ay in real terms is dropping faster than at any time since records began in 2001, the Office for National Statistics (ONS) revealed today.
Wages excluding bonuses fell 2.8% in real terms from a year earlier in March to May, highlighting inflation’s impact on household budgets.
Other figures from the ONS were more encouraging for the UK economy as it reported an unchanged unemployment rate of 3.8% for May.
Shares in Ocado dropped 1.7% after the grocery delivery firm announced CEO Melanie Smith would be stepping down at the end of next month.
Deputy CEO Lawrence Hene would be taking over as interim CEO in September until a permanent successor could be found, the company said.
Smith has been CEO since 2019 when the company announced a joint venture with supermarket Marks and Spencer in a £750 million deal.
Ocado shares are down 52% since the start of the year
Stocks opened higher in the opening minutes of trading in New York, but investors were mindful of a stronger dollar’s potential impact on company profitability.
The Nasdaq went up 1.4%, led by gains from America’s biggest tech giants including Google, Amazon and Meta.
The US dollar has risen 5% against the Euro over the past month, as investors spooked by fears of a looming recession have piled into the greenback as a safe haven.
Shares in IBM dropped 7% after finance chief James Kavanaugh warned the stronger US dollar would mean the company would take a $3.5 billion forex hit for the year.
The New York-based software firm posted revenues of $15.5 billion in the second quarter, beating analyst expectations and marking the highest quarterly sales growth in a decade. The firm’s gross profit margin reached 54.5%, while revenue for its cloud computing business rocketed 18% to $5.9 billion.
The dollar has risen 5% against the Euro over the past month.
City fund manager Liontrust became the latest to reveal that customers have been pulling out cash apace amid recession fears and wider market volatility.
In the last three months alone it saw “net outflows” of £500 million, though total assets under management rose 2.1% to £34.2 billion. That was due to the April acquisition of Majedie Asset Management. Fund managers are having a rough time in general as stock pickers struggle to find value — many of them are well below their benchmarks.
Liontrust rival Jupiter saw £3.8 billion of outflows last year — chief executive Andrew Formica departed recently.
John Ions, chief executive, said: “This continues to be a challenging year for investors especially those who have a bias towards growth stocks. Despite the ongoing war in Ukraine and inflationary pressures, supply chain issues and strains on economic growth, we remain confident about the long-term prospects for our investment teams and their processes, along with the quality companies they hold within their portfolios.”
Peel Hunt said in a note “flows and market movements remained negative”, a “disappointing but not unexpected” outcome. Liontrust is shaking up its staff structure. A new team, the Global Innovation team, will be headed by James Dowey and Storm Uru, who will be supported by Clare Pleydell-Bouverie.
Insolvency adviser Begbies Traynor is on the up, a worrying sign for the wider economy.
For the year to April it saw profits more than double to £4 million. That was better than City expectations, suggesting more firms are in distress than analysts realise.
Begbies itself has been acquiring rival firms and plans to keep doing so. It bought chartered surveyor Budworth Hardcastle for £2.4 million just weeks ago.
Revenue jumped from £84m to £110m. The dividend to investors goes up from 3p to 3.5p. Financial support during lockdown helped many vulnerable firms avoid insolvency. However, insolvency numbers “have now returned to pre-pandemic levels”, Begbies said today.
Ric Traynor, executive chairman, said: “We have reported a further successful year for the group, with financial performance comfortably ahead of original market expectations. The results reflect the material increase in our scale and service offerings and a continuation of the strong financial track record we have built.”
Begbies shares slipped 6p to 140p today, leaving the business valued at around £220 million.
Shares in online furniture retailer Made.com crashed nearly 40% today after it issued a dire warning over trading in the home furnishings market.
The London-based company set up by Lastminute.com founder Brent Hoberman and entrepreneur Ning Li that has a large following among urban professionals said sales were down 19 per cent in the first half of the year.
Shares in the retailer crashed 40% in early trading to 23.34p on the revelation.
The business also said that profit this year was expected to be adversely impacted by £20 million due to costs “primarily in two areas”.
These were “additional promotional and clearance activity” related to excess inventory in the business, following an inventory increase and additional costs in the supply chain due to disruptions at ports and extra handling at warehouses.
Made said that its management team was actively addressing all “non-strategic fixed costs” across the business to ensure the business operating model is flexible for the new environment.
It said it was now examining employee headcount, forward stock buying, warehousing and sourcing markets, and reviewing its operational structure.
The business added that it had been hit by “worsening of consumer confidence” that had “impacted demand for discretionary big-ticket items”.
Made said it was now issuing “revised guidance” as it had also seen a 5% drop off in active customers.
CEO Nicola Thompson said: “It’s clear that things are tough for consumers at the moment. Understandably, we’ve seen a worsening in consumer confidence since May and this has had an impact on this period’s performance.
Darktrace shares soared 8% this morning after the cybersecurity firm upped its profits forecast for the year amid growing fears of attacks following the Russian invasion of Ukraine.
The firm expected sales growth of 48% in the year to 30 June 2022, while profit margins were set to exceed the top end of forecasts to reach 19.5%, as businesses ramped up their cyber protections. The company added 500 net new customers over the year, bring its total to 7,400.
Darktrace CEO Poppy Gustavson said: “Against a turbulent geopolitical background, it’s no surprise that long-term cyber risk is an even higher priority for Chief Information and Security Officers and senior executives.”
Darktrace shares have lost 65% of their value since a peak in September 2021 when founder Mike Lynch was embroiled in a court battle over claims he overstated the value of a tech business he sold to Hewlett-Packard in 2011.
Shares in luxury retailer Hotel Chocolat fell 42% in early trading today as the chocolatier’s strong UK sales were overshadowed by setbacks in its overseas operations.
In a trading update the company said it expects to make a loss after taking a £3 million hit from closing all five of its US stores in a “difficult” trading period. It may also have to write down the value of a £23 million loan from its ailing Japanese business.
Co-founder Angus Thirlwell said: “Outside China, Japan was the first major economy to go into Covid so it’s the last really to come out, and that’s had a tough effect on the performance of the business. We’re adopting a more prudent approach and keeping the capital at a constrained level.”
The firm’s UK sales grew 35% in the year to 26 June 2022, led by a tripling of online revenues since 2019.
Shares in payments transfer business Wise are up 14% this morning after the company posted a 51% rise in revenue in the fourth quarter compared with the previous year.
As many as five million Wise customers transacted over £24 billion across borders in the three months to June 2022, driven by an expansion in the number of customers from the US and Brazil.
The Shoreditch-based firm said it expected to see revenue growth of 30-35% in the next financial year, with 20% growth over the medium term.
Wise shares are down 48% since the start of the year.
Haleon’s tough start to life continued today as shares in GSK’s former consumer health division slumped to the bottom of the FTSE 100.
The Weybridge-based maker of Sensodyne, Panadol and Centrum made its debut yesterday in Europe’s biggest stock market listing for a decade, with shares priced for the economic conditions at 330p and a lower-than-expected valuation of £30.5 billion.
The newcomer dived below 300p today, down by a further 5% or 14.70p to 293.65p after Monday’s lacklustre opening day performance.
As well as the uncertain economic outlook, sentiment has been impacted by Haleon’s high opening debt level and potential overhang from November’s expiry of lock-up agreements on the 45% retained stakes held by GSK and Pfizer.
Analysts at Barclays today reflected the City’s caution by starting their coverage with an “equal weight” recommendation and target of 348p.
Last week, Jefferies highlighted a bull case where a management team led by chief executive Brian McNamara is able to drive the top line harder as an independent company. But the bank warned this would be offset by slowing industry growth.
The economic jitters were fuelled last night when Bloomberg reported that iPhone giant Apple intends to slow hiring and spending growth in readiness for tough trading conditions.
The speculation caused Wall Street to reverse earlier gains, while London’s rebound after two strong sessions also ended. The FTSE 100 index fell 15.51 points to 7207.73 and the FTSE 250 dipped 7.56 points to 19,007.59.
Several tech-focused stocks were lower on the reported Apple caution, including Ocado and Scottish Mortgage Investment Trust after falls of 2% in the FTSE 100 index.
In contrast, two companies with exposure to corporate America boosted their share prices after better-than-expected updates.
Business information and exhibitions group Informa jumped 4% on underlying revenues growth of more than 40% in the first half of the year.
The FTSE 100-listed company, which rose 23p to 560.2p, also intends to resume dividend payments and forecast full-year profits towards the top end of City hopes.
The biggest riser in the FTSE 250 was corporate merchandise firm 4imprint after it forecast 2022 operating profits well ahead of forecasts and said it is increasingly confident of meeting its $1 billion revenues target for this year.
Shares jumped 21% or 500p to 2940p but analysts at Liberum now see the potential to reach 4,000p.