Today’s news in brief-2/2/24

The overall percentage of UK-listed companies issuing profit warnings reached 18.2%, surpassing the levels observed during the 2008 financial crisis. Particularly, the FTSE retail sector struggled, with two in every five retailers issuing profit warnings. The retail industry issued a total of 24 profit warnings in 2023, indicating a notable increase from the 36 warnings in the previous year. The report highlighted that 26% of the profit warnings were due to delayed contracts or decisions, 19% were linked to increased costs, and another 19% cited the impact of higher interest rates. Notably, 39 listed companies issued their third or more consecutive profit warning in 2023, representing 18% of all companies issuing warnings, with 13% of them subsequently de-listing.

Adidas reported a better-than-expected operating profit of €268m in 2023, compared to the previously projected €100m loss. The improved performance was attributed to a stronger operational business in Q4 and the decision not to write off the majority of its existing Yeezy inventory. Adidas plans to sell the remaining Yeezy products in 2024 at least at cost price, expecting sales of around €250m and projecting an operating profit of approximately €500m for 2024.

Norwegian hedge fund First Seagull acquired a 5.3% stake in Superdry. The hedge fund sees a potential opportunity for a takeover following Superdry’s multiple profit warnings in recent years. Authentic Brands Group and Sycamore Partners are also rumoured to be interested in the retailer. Superdry is working with PwC to explore cost-cutting options, including a Company Voluntary Agreement.

Farfetch completed the sale of its business to South Korean marketplace company Coupang for $500m, despite resistance from a group of investors. The investors, representing over 50% of institutional investors, raised concerns about the distress sale wiping millions of dollars of debt to zero and harming employees and other investors. Coupang stated that the acquisition provides Farfetch with access to $500m in capital, allowing for steady and thoughtful growth.

Sainsbury’s CEO Simon Roberts is set to unveil a new phase of the company’s strategy, including cost-saving targets, as part of its efforts to finance lower prices and a 9% pay hike for around 120,000 staff. Sainsbury’s reported a 6.5% jump in retail sales for the 16 weeks ended January 6, 2024, and expects an underlying full-year profit between £670m and £700m.

Amazon reported a record-breaking holiday shopping season in Q4 2023, with net sales rising by 14% to $170bn. International sales increased by 17% year-over-year to $40.2bn, and Amazon Web Services (AWS) sales rose 13% year-over-year to $24.2bn. The operating income during the quarter reached $13.2bn, compared to $2.7bn in the same period the previous year. Despite an operating loss of $400m in the international segment, AWS contributed $7.2bn in operating income.