Three things you need to know in the financial markets this morning from investment writer, Tony Cross.
Mitchells & Butlers
A short COVID-19 update from Mitchells & Butler [LON:MAB] has been published this morning. This notes that whilst costs have been pared the forced closure of its operations could amount to a technical breach of its secured financing arrangements. There’s no further detail here, but presumably the caveats hadn’t considered such a protracted closure. A temporary waiver to May 15th has been announced, but with the lockdown tipped to be extended by three weeks and questions still being asked as to how leisure venues can expect to reopen, such situations seem inevitable with other operators in the sector, too.
Retailer Next [LON:NXT] has this morning announced that its warehouse and distribution operation will resume today, after a two and a half week hiatus. Following consultation with unions, a limited online sales service will be resumed, with sales being restricted to what can be safely ‘picked’ on any given day. At that point, the website will switch to a browse only mode, until the following morning. This is an interesting innovation with the company arguably running ahead of government guidance on the subject, although by restricting the initial product lines to kids clothing and small home items, the business is arguably just trying to ensure it doesn’t needlessly give ground to the online behemoths.
Rounding off with a trading update from National Express [LON:NEX] covering the first three months of the calendar year, where group revenues rose 8.9%. However, just looking at January and February, that figure was up 17%, laying bare the impact of COVID-19 on the business. The note details the support being received from governments across its portfolio, whilst they have also been able to secure £600m from the UK Treasury’s corporate financing facility. The board notes that a full year dividend won’t be proposed in order to conserve cash, but is convinced that having entered the crisis in a position of financial health, it will be able to weather the storm. Knowing more about government exit strategies will however be fundamental in understanding the medium term outlook for the business.
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