BUSINESS LIVE :THG to sell luxury portfolio to Frasers; Prudential preps £2bn buyback; SIG profit warning

Susannah Streeter, head of money and markets at Hargreaves Lansdown:

‘It’s been a lacklustre start for the FTSE 100, which only made small steps of progress in early trade, with scant positive data around to spark significant gains amid ongoing caution.

‘The latest snapshot of business activity in the US has caused fresh uncertainty, with the PMI numbers showing robust growth. There are worries it could lead to the Fed holding off from cutting interest rates for longer. The official US GDP data out on Thursday will be closely watched to establish just how stubborn inflation could be in the last yards down to target.

‘The UK’s growth snapshot is out on Friday, and although the expectations are that it might show a shift out of stagnation mode, it’s unlikely to be so significant that it’ll help propel the Conservatives’ election prospects forward in any meaningful way.

‘Investors have largely cheered the deal for Frasers Group to take over a string of luxury goods websites from The Hut Group and tie-up with the Ingenuity e-commerce platform. There is general approval of this direction of travel, to refocus Frasers towards the more affluent classes of shoppers. It comes amid a shakeup of Frasers Group’s wardrobe of brands, with MissGuided offloaded to Chinese giant Shein late last year.

‘The Hut Group’s shareholders have been on a hugely disappointing journey with the group since its IPO, given governance concerns, but also prospects for its e-commerce platform which aims to accelerate online solutions for clients.

‘The partnership with Frasers Group offers a smidge more hope that this area of the business will have more legs. Shares rose by 4% in early trade but then lost ground and are still languishing more than 90% below the IPO price, demonstrating how far the THG still needs to go to restore confidence in its growth prospects.’

Shein may scrap its planned £50billion float in London amid growing disquiet in Beijing over the way the fast-fashion retailer is portrayed in the UK.

A series of criticisms levelled at Shein has irked some in the upper echelons of the Chinese government, according to senior City sources.

The attacks have come from politicians, the Press, other retailers and investors.

London-listed stocks are trading lower this morning as investors turn cautious ahead of key inflation data in the United States, while a downtick in oil and copper prices weighs.

The energy sector is down 0.3 per cent, in tandem with oil prices, as concerns of higher-for-longer interest rates in the US strengthened the dollar.

Industrial miners has slipped 0.7 per cent, as concerns of muted Chinese demand kept traders on the sidelines, pulling down copper prices.

The Bank of England kept interest rates unchanged on Thursday, with renewed hopes of an August rate cut after comments from policymakers.

A domestic inflation report last week showed that headline inflation in the economy had fallen to 2 per cent – the BoE’s target.

In the US, the personal consumption expenditure numbers (PCE) are due on Friday. Investors are banking on the data to show a renewed moderation in inflation.

Also due are the gross domestic product numbers in the UK, that will shed more light on the state of the British economy, after strong retail sales data on Friday tempered some optimism from the BoE’s comments.

Prudential has gained 4.6 per cent after the insurance group said it planned a $2 billion share buyback programme, to be completed by mid-2026.

Shares of THG Group have gained 4.7 per cent after the ecommerce company agreed to sell its portfolio of luxury goods website to Fraser’s Group for an undisclosed sum. Fraser’s Group was up 0.9 per cent.

Richard Hunter, head of markets at Interactive Investor:

‘In the UK, the premier index limped to a weak open in the absence of any obvious immediate catalysts, with most mining stocks under pressure in reflection of a risk-off mood among investors.

‘One bright spot came from Prudential, who announced a new $2 billion share buyback programme to be completed by 2026.

‘The company has revised its free surplus requirement ratios which in turn could unlock the potential for more shareholder returns and the shares rose by around 5% on the news.

‘The share price hike provides some relief to what has been a torrid time for the insure, where doubts over China’s economic performance in particular have weighed heavily on the stock, forcing the shares lower by more than 35% over the last year.

‘The final reading for UK GDP is due later in the week, while the corporate calendar remains light ahead of the impending deluge of half-year results which will wash through in July.

‘The FTSE100 has added 6.5% in what has been a relatively strong performance in the year to date, with some warming of sentiment towards the UK in general also contributing to a 3.5% gain for the FTSE250, which has also seen an increasing number of its constituents the subject of opportunistic bid approaches.’

Britain’s SIG Plc expects underlying profit for the year to be below market forecast as a result of subdued demand in the construction sector.

The building materials supplier, which sells roofing and insulation materials in Britain and some European countries, now expects underlying operating profit to be in the range of £20million to £30million, well below analysts’ expectations of £41.1million.

Britons have been grappling with high household bills amid inflationary pressures, resulting in consumers cutting back on discretionary expenditures such as home upgrades.

SIG also forecasts a 7 per cent decline in like-for-like sales in the first half of the year, with underlying operating profit in the range of £10million to £12 million.

The Euros and the Olympics will deliver a £233m boost to the UK economy, according to a forecast.

Experts at credit score firm Experian predict a spending surge among fans going out to pubs as well as those stocking up on drinks and food for gatherings at home.

Some are also expected to purchase new television sets to keep up with the action.

Insurance group Prudential plans a $2billion share buyback programme which will be completed no later than mid-2026.

The life and health insurer will commence the first $700million tranche of the buyback, for which it has entered into an arrangement with Goldman Sachs International, it said in a separate statement.

The buyback marks progress towards the London and Hong Kong dual-listed company’s 2027 financial objectives and will increase the potential for further cash returns to shareholders, the company said.

Chief executive Anil Wadhwani said the Pru’s board continues to expect its annual dividend for 2024 to increase by 7 to 9 per cent compared with a year before.

He added: ‘We have confidence in our FY2024 new business growth and in achieving our 2027 financial and strategic objectives.’

THG has agreed to sell its portfolio of luxury goods websites to Frasers Group for an undisclosed sum, with Mike Ashley’s retail giant adding brands like Coggles and annual revenues of £43million.

Michael Murray, CEO of Frasers Group said:

‘Today we are pleased to announce a new strategic partnership with THG, which includes launching our consumer credit and loyalty proposition, Frasers Plus across the THG Ingenuity platform.

‘This is an exciting step towards our Frasers Plus ambitions as we look to expand its offering across additional third-party platforms.

‘We are looking forward to working with the THG team and unlocking further benefits for both businesses.’