradition and implement modern technology to grow the business across a wider footprint based on high quality, unique content.”
JPI Media, formerly known as Johnston Press, has been seeking a buyer since late 2018 when it put itself up for sale to try and pay debts of £220m. JPI rejected all the offers made for its assets - including one from rival publisher Newsquest valuing the business at up to £120m, with no pension deficit obligation - instead choosing to enter administration.
A day later JPI agreed a rescue and restructuring plan tabled by its biggest lenders that involved writing-off £135m of debt, leaving it with £85m of debt.
In November 2019, JPI agreed a £50m deal to sell crown jewel the i newspaper to Daily Mail and General Trust, the owner of the Daily Mail, Mail on Sunday and Metro.
In October, JPI Media sold its printing plants, at Portsmouth, Dinnington and Carn, to DMGT.
Last year, Publicly-listed Reach, which owns national and regional newspaper titles including the Daily Mirror, Daily Express and Manchester Evening News, offered £50m to buy JPI Media but subsequently pulled out of the deal.
Earlier this year, Norwich-based Archant, which publishes more than 50 local titles including the Eastern Daily Press and Ham & High, sold a majority stake to private investment firm Rcapital in a bid to shore up its finances.
In 2012, DMGT sold its local newspaper operations to Montgomery’s Local World, a joint venture comprising more than 100 regional titles, which was valued at £100m at the time. Three years later Reach, owner of the Mirror and Express titles as well as local titles including the Birmingham Mail and Manchester Evening News, took over Local World in a £220m deal.
The decline in the regional newspaper industry has been precipitous. In 2005, Johnston Press - now JPI Media - paid £160m to buy the Scotsman newspaper group from the Telegraph’s owners, the Barclay Brothers. During the administration process in 2018 the titles were assigned a value of just £4.3m by creditors acting for Johnston Press.
Updated
Spain’s IBEX index had an even worse year, ending 2020 down over 15%.
The Spanish economy was extremely badly hit by the pandemic, of course, particularly its tourism industry.
FTSE 100 posts biggest annual fall since 2008
It’s official, 2020 was the worst year for the FTSE 100 share index since 2008.
The UK stock market has closed for the year, with the blue-chip index down 95.3 points today at 6460 points (a drop of 1.45% today).
That takes its total losses for 2020 to 14.34%, its biggest annual decline since the year of the financial crisis.
Although the Footsie has recovered from its slump in March (when it was down over 30% for the year), it is still a long way from the start of January.
In 2020, the UK stock market was hit particularly hard by the Covid-19 pandemic, with Brexit concerns also weighing on the market.
With Germany’s stock market back in positive territory, and the US at record highs, Britain’s stock market has been a clear laggard (as shown in previous post).
Joshua Mahony, senior market analyst at IG, says
The FTSE 100 closed out the year on the back foot, with the value and cyclical nature of the UK markets ensuring significant underperformance compared with their US counterparts. That underperformance of UK stocks is never more apparent than seeing the Dow reach record highs in the same week as the FTSE 100 could secure its worst annual performance since 2008.
Travel and housing are at the forefront of todays losses, with worries over an extended period of economic restrictions heightening the clear uncertainty of exactly how hard the UK economy will suffer on its exit from the EU. The government’s Brexit deal does allay many of the fears over a potential breakdown at the border, yet questions remain over how hard the services sector will suffer from a deal which pays little attention to an area which makes up a whopping 80% of the UK economy.
With 2020 behind us, traders will be looking forward to a period of increasing stability and prosperity. Despite ongoing upheaval and suffering, the swift actions taken on a governmental and central bank level have helped avoid what could have been a year filled with bankruptcies and economic collapse. Instead, UK businesses are looking towards Spring as a target to blossom once again. The current April deadline to end the furlough scheme coincides with Matt Hancock’s prediction that the UK could be out of this crisis by spring, with the vaccine roll-out boosted by the news that the AstraZeneca inoculation effort begins next week.
While short-term fears over the Covid restrictions and Brexit implications will understandably ensure volatility over the months to come, the prospect of a reopening effort in Q2 should provide the basis for a much better 2021 for UK stocks.
This chart from CMC Markets shows how the UK’s FTSE (in grey) has lagged behind the US, German and Japanese stock markets this year:
CMC’s Michael Hewson reckons the FTSE 100 could rebound in 2021, if the world economy recovers, writing that:
It’s notable that once again the S&P 500 has managed to outperform, hitting new record highs, despite the economic shock of the pandemic, while the Nikkei has also seen a decent rebound.
The response of the US Federal Reserve has certainly helped in this regard, with a number of new monetary policy interventions which almost stray into the realms of fiscal policy. Various lending programmes, along with the purchase of so-called “fallen angels” corporate debt have almost acted as a put against bankruptcy of a number of large US companies.
It is also interesting to note how different the pace of the respective bouncebacks has been, and how much harder the FTSE 100 has been hit relative to its peers, though if you dig deep enough below the surface it’s also easy to understand why the FTSE has struggled.
So, while the FTSE 100 has clearly struggled this year, it also stands to reason that it could also be the most susceptible to a strong rebound, if the UK and global economies see a normalisation in 2021, with the prospect of a move back above the 7,000 level a likely possibility, and higher towards 7,400.
The sectors hit the hardest by the pandemic: travel, leisure, general retail, energy and banks, all of which make up a significant proportion of the FTSE 100, encapsulates quite neatly why the FTSE 100 has been hit as hard as it has, and that’s before we even consider that the Brexit transition period comes to an end at the end of this year. If we look at the likes of IAG, down over 60%, Rolls-Royce, BP, Royal Dutch Shell and Lloyds Banking Group over 40% lower, and NatWest Group, more than 30% weaker, the evidence is clear to see.
The rebound in the German DAX has also been fairly impressive, however there are concerns as we look ahead to 2021.
Wine and spirit makers may not feel like popping champagne corks tonight, after the US announced it’s raising tariffs on certain European Union products, including wines, and cognac from France and Germany.
Last night, the Office of the U.S. Trade Representative (USTR) said it was adding tariffs on aircraft manufacturing parts and certain non-sparkling wines as well as cognacs and other brandies from the EU’s two largest members.
The USTR did not say when the tariffs would take effect but noted that additional details would be “forthcoming.”.
The French wine exporters’ federation said the move was “a real sledgehammer blow in a fight which has nothing to do with us”.
Ben Aneff, president of the US Wine Trade Alliance, said the move would hurt US restaurants and small businesses (as they’d have to pay these tariffs on the imports)
Gold has had its strongest year in a decade.
At $1.893 per ounce, bullion is up nearly 25% this year - its biggest annual increase since 2010.
Record-low interest rates, a weaker US dollar, and predictions of higher inflation have all encouraged interest in gold.
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