UK stocks continue their shortened week slide in early trade on Wednesday as investors wade through a plethora of corporate announcements, with miners and supermarkets acting as a particular drag on blue-chips. The FTSE 100 index falls nearly 40 points, or about 0.6%, to 6,148, matching declines on Wall Street and Asian markets overnight, and across major European indices.
Supermarket Sainsbury's (SBRY) year-to-date rally is interrupted, the shares off 3.3% at 276.3p as full-year results reveal the negative impact of price cuts and food price deflation on sales and operating margins. Despite rising volumes and transactions, underlying profit and earnings per share are down for the year to 12 March, while like-for-like sales are negative for the second year running. The grocer, which recently won the bid battle for Argos-owner Home Retail (HOME), also cautions household income growth is slowing. CEO Mike Coupe warns 'the market is competitive, and it will remain so for the foreseeable future'.
These numbers accompany the latest grocery share figures from Kantar Worldpanel, showing all the major supermarkets posting declines in growth rates over the 12 weeks ending 24 April. Supermarket sales growth slowed to 0.1% from the 1.1% reported in April, which was boosted by an early Easter, news that sends Tesco (TSCO) 1.9% lower to 166.1p and sees smaller peer Morrisons (MRW) marked down 3.25% to 184.7p.
Better-than-expected first quarter results – underlying earnings of $1.55 billion topping estimates for $1 billion – could not save Royal Dutch Shell (RDSB) from a wider sell-off in resources stocks. Its shares are down 0.5% at £17.53.
A $44 billion compensation claim sends FTSE 100 miner BHP Billiton (BLT) down 5.8% to 824.9p. The Federal Public Prosecution Service has started proceedings against BHP and Vale after their joint mining venture suffered a dam collapse in Brazil which caused a major social, environmental and economic disaster.
Randgold Resources (RRS) falls 4.2% to £63.25 after reporting an 11% decline in quarterly production because of operational problems at some of its gold mines in West Africa.
High street clothing colossus Next (NXT) edges 1.95% higher to £50.75 despite issuing a profit warning. Following disappointing first quarter sales, not helped by much colder weather in March and April which reduced demand for clothing, and concerned its poor recent performance may 'be indicative of weaker underlying demand for clothing and a potentially wider slow-down in consumer spending', Next lowers its full-year profit guidance once again. Yet the news online arm NEXT Directory's sales rose 4.2%, helped by better stock availability since Christmas, entices buyers early doors.
Gambling group Paddy Power Betfair (PPB) falls 1.9% to £90 after reporting revenue of £339 million in the three months to 31 March, 3.7% lower than analysts' expectations due to adverse sports results. Sportsbook stakes are up 21% at £2.3 billion, while EBITDA (earnings before interest, tax, depreciation and amortisation) is 27% higher at £59 million. The group says the post-merger integration is on track and it's confident of delivering synergy cost savings of £50 million a year.
Kibo Mining (KIBO:AIM) falls 15.2% TO 4.88P after publishing the definitive feasibility study on its power project in Tanzania. The decline should be seen in the context of a significant rally in the past few weeks so today looks just like a bout of profit taking.
Broadcast software minnow Forbidden Technologies (FBT:AIM) jumps 20% to 9.25p after it announces a collaboration with a global US technology giant. The company has agreed a paid-for 12-month Forscene proof of concept, starting this month, with a major UK broadcaster, continuing the attempted turnaround by new CEO Aziz Musa.
Electronic and energy saving components supplier APC Technology (APC:AIM) rallies 9% to 9.63p as it confirms year-to-date bookings worth £9.7 million to end-April and reassures that its component division continues the strong booking performance reported in November 2015 and March 2016.
Pub group JD Wetherspoon (JDW) edges up 0.4% to 682.5p on a 3.8% rise in like-for-like sales for the 13 weeks to 24 April. The operating margin is down from 7.5% to 6.4% as a result of an 8% increase in the starting rates for hourly-paid staff.
High street bank Virgin Money (VM.) slips 2.3% to 346.3p after warning that mortgage lending could ease in 2016. Lower demand for buy-to-let mortgages due to higher stamp duty charges and uncertainly surrounding the EU referendum on 23 June are reasons.
Hotel group PPHE Hotel (PPH) loses 4.6% to 775p on news its revenue per available room (RevPAR) drops by 1.7% to £73.90 in the first quarter as a result of a slow start to the year for some London hotels and a rate-focused strategy in Germany. Total revenue has slipped from £45.2 million to £44.7 million, which the group says it's pleased with given the timing of Easter, renovation work and acts of terrorism in Europe.
Drug discovery specialist ImmuPharma (IMM:AIM) rises 3.8% to 30.6p, despite pre-tax losses widening to £4.5 million from £3.3 million in 2015. Investors have welcomed the news that the third and final clinical trial phase for Lupus drug Lupuzor has commenced and is fully funded.