Sun. Feb 25th, 2024

    BUSINESS LIVE: Sainsbury’s plots bank withdrawal;  IDS revenues soar;  Switzerland watches cut guidance

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    The FTSE 100 will open at 8am Companies with trading reports and updates today include Sainsbury’s, International Distribution Services, Watches of Switzerland, Currys and Dunelm. Read the Business Live blog from Thursday 18 January below.

    > If you are using our app or a third-party site, click here to read Business Live

    Switzerland watches cut guidance

    Luxury watch retailer Watches of Switzerland has cut its annual revenue forecast, as consumers continue to rein in spending and stop splurging on luxury items.

    For the full year 2024, revenue is now expected to be between £1.53 billion and £1.55 billion, compared to its previous forecast range of £1.65 billion to £1.7 billion.

    ‘The festive period was particularly volatile this year for the luxury sector, with consumers allocating their spending to other categories such as fashion, beauty, hospitality and travel. While we are disappointed with this trend, we are encouraged by the increase in our market share in both the US and the UK.

    ‘I would like to thank our colleagues for continuing to provide high quality service and support to our customers in this challenging context.

    “We remain confident in the markets in which we operate, our model and the delivery of our Long Term Plan announced to the market in November 2023.”

    GLS supports IDS as Royal Mail remains ‘stuck in the past’

    Matt Britzman, equity analyst at Hargreaves Lansdown:

    ‘With the strikes in the rearview mirror, Royal Mail is starting to deliver goods once again. This is good news for investors in its parent company, IDS, but we are far from calling this change a job well done. Royal Mail is fundamentally stuck in the past and to some extent that is out of its hands.

    ‘As the UK’s designated postal service, it must deliver letters six days a week, among other things. With the letter business in structural decline, with no real hope of recovery, that puts Royal Mail in a difficult situation when competitors are free to focus investment in more lucrative areas.

    ‘Royal Mail must drive revenue growth if it is to return to profit, and a big part of that must come from winning back customers lost as industrial actions wreaked havoc. The first signs are positive, but there is still a long way to go.

    “At the moment, IDS’s chances of achieving a balanced profit at group level depend entirely on the international GLS business, which continues to perform well.”

    William Hill’s commitment to AI reduces profits

    Shares in the owner of William Hill fell after the bookmaker warned that plans to increase spending on artificial intelligence (AI) and marketing would hit profits.

    With stricter regulations also taking their toll in the UK, gaming giant 888 expects its annual profits to be closer to the lower end of the £340m and £397m range predicted by analysts.

    The shares sank 1.5 per cent, or 1.25 pence, to 79.75 pence, taking losses for the year to 17 per cent. The profit warning, the second since September, came as it said cost cutting had freed up up to £30m for artificial intelligence and marketing.

    IDS income soars

    International Distributions Services, owner of Royal Mail, achieved its best Christmas in four years in 2023, with revenue rising almost 10 per cent during the festive quarter.

    Royal Mail has suffered several setbacks in recent years, including postal worker strikes, a cybersecurity incident, a fine from regulator Ofcom for missing delivery targets and the loss of its 360-year monopoly on delivering parcels from branches. of mails.

    However, its recovery plan has moved forward under the leadership of Martin Seidenberg, while customers it lost during the strikes at the end of 2022 have returned to the postal and parcel company.

    IDS, which also operates GLS internationally, reported group revenue of £3.59bn for the three months to the end of December, a year-on-year increase of 9.8 per cent.

    Boss Martin Seidenberg hailed a “marked improvement in both Royal Mail’s trading and operational performance over Christmas”, adding that the group has “continued to win back customers”.

    And he added: We need to take advantage of this momentum. With Ofcom due to publish options for the future of the Universal Service imminently, now is the time to take urgent action.

    “We are doing everything we can to transform, but it is simply not sustainable to maintain a delivery network built for 20 billion letters when we now only deliver seven billion.”

    Sainsbury’s plots bank withdrawal

    Sainsbury’s is planning a “phasing out” of its core banking business, with financial products and services sold by the group to be provided by third-party companies in the future.

    Chief executive Simon Roberts said:

    ‘Since we launched our Food First strategy in 2020, we have been clear that we would concentrate our efforts on our core retail businesses and today’s announcement reflects that strategic focus.

    ‘It is business as usual at Sainsbury’s Bank for now and there will be no immediate changes to products and services as a result of today’s announcement.

    “Of course, we will communicate directly with customers well in advance of any changes to their products and services.”

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