Next upgrades earnings guidance, Ocado lifts revenue outlook

Stocks to watch

UK clothing retailer Next once again upgraded annual earnings guidance as full price sales in the first six weeks of the second half of the year “materially exceeded” expectations, rising 6.9%. It lifted 2024/25 pre-tax profits forecasts £15m to £995m, up 8.4% on last year, after interim profits for the six months to July surged 7.1% to £452m.

Online grocer and logistics group Ocado has upgraded its revenue guidance following a strong third-quarter performance which saw retail revenues jump 15.5% The company is now targeting low double-digit percentage growth in sales over the year to 3 December, from the £2.8bn generated last year. That’s up from earlier guidance for mid-high single-digit growth given in July.

Close Brothers reported a 1% increase in full-year operating income to £944.2m on Thursday, driven by growth in its banking and asset management divisions, despite challenges in Winterflood and increased central function costs. Statutory operating profit before tax rose 27% to £142m due to the absence of prior-year impairment charges, though the FTSE 250 company incurred £28.6m in adjusting items related to regulatory reviews and restructuring. It also announced the sale of its asset management division to Oaktree Capital, expected to boost its CET1 capital ratio by 100 basis points.

Newspaper round-up

Boeing’s CEO said on Wednesday that the company would begin furloughing “a large number” of employees to conserve cash during the strike by union machinists that began last week. The chief executive, Kelly Ortberg, said the layoffs would be temporary and affect executives, managers and other employees. – Guardian

Governments and private companies should contribute to a global artificial intelligence fund that will allow developing nations to benefit from advances in the technology, according to a UN report. The fund would help provide models, computing power and AI-related training programmes, according to recommendations from the UN secretary general’s high-level AI advisory body. – Guardian

Companies could be forced to offer all staff regular hours after three months as part of a crackdown on zero-hours contracts. Deputy Prime Minister Angela Rayner and Business Secretary Jonathan Reynolds told bosses and unions in a private call on Wednesday that they were working on a policy which could force employers to offer zero-hours workers a regular contract after 12 weeks. – Telegraph

Large firms face a crackdown on late payments to small businesses as part of a raft of government measures to tackle an issue that drives 50,000 smaller firms to the wall every year. Delayed payment of invoices costs small businesses £22,000 a year on average, according to the Department for Business & Trade (DBT) and research from the Federation of Small Businesses. – The Times

Concerns have been raised that voluntary insolvencies are being abused to enable companies to drop debts with little scrutiny. So-called creditors voluntary liquidations occur when a company’s shareholders agree to liquidate the company because it is insolvent and cannot pay its debts. They have reached the highest level since records began last year as they have become by far the most common form of corporate insolvency. An insolvency expert has warned that they are sometimes being sold by unscrupulous firms as a way to drop debts with little risk of scrutiny. – The Times

US close

US stock markets finished a memorable day in the red on Wednesday as the Federal Reserve made its biggest cut to interest rates in 16 years.

The Fed lowered the Federal Funds Rate by 50 basis points to 4.75-5.0%, marking the first time monetary policy has been eased since March 2020.

The past week has seen increased bets that the Fed would indeed go ahead with a 50bp reduction in the Federal Funds Rate, though many still expected a more conservative 25bp cut.

Stocks initially gave a positive reaction to the decision, but gains were quickly erased, with all three Wall Street benchmark indices falling 0.3% by the close.

The S&P 500 in particular was retreating after briefly hitting a new intraday record high of 5,689.75 after the news.