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Seven Days: 25 September 2020

A round-up of the biggest business stories of the past week
September 24, 2020

New virus restrictions

Hospitality blow

UK Prime Minister Boris Johnson unveiled new measures to stem the spread of Covid-19 on Tuesday – saying that he expects these restrictions to stay for six months. Pubs, restaurants and bars are to close at 10pm every evening, and only table service will be permitted – dealing a blow to a hospitality sector that was shut down earlier this year at the height of the pandemic. Retailers and eateries in urban centres will also feel the impact of new guidance to work from home where possible – a reversal of earlier government sentiment.

 

Rolls-Royce mulling options

Possible fundraising

Rolls-Royce (RR.) has confirmed that it is considering tapping investors for up to £2.5bn to shore up its balance sheet. The aero-engine maker has repeated that it continues to “review all funding options” and that “no final decisions have been taken”, but says it is mulling a potential rights issue or issuing new debt. The announcement followed a report from the Financial Times over the weekend that Rolls is in discussions with sovereign wealth funds – including Singapore’s GIC – over a possible fundraising.

 

 

Precious Metals IPO

Canada’s Wheaton

Amid the ongoing gold rush, Canadian company Wheaton Precious Metals (CA:WPM) is planning a secondary listing in London by the end of this year. Looking to join the main exchange, this would accompany its primary listing in Toronto and dual listing in New York. Rather than digging minerals out of the ground itself and selling them, Wheaton operates under a so-called ‘streaming’ model. This entails making an upfront payment to a miner in return for a fixed percentage of whatever is produced, plus an additional payment upon delivery.

 

Hipgnosis fundraising

Music royalties

Hipgnosis Songs Fund (SONG), which invests mainly in music royalties, has unveiled another share placing to raise over £250m from institutional and private investors (via the PrimaryBid platform). Hipgnosis says it will invest the proceeds in a “significant pipeline of catalogues”, which include some of the most influential hit songs of the past six decades. The placing comes shortly after the trust announced it had invested more than 80 per cent of the proceeds from a share issue in July which raised over £230m.

 

Risers and fallers (%)

Energean+19.19
Ocado Group+8.86
John Laing Group+7.07
Sainsbury J+6.83
Kingfisher+6.36
  
Network Int.-25.51
Intl. Cons. Air.-23.54
Virgin Money UK-21.32
Rolls-Royce-20.95
Redrow-20.82

Week to 23 September 2020

 

Whitbread redundancies

6,000 people

Premier Inn-owner Whitbread had opened 98 per cent of its hotels by the end of August, and year-on-year accommodation sales remained ahead of the market for the first two weeks of September. But demand is expected to continue to be “subdued” for now and new proposals could pave the way for up to 6,000 redundancies to be made. First-half revenues slumped by roughly three-quarters, reflecting the virus-induced closure of its sites at the end of March.

 

Retail sales up

DIY boost

UK retail sales rose by 0.8 per cent in August, the fourth consecutive month of growth and 4 per cent higher than February’s pre-pandemic level. According to the Office for National Statistics (ONS), spending on home improvement and DIY continued climbing, with sales volumes within household goods stores up by roughly a tenth compared with February. Online retail sales edged down by 2.5 per cent, but – thanks to good growth during the pandemic – sales were still almost a half higher than February.

 

Nike just does it

Strong first quarter

Nike (US:NKE) beat analyst forecasts for its first quarter, posting sales of $10.6bn (£8.3bn). Revenues were bolstered by the sportswear giant’s ‘Nike Direct’ strategy, which is seeking to bolster its digital offering and bring its products to consumers more efficiently, while sales in EMEA and Greater China rose 5 per cent and 6 per cen,t respectively, compared with last year’s first quarter. Nike also brought down its inventory by 9 per cent from the close of its last quarter through the use of discounting.