Furniture seller Made.com on Tuesday lowered guidance as UK consumers rein in spending and warned that it may need to raise additional financing.
The warning from the retailer came as official figures showed UK earnings rising at only half the rate of inflation.
Made.com said gross sales in the first half of 2022 were down 19% year-on-year, though up 55% from pre-virus levels.
‘Recent trading has been volatile, and the worsening of consumer confidence has impacted demand for discretionary big-ticket items, making new customer acquisition at financially attractive rates challenging,’ Made.com cautioned.
Profit for 2022 will take a £20 million one-off hit from clearance work related to excess inventory and additional costs in its supply chain.
For 2022, Made now expects gross sales to fall by between 15% to 30%. It had previously expected an outcome ranging from flat sales to a 15% fall.
Revenue guidance has been lowered to a range of a 9% fall to a 24% fall from between 8% growth and a 7% decline previously.
Made said it is considering options to strength its balance sheet, as it lowered its 2022 year-end cash forecast to between £5 million and £30 million from between £40 million and £65 million previously.
Made.com shares were down 37% early Tuesday at 24.15p.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.6% at 7,183.32
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Hang Seng: down 0.8% at 20,680.43
Nikkei 225: closed up 0.7% at 26,961.68
S&P/ASX 200: closed down 0.6% at 6,649.60
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DJIA: closed down 215.65 points, or 0.7%, at 31,072.61
S&P 500: closed down 32.31 points, or 0.8%, at 3,830.85
Nasdaq Composite: closed down 92.37 points, or 0.8%, at 11,360.05
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EUR: flat at $1.0164 ($1.0167)
GBP: soft at $1.1970 ($1.1994)
USD: lower at JP¥137.74 (JP¥138.17)
GOLD: lower at $1,708.91 per ounce ($1,709.33)
OIL (Brent): higher at $106.29 a barrel ($105.55)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday’s key economic events still to come
1000 CEST EU ECB bank lending survey
1100 CEST EU harmonised consumer price index
1100 CEST EU construction output
0830 EDT US new residential construction
1630 EDT US API weekly statistical bulletin
0855 EDT US Johnson Redbook retail sales index
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The UK unemployment rate remained unchanged in the three months to May, in line with market expectations. The jobless rate was 3.8%, the same level as in the three months in April, according to the Office for National Statistics. A year earlier, the unemployment rate had sat at 4.9%. The latest figure was in line with FXStreet cited consensus.
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UK wage growth figures, meanwhile, showed average earnings including bonuses rose 6.2% on an annual basis, slowing from 6.8% in the reading for April and below FXStreet-cited consensus of 6.9%. Excluding bonuses, wages grew 4.3%, in line with consensus and picking up from 4.2% growth in April. That means UK earnings by both measures continue to lag consumer price inflation, which ran at 9.1% in May.
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BROKER RATING CHANGES
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Barclays starts Haleon with ’equal weight’ - price target 348 pence
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Oddo BHF starts Vodafone with ’neutral’ - price target 140 pence
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JPMorgan places Segro on ’positive catalyst watch’
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COMPANIES - FTSE 100
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Business publisher and events organiser Informa backed annual expectations. Informa still expects revenue between £2.15 billion to £2.25 billion for 2022, with adjusted operating profit between £470 million to £490 million. At best, this would represent revenue growth of 25% from £1.80 billion in 2021 and adjusted operating profit growth of 26% from £388.4 million. Guidance does not include any contribution from Industry Dive, which Informa announced it has acquired for up to $525 million. The initial cash consideration is $389 million. ‘Industry Dive brings a scalable, single proprietary technology platform, which will enable us to expand our digital services capabilities and deliver content led services to our B2B audiences,’ Informa said. Informa said that for the first half of 2022, it expects to report underlying revenue growth of 40%, helped by a return of live events.
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COMPANIES - FTSE 250
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Cybersecurity company Darktrace said it expects revenue growth of 48% in the financial fourth quarter that ended June 30. It forecasts an annualised recurring revenue climb of 42%. ‘Darktrace continued to deliver strong sales performance in its fourth quarter, adding over 500 net new customers, and bringing the group’s customer base at year-end to over 7,400. This reflects year-over-year growth of approximately 32%,’ the company said. For the year, Darktrace expects revenue of $417.0 million, up 48%. Its adjusted earnings before interest, tax, depreciation and amortisation margin is tipped to land at 19.5%, above its previous guidance range of 15% to 17%. For the new financial year, revenue growth will slow. Darktrace expects a revenue rise of between 29% and 32%. Growth has been hit by foreign currency movements. ‘It cautions that particularly for the first six-to-nine months of the year, year-over-year growth comparisons are expected to be dampened by the impact that significant movements in exchange rates relative to the prior year period have already had, and are expected to continue to have, on the conversion of British pound and euro-denominated ARR to US dollar-denominated revenue,’ Darktrace explained.
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COMPANIES - SMALL CAP
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Wise has kicked off its new financial year with growth in revenue and volumes. In the three months ended June, the international money transfer service provider said revenue grew 51% yearly to £185.9 million from £123.5 million. Quarter-on-quarter, revenue was up 21%. Transaction volumes were 49% higher yearly and 14% higher quarterly at £24.4 billion. ‘Volume growth was driven by a higher number of active customers that are increasingly using the Wise Account and Wise Business products, which in turn also leads to a higher average volume per customer. The growth also reflects to a lesser extent, more variable drivers which include people and businesses responding to increased levels of FX volatility and the translation impact from FX movements which was a tailwind in the quarter, compared with a headwind in FY22. On a constant currency basis volume grew 45% year-on-year,’ Wise explained. Wise left revenue guidance unchanged. It still expects annual growth of between 30% and 35% for financial 2023.
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COMPANIES - GLOBAL
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Novartis reported a drop in second-quarter income and a fall in sales but nonetheless reconfirmed its guidance for 2022 as a whole. The Basel, Switzerland-based pharmaceutical company posted net income of $1.70 billion in the second quarter of 2022, representing a 36% drop against the previous year’s figure of $2.65 billion. Earnings per share fell by a similar percentage, dropping 36% to $0.77 per share from $1.19 the previous year. Net sales declined more modestly, slipping 1.4% to $12.78 billion from $12.96 billion. The firm explained that price erosion and competition from generic drugs was the reason behind the drop in sales. In contrast, key sales drivers were arthritis and psoriasis drug Cosentyx, heart failure treatment Entresto, spinal muscular atrophy drug Zolgensma, breast cancer drug Kisqali, multiple sclerosis therapy Kesimpta, and cholesterol drug Leqvio - all of which grew in double digits, Novartis added.
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Tuesday’s shareholder meetings
Biotech Growth Trust PLC - AGM
Clean Power Hydrogen PLC - AGM
e-Therapeutics PLC - AGM
Norcros PLC - AGM
Ten Lifestyle Group PLC - GE re commitment to sustainability, B Corp certification
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