Britain’s soggy summer and sticky inflation failed to deter shoppers from splashing out on fashion. Clothing retailer Next, considered a bellwether for the health of UK retailers, upgraded its full-year guidance for the second time in recent months. The company said salary increases and some signs of easing inflation seem to be encouraging demand. Slower price growth may give Bank of England policymakers scope to scale back the size of hikes as they reveal monetary policy later today.
Here’s the key business news from London this morning:
In The City
Wizz Air Holdings Plc: The low-cost airline saw first-quarter results exceed market expectations as demand for flying in Europe surges in the peak summer travel season.
- At the same time, the carrier reduced its first half capacity growth to 25% compared with an earlier forecast of 30%, partly due to newly identified issues with its Pratt & Whitney geared turbofan engines, as well as a desire to improve yields
Next Plc: The clothing and homeware brand raised its full-year profit before tax guidance to £845 million from £835 million previously, citing both full price and end-of-season sales ahead of expectations.
- Stocks are “well controlled” and clearance rates to date are higher than anticipated, the retailer said, noting it entered end-of-season sale with surplus stock down 22% versus last year
London Stock Exchange Group Plc: The company now expects income growth for the year to reach the upper end of its guidance range after half-year earnings that fell slightly short of estimates but showed growth in all areas of the business.
- The strategic partnership with Microsoft Corp. is progressing well, Chief Executive Officer David Schwimmer said, adding that customers are likely to see the benefits from next year
Rolls-Royce Holdings Plc: The jet engine maker’s first-half results beat analysts’ consensus, with cost efficiency efforts offsetting the impact of inflation and supply chain pressures.
- Last week, the company raised its full-year guidance for underlying operating profit to £1.2 billion-£1.4 billion following what it called the “early successes” of its turnaround plan
In Westminster
The Bank of England is likely to boost interest rates again today, but a slowing in the pace of inflation may give policymakers scope to scale back the size of hikes. Here’s your decision guide.
Meanwhile, the government unveiled a fresh attempt to bolster security of critical energy infrastructure like gas pipelines.
In Case You Missed It
Britain’s biggest banks stand to gain billions this year from hedging against rising rates. The boost comes from a little-understood balance sheet exercise, so-called structural hedges, which reduces banks’ sensitivity to interest rate moves. The trend is widely expected to help lenders offset income hits from tougher mortgage competition and pressure to pass on a greater share of rate hikes to customers.
Looking Ahead
WPP Plc, the world’s largest advertising group by revenue, will round out the earnings week tomorrow. The company will likely use its first-half update to showcase how it’s “harnessing artificial intelligence tools to gain an edge,” says Bloomberg Intelligence’s Matthew Bloxham.
S4 Capital Plc, the digital advertising agency set up by WPP founder Martin Sorrell, last week plunged to a record low after lowering revenue guidance for the year, saying clients in the technology sector cut back on spending.
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--With assistance from Leonard Kehnscherper.
