Primark and John Lewis furloughs, stocks fall, SAP boss steps down
Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:
Primark owner Associated British Foods (ABF.L) said on Tuesday that it had scrapped its dividend, furloughed 68,000 employees across Europe, and suspended its earnings guidance due to the coronavirus crisis.
The fast-fashion retailing giant, which does not operate an online store, said that it had gone from making £650m (£806m) in sales each month to selling “nothing” since it closed the last of its stores on 22 March.
“ABF has been squarely in the path of this pandemic,” said chief executive George Weston on Tuesday. “One of the world’s great clothing retailers is entirely shut.”
Weston said that 68,000 Primark employees were receiving furlough payments from governments across Europe, most of whom it would otherwise have been forced to make redundant.
Associated British Foods said that it was “too early” to provide earnings guidance for the rest of the year.
The company said its board had chosen not to declare a shareholder dividend, noting that the group was instead focused on managing cash outflows in the second half of its financial year.
Pre-tax profits in the six months to 29 February fell by 42% to £298m, even as revenue climbed 2% to £7.6bn, largely due to a £284m charge related to an expected decline in value of its clothing inventory once stores open.
John Lewis and Waitrose have furloughed 14,000 staff as part of efforts to cut costs during the COVID-19 pandemic.
John Lewis Partnership, which owns the department store and supermarket Waitrose, said on Tuesday 21 April it was taking actions to preserve cash in the business to help the partnership weather the storm.
The group said 14,000 staff had been furloughed under the government’s job retention scheme, largely due to the closure of all 50 John Lewis department stores.
John Lewis Partnership has also cut marketing spend by £100m ($124m), cut investment plans, and is buying less stock. The group is also trying to negotiate rent reductions, while the board and management have agreed to take 20% pay cuts for three months.
“The Partnership has been trading for nearly a century,” chairman Sharon White wrote in a letter to staff.
The UK unemployment rate edged higher in February just before the coronavirus began to cripple the UK economy, official figures show.
The Office for National Statistics (ONS) published the latest official data on the UK labour market on Tuesday 21 April, with February the most recent month available.
The unemployment rate was 0.1% higher in February than a month earlier at 4%, according to new ONS estimates based on the latest HMRC earnings data.
Flash estimates for March show the number of paid employees also slid compared with February, down by 0.06% to 29.1 million people, though it remained higher year-on-year.
David Freeman, head of labour market statistics at the ONS, said employment had been “very robust” when the crisis hit.
Employment was still at record highs and unemployment also remained at a near-record low, despite the uptick just as the economy began to seize up.
German software giant SAP (SAP) announced late on Monday that its co-chief executive Jennifer Morgan was leaving the company and Christian Klein, her co-CEO would carry on in the job.
Morgan made history in October 2019 when she became the first chief executive of SAP as well as the first woman to ever lead a company on the DAX, the blue-chip index of Germany’s 30 largest companies.
SAP gave the coronavirus pandemic as a reason for her departure, saying in a statement that the move was to ensure “strong unambiguous steering” and that “the current environment requires companies to take swift, determined action which is best supported by a very clear leadership structure.”
“The reason we decided to come back to a sole CEO model was because of the outbreak of the pandemic,” Klein said in a call with reporters.
There was no exact date to when SAP would have come back to a sole CEO model but in these turbulent times we thought now was the right time.”
European stocks fall after record oil crash
US president Donald Trump’s claim that he will temporarily suspend immigration to America, combined with a record-breaking fall in oil prices, pushed European stocks lower on Tuesday.
Trump said late on Monday that he would sign an executive order to prevent people coming to the US to live and work during the coronavirus crisis. It is unclear what mechanism he would use to do so and how long the suspension would last.
His claim came after a collapse in oil prices, with the price of a barrel of the benchmark West Texas Intermediate crude falling below zero for the first time on Monday.
West Texas Intermediate rebounded on Monday, with crude oil futures for May (CL=F), contracts for which are due to expire later on Tuesday, climbing 94% to –3.43 from record negative territory. Brent crude (BZ=F) fell by 22.6% to $19.80.
What to expect in the US
Futures were pointing to a lower open for US stocks on Tuesday.
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