What to Watch: M&S and John Lewis woes, Willie Walsh departs IAG, pound falls

Edmund HeaphyFinance and news reporter
A Marks & Spencer in Yorkshire. The company's recovery has been slow. Photo: PA
A Marks & Spencer in Yorkshire. The company's recovery has been slow. Photo: PA

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Marks & Spencer shares dive 10% amid slow recovery

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Shares in Marks & Spencer (MKS.L) plunged by more than 10% on Thursday after the company said that difficulties with wasted food, menswear, and its supply chain held back its drawn-out recovery in the third quarter.

The retailer said that revenue and volumes improved in its food division in the three months to 28 December, but one-off issues held it back from “delivering a stronger result”.

Revenue in its clothing and home division fell by 3.7%, with the company pointing to issues with menswear sales and gifts. It said that its womenswear division continued to improve.

After falling by more than 11% earlier, shares in the company were down by around 10% at 10am.

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John Lewis boss exits as company mulls axe of staff bonus

John Lewis Partnership on Thursday warned that full-year profits would be “significantly lower” than the previous 12 months, and said it was considering axing its staff bonus for the first time since 1953.

The company also said that Paula Nikolds, who serves as managing director of the John Lewis & Partners division, would unexpectedly step down in February before the merger of the John Lewis and Waitrose executive teams.

Nikolds had been expected to take over as executive director of the combined brands.

Gross sales at John Lewis stores fell by 2.3% to £1.1bn ($1.44bn) in the seven weeks to 4 January, while those at Waitrose stores fell by 1.3%.

The company said it was “encouraging”, however, that online orders at Waitrose, which have been an area of focus for the company, climbed 23.4% in the week before Christmas.

British Airways boss to stand down after 15 years in charge

The chief executive of International Airlines Group (IAG.L) Willie Walsh has announced plans to stand down.

IAG said on Thursday Walsh had decided to retire as chief executive of the group, formed from the merger of British Airways (BA) and Spanish airline Iberia in 2010.

Walsh, a former BA and Aer Lingus CEO, will be replaced by Iberia’s current chief executive Luis Gallego. Gallego’s replacement at the Spanish flag carrier airline will be announced “in due course.”

Walsh will stand down from his role and the board of IAG on 26 March, and retire on 30 June, according to IAG.

IAG shares rose after the announcement in early trading on Thursday morning, up 1.2% on the previous day.

Downbeat Mark Carney speech sends pound falling

The pound fell after Bank of England governor Mark Carney said the central bank was weighing up the merits of a “near-term stimulus” to revive the struggling UK economy.

Sterling was down 0.6% against the dollar (GBPUSD=X) in morning trading on Thursday after a copy of Carney’s speech was released by the Bank of England.

The governor, who is due to leave his post in March, warned a rebound previously predicted by the bank’s monetary policy committee (MPC) was “not, of course, assured.”

He said there was “sufficient headroom” to at least double the £60bn of asset purchases by the bank in August 2016 to stimulate growth.

That would mark the equivalent of around a 100 basis point cut to the bank’s main interest rate, according to the outgoing governor, sparking the flight from sterling.

Christmas card slump batters Card Factory

Poor sales in the run-up to Christmas sent shares in Card Factory (CARD.L) crashing on Thursday, with the UK retailer blaming weak consumer confidence and the general election.

Karen Hubbard, CEO of the high street card supplier, said Christmas had been “challenging,” with a long-running trend of falling high street footfall continuing.

Like-for-like sales dropped by 0.6% in the 11 months to 31 December, a steeper decline than the 0.1% slide reported a year earlier.

The company did not provide specific figures for the run-up to Christmas, a decision met with surprise from at least one analyst.

But Nick Bubb, a retail analyst and consultant, noted the 11-month decline marked a stark contrast to the 0.9% increase in sales reported in a nine-month update before the festive season. Christmas is one of the most crucial periods of the year for retailers.

European stocks climb

European markets were in the green on Thursday amid relief that tensions with Iran seem to have calmed. The pan-European STOXX 600 index (^STOXX) was up by around 0.6%.

The FTSE 100 (^FTSE) was also up 0.6%. Germany’s DAX (^GDAXI) surged by more than 1.2%, while France’s CAC 40 (^FCHI) was up more than 0.4%.

What to expect in the US

Futures are pointing to a higher opening for US stocks.

S&P 500 futures (ES=F) are up 0.3%. Dow Jones Industrial Average futures (YM=F) are also up 0.3% and Nasdaq futures (NQ=F) are up 0.45%.

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