On Tuesday Nick Robertson, Asos' ebullient chief executive, revealed that UK growth was accelerating again after a wave of price cuts. The company reported a 24 per cent increase in domestic sales, a rate of growth that compares with a 4 per cent at its lowest point last year. That allayed concerns that it might be reaching maturity in the UK. The renewed domestic growth is a double whammy, since it implies that the prospects for international expansion are even greater than previously thought. If Asos can grow at 24 per cent in its oldest market, then the scale of its business in the United States, where it grew 57 per cent in the first quarter, can only be guessed at, much the same as China, where it expects to begin trading in a year's time, writes The Times' Tempus column.
Not only that, the newspaper wonders aloud if the company's shareholder, Danish group Bestseller, which is also present in Asia's powerhouse, might not be interested in making a bid. Nevertheless, the company's shares do trade at 49 times earnings currently, and the likes of Amazon.com and TMall will not just sit idly by and just watch. Take a deep breath and hold, Tempus concludes (Last IC rating: Hold, 11 Dec).
Given his relatively discreet character, when Whitbread chief executive - Andy Harrison - took the helm two years ago, there were fears that this might be to the detriment of such a high-profile British institution with household names in its portfolio including Premier Inn, Costa Coffee, Brewers Fayre and Beefeater. But yesterday's third-quarter numbers show that there is more than one way to skin a cat.
The former easyJet chief executive delivered like-for-like sales growth of 3.3 per cent in the 13-week period to November 29, with total sales - including new openings - up 14.4 per cent. The like-for-like growth rate was slightly below the first half but that is still, by any measure, impressive stuff - all the more so for a consumer-facing company in such dismal economic times. Buy and tuck away says the Times' Tempus column (Last IC rating: Hold, 11 Dec).
At an April 2013 earnings multiple of a staggering 66.7 times, falling to 41.7 next year and 27.5 in 2015, Carpetright shares are defying gravity, says The Telegraph's Questor team. Sure profits will recover - but even if they went to up their peak earnings per share of 71p achieved in 2005, the shares would still be on a multiple of 9.6 times, it quips. This would be a more appropriate earnings multiple of this stage in the cycle, but it will clearly be years before that level of profitability returns - if it materialises at all. So why are they on such a heady rating? Well the shares are tightly held, with founder and current chairman Lord Harris of Peckham and his family owning almost 30 per cent. It even has Bill Gates as a shareholder.
The company is also the market leader and has significant operational leverage to an upturn, during which the company should throw off a lot of cash. The store refurbishment programme is boosting sales and the company's move into selling beds appears to be going well. The rating is probably also down to the fact that some think that the cash-generative company could be taken private. "There is no doubt that Carpetright is a well managed business. The fact it remains cash generative during such turbulent times is a testament to this. However, the valuation is so stratospheric - and Questor strongly believes that shares should not be bought on bid hopes alone - that they can only be rated an avoid," the newspaper says (Last IC rating: Sell, 11 Dec).
Business press headlines:
The chief executive of HSBC and a string of top bankers will lose a slice of their bonuses and will have future payouts deferred after Britain's biggest bank was hit with a record fine to settle damaging money-laundering charges. Stuart Gulliver, the former investment banker who runs HSBC, has already lost part of one annual payout in the light of the allegations. He will now lose an unspecified portion of this year's deal. Numerous 'code staff' at the bank who carry out significant risk activities will also be hit by the measure. [The Times]
Channel 4 is locked in a stand-off with WPP, the world's biggest advertising group, which could end up pulling all of its ads from the broadcaster. WPP's media-buying arm, Group M, is in negotiations to renew its two-year deal to spend around £200m with Channel 4, after its current contract expires at the end of the month. The advertising group, founded by Sir Martin Sorrell, is battling for better terms than in previous years. Channel 4 is not giving ground, leading to an impasse. [The Telegraph]
Britain has no reason to fear a spike in borrowing costs if stripped of its AAA credit rating, the Government's fiscal watchdog suggested today. "It's not entirely clear that [a downgrade] would be providing any new information to the markets that they hadn't already managed to deduce," the chairman of the Office for Budget Responsibility, Robert Chote, told the Treasury Select Committee today.
At last week's Autumn Statement the Chancellor, George Osborne, conceded he is likely to miss his self-imposed target of putting the national debt on a falling trajectory as a share of GDP by 2015-16. Fitch warned that this "weakens the credibility of the UK's fiscal framework" prompting speculation that the agency will downgrade the UK next year. Some eurozone nations have seen their borrowing costs spike after downgrades. [The Independent]
The head of the government's independent tax and spending watchdog has warned chancellor George Osborne that it would be a mistake to rely on forecasts showing public borrowing coming down this year. Robert Chote, the director of the Office for Budget Responsibility, said he would not stake his reputation on the predictions his organisation made for last week's autumn statement. The chancellor wrong-footed his Labour shadow, Ed Balls, in last week's Commons exchanges by announcing OBR figures showing that the UK's budget deficit would fall from £121.4bn to £119.9bn this year once a number of special factors were taken into account. These include receipts from the Bank of England's quantitative easing programme and future income from the sale of the 4G mobile phone spectrum. [The Guardian]
Britain is leaving itself with "no voice in Europe" by drifting to the margins of the EU, according to one of the Continent's top politicians. Wolfgang Schäuble, the German Finance Minister, made the unguarded remarks at a private dinner in front of the British Ambassador and several other guests, one of whom told The Times that he was struck by the ferocity of the outburst. But despite rising German frustration at calls from London for more concessions and a looser relationship with the EU, it is understood that Angela Merkel, the German Chancellor, has told David Cameron that she will do everything she can to keep Britain in the 27-nation organisation. [The Times]
HSBC will spend $700m on a global "know your customer" programme, as part of a 26-point plan agreed with US regulators to settle money laundering and sanctions breaches. The UK bank, which signed up to the A-Z programme of management changes covering both its US and global operations, reiterated apologies for its failure to prevent Mexican money launderers and countries subject to sanctions, including Iran, from using its network. [Financial Times]
UK boardrooms are becoming more diverse but the lack of female executives remains a major concern for investors, one of the country's leading shareholder groups has claimed. The Association of British Insurers (ABI) today called for businesses to step up their attempts to attract more women into boardrooms. In a survey released ahead of its investment conference in London today, the ABI said only 6.6 per cent of FTSE 100 executives and 4.9 per cent of FTSE 250 executives were currently female despite Government attempts to address the imbalance. [The Independent]
Scotland's beleaguered high street retailers have had their hopes of a pre-Christmas boost dashed as new figures showed a dramatic slump in shop sales. The latest report from the Scottish Retail Consortium (SRC), published today, indicates that hard-pressed Scottish consumers have delayed their Christmas shopping, contributing to disappointing sales that have fallen behind those elsewhere in the UK. The gloomy picture was revealed in the survey by SRC and KPMG, which compared last month's sales with those recorded in November 2011. [The Scotsman]
