Three things you need to know in the financial markets this morning from investment writer, Tony Cross.
There’s a stark warning from Next [LON:NXT] in a three month trading statement issued this morning. The note updates on the stress tests performed in March, stating that the decline of sales has been faster and steeper than expected, but aggressive cash management means the finances of the company are now more secure than they were a month ago. Year-on-year, retail sales fell 52%, whilst online dropped by 32%. Plans are already in place for a phased reopening of stores once permitted, but the company is supported by the online operation, where capacity is expected to be back to around 70% of normal by mid-May.
Some eye catching numbers from Dixons Carphone [LON:DC] are out today in a trading statement. The vast majority of its stores have been shuttered, but the company’s ability to handle digital sales looks set to bolster the bottom line. In the 5 weeks to April 23, UK online sales rose 166%, in the Nordics that figure was 98% whilst Greece saw a jump of almost 600%. Granted these are nascent channels, but their presence means like for like revenue growth for the group is set to be around 2% across the year. A couple of points worth noting include the fact that UK furloughed staff are having their wages topped up by the company, whilst the unused processing power from 1500 gaming PCs in Nordic stores has been donated to a Stanford University project tackling COVID-19.
Q1 results from Barclays Bank [LON:BARC] have taken a hit from COVID-19, with pre-tax profits down 40% year-on-year and well below analyst expectations. Income was up across the group by 20% with investment banking returns performing particularly well, but bad debt provisions have been moved higher to account for the economic uncertainty that lies ahead. There’s an interesting panel in the numbers discussing expected credit losses (ECLs) which includes baseline macroeconomic scenarios for this year and next. At its worst point, the bank is estimating UK GDP could fall by 51.5%, house prices by 6.5% and unemployment could reach 8%.
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