Burberry ousts CEO, flags loss, suspends divi, Me Group reports first-half growth

London open

The FTSE 100 is expected to open 29 points lower on Monday, having closed up 0.36% on Friday at 8,252.91.

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Luxury goods maker Burberry has ousted its CEO, suspended dividend payments and said it expected to post an interim operating loss after a slump in first-quarter revenues. The company said retail sales in the 13 weeks to June 29 fell by 22% to £458m “The slowdown in trading we experienced in Q1 FY25 continued into July. If this trend were to continue through the current quarter, we would expect to report a H1 FY25 operating loss and FY25 operating profit to be below current consensus,” Burberry said on Monday.

Me Group International reported a strong first-half financial and strategic performance on Monday, with a 4.6% revenue increase to £150.4m and a 10.3% rise in profit before tax to £30.0m. The FTSE 250 company said growth was driven by the expanding Wash.ME laundry operations and increased installations of Revolution laundry machines, alongside a 2.4% revenue increase in Photo.ME machines. It said it maintained a robust balance sheet with significant cash generation, supporting investments and a 16.2% increase in the interim dividend, while projecting continued growth and record profitability for the full year.

Newspaper round-up

A solar energy project developer linked to Thames Water is to be liquidated and its staff made redundant as the crisis engulfing the debt-laden water supplier puts strain on its complex corporate structure. Trinzic Operations Ltd, which is ultimately owned by Thames’s parent company Kemble Water Holdings, is to be voluntarily shut down, the Guardian can reveal. – Guardian

Lloyds Banking Group will start converting its disused office sites into social housing, as the UK’s largest mortgage provider lays the groundwork for a fresh house building boom after Labour’s election win. The bank, which started reviewing its property portfolio during the Covid lockdown in 2020, is launching the programme with a decommissioned data and office space in Pudsey, West Yorkshire. Lloyds will sell the site to a local housing group with the agreement that 80 new homes will then be rented at about half the usual rate. Lloyds said it was assessing other potential offices and data centres in the UK that it could do something similar with. – Guardian

Sky News has begun to slash its freelance budgets as bosses look to cut costs amid a decline in viewing figures. The Telegraph has seen evidence that the broadcaster has reduced its use of freelance workers in roles including producers and guest bookers. Staff have reported a sharp reduction in the number of shifts available in recent months. – Telegraph

Scrapping inheritance tax relief would hit thousands of family businesses with a £1.4bn bill each year, firms have warned, amid fears Labour is plotting a raid on the estates of grieving families. More than 3,000 family businesses would be hit with soaring inheritance tax bills each year if the relief was scrapped, which could trigger company liquidations and job losses, the lobby group Family Business UK (FBUK) warned. – Telegraph

The British luxury brand Hotel Chocolat plans to open 25 new shops and expand manufacturing in the UK, with the backing of its new owner Mars. The chocolatier, bought last year by the US confectionery giant, will open the stores next year in cities such as Belfast and Glasgow, as well as market towns including Ilkley, West Yorkshire, and Morpeth, Northumberland. Plans are also afoot to “upsize” in existing locations such as Nottingham and Chichester, West Sussex. – The Times

US close

US stocks finished higher with the Dow topping the 40,000 mark for the first time in nearly two months despite a gloomy start to bank earnings season, as expectations of an interest-rate cut in September continued to climb.

Investors were largely shrugging off an upside surprise to June's producer price index and instead chose to focus on Thursday's sharper-than-expected slowdown in consumer-price inflation to its joint lowest level in more than three years.

All three main Wall Street benchmarks gained 0.6% on Friday, with the Dow in particular settling at 40,000.90, its highest closing level since 17 May.

In economic data, the US producer price index rose by 2.6% in June, up from 2.6% the month before and surprising economists who expected a slowdown to 2.3%.

In other news, the University of Michigan's consumer sentiment index showed its fourth straight monthly decline, dropping from 68.2 in June to 66 in July. The preliminary print marked the lowest reading since November and was well below forecasts of 68.5.