BUSINESS LIVE: BoE interest rates decision looms; Next eyes £1bn profit; Ocado Retail targets double-digit growth

S4 Capital shares fell sharply on Thursday after the group revealed it would see a greater decline in net revenue this year than it previously expected.

The London-listed group recorded a 15.6 per cent decline in net revenue to £376.1million, with a like-for-like reduction of 13.5 per cent.

Close Brothers has sold its wealth management business in a £200million deal as it again flagged uncertainty over a potential financial hit from a review into the motor finance sector.

The group has been bolstering its balance sheet amid a regulatory probe into the historical sale of loans by UK motor finance companies, following a surge of complaints from consumers who had their compensation claims rejected.

The first thing you notice is not the smell, but the sign. ‘Bramley Open for Business’ it tells drivers on the busy A-road approaching the picturesque village deep in the Surrey stockbroker belt.

That optimistic billboard gives no clue as to the way villagers’ lives have been blighted by a devastating fuel leak at the local petrol station.

Next expects to boast profits of almost £1billion this year after upping annual guidance for the second time in less than two months.

The retailer upped its full-year profit guidance by £15million to £995million, which would mark an 8.4 per cent rise on 2023-24.

Ocado Group has upgraded full-year profit guidance after its Marks & Spencer joint venture was boosted by a jump in customer numbers.

Ocado Retail saw revenue rise over 15 per cent to £658million in the 13 weeks to September, up from £569million by the same point a year ago, as active customer numbers  soared 10.3 per cent to surpass one million.

It marks a recovery after weaker trading during a post-pandemic slump, with Ocado Retail hit by more shoppers returning to bricks-and-mortar supermarkets.

The Bank of England plays down the notion that American interest rate policy has any direct impact on our own.

It argues that British inflation largely has been caused by supply issues after the pandemic and Russia’s aggression in Ukraine.

America’s central bank last night announced a jumbo half percentage point interest rate cut as it scrambles to deliver a ‘soft landing’ for the world’s biggest economy.

It was the first cut by the US Federal Reserve in four years and sent the dollar sliding against the pound, which hit a fresh two-and-a-half-year high of just below $1.33.

John Moore, senior investment manager at RBC Brewin Dolphin:

‘Ocado Retail is starting to deliver, after a bumpy period for the company. Strong revenue, volume, and customer growth suggest the joint venture’s strategy is yielding results, and Ocado Retail’s guidance has been upped accordingly.

‘For the wider Ocado Group, this should represent another step on the path towards £3 billion in sales, growing EBITDA, and self-sustaining growth without having to borrow more or raise equity. The last nine months have been challenging for the company, with the shares down more than 50% in the year to date and nearly 75% on five years ago. For that to reverse, the company’s growth will need to translate into profitability.’

Aarin Chiekrie, equity analyst at Hargreaves Lansdown:

‘Next has been on a hot streak of delivering positive news lately, and today’s results didn’t disappoint investors. Just six weeks after its last upgrade, Next has issued yet another improved profit outlook as sales since the half-year mark landed higher than previously expected.

‘Skyrocketing demand in its online channel remains a running theme. Despite already accounting for more than half of group sales, the online channel is still seen as the main growth driver. Expansion overseas is still in the early stages, and if Next can execute its strategy well, there’s a lot of room left to run.

‘Retail is a different story, with in-store revenue falling 2.1% in the first half. That trend’s not expected to change going forward, with high-street shopping in structural decline. Next has some insulation in the fact that its shops typically have shorter, more favourable leases than peers, and are more focussed on out-of-town retail outlets that have fared better.

‘Full-price sales continue their upward trajectory. Delivering what fashion-conscious consumers want at the right price point is exactly what’s helping to keep Next’s profitability at the top end of its peer group. Overall performance has been good, and the current valuation doesn’t fully reflect the growth opportunities at hand. But expanding overseas isn’t easy, as many of its peers have found out the hard way, meaning some ups and downs could be in store along the way.’

Ocado Retail is expecting to post double-digit revenue growth this year after sales soared 15.5 per cent in its most recent trading quarter, thanks to a focus on value attracting mroe customers.

The busienss, a joint venture between Ocado Group and Marks & Spencer, said it now expected annual revenue to rise by low double digits, up from previous guidance for mid-high single digits.

It said its core earnings margin would come in around 2.5 per cent, unchanged from its previous view.

Rolls-Royce’s nuclear power ambitions received a major boost last night as the firm secured a key contract.

The British engineering giant has been selected to build mini nuclear power plants for the Czech government.

Rolls-Royce beat competition from French, American and Japanese rivals to be named as a preferred supplier to state-owned power group CEZ.

Fears over the future of British Steel are mounting after the Chinese-owned company revealed that losses had spiralled to more than £400million.

In just the latest blow to the UK steel industry, the firm said losses rose eightfold in 2022, from £49.5million to £408.4million.

Next expects to make an annual profit of almost £1billion after the high street giant raised its outlook for the second time in two months on the back of better-than-expected recent trading.

The group, often considered a useful gauge of how British consumers are faring, reported a 7.1 per cent rise in first half to July pretax profit and said full-price sales over the first six weeks of its second half had ‘materially exceeded’ its expectations and were up 6.9 per cent.

As a result, Next upgraded its forecast for second-half sales growth to 3.7 per cent, up from previous guidance of 2.5 per cent.

It also now expects full-year 2024/25 profit before tax of £995million, ahead of previous guidance of £980million and an 8.4 per cent increase on 2023/24.