BUSINESS LIVE: Metro Bank to slash workforce; Dr Martens sales slump; Mulberry suffers luxury slowdown

Saudi Arabia is taking a 10 percent stake in Heathrow as it ramps up its investments in Britain.

The sovereign wealth fund, which includes Newcastle United FC, has agreed to pay Spanish infrastructure giant Ferrovial £1 billion for the shares.

Russell Pointon, consumer director at Edison Group:

“Having strengthened their US leadership team and appointed a new Chief Brand Officer, Dr. Martens is looking to refocus marketing as they remain confident in their business and its growth potential.

‘However, current third quarter trading has been weaker than expected across the board, albeit with some signs of improvement in some regions in recent weeks.

“Trading is weak enough to force management to cut FY24 guidance again and given macroeconomic uncertainty, it has withdrawn its previous guidance for high-single-digit revenue growth in FY25.”

Metro Bank is cutting 20 percent of its workforce in a bid to cut costs, days after its investors backed a £925 million rescue package.

The embattled lender is also “reviewing” the seven-day opening hours and extended opening hours of its branch network, it told investors on Thursday.

Derren Nathan, head of equity research at Hargreaves Lansdown:

‘The pub chain behind Harvester and Miller & Carter had no problems filling tables last year. The focus on meeting punters’ preferences translated into LfL revenue and volume growth across all brands. Mitchells & Butlers has something to offer to suit most budgets.

“Continued investment in real estate and customer service is translating into impressive outperformance in revenues compared to the broader market. It will probably remain that way. And despite a 13.2% drop in the number of pubs and restaurants since the outbreak of COVID-19, more supply could come from the market.

‘But it was a bigger challenge to get the business results in the right direction. Sales growth was not strong enough to offset the £175 million cost headwind during the period.

‘Mitchells & Butlers expects these pressures to ease somewhat in the current period, partly helped by the direction of energy prices, but offset by increases to the National Living Wage, which will take place in April. Guidance for the same headwinds this year implies they will be more than half to £65 million. But a return to profit growth is not assured.

“Sales growth so far this year has slowed by a few percentage points as landlords head into the crucial holiday season. And there are signs that consumers are eating out less to save for Christmas. With a debt mountain of more than £1 billion, it is no surprise that the financial strings have not been loosened to allow for a dividend.

“Given the continued uncertainty about the immediate prospects, it makes sense to prioritize investment in the business and leave some room for promotional activities.”

Mitchells & Butlers hopes to return its margins to pre-pandemic levels thanks to a reduction in input costs, after the British pub group posted a decline in annual profits of around 8 percent in a year battered by cost pressures.

British pub groups and retailers are lined up offers to attract customers as Britons prepare for a cheerful holiday season.

The company, which adjusted its menus last year to tackle high costs, said it expects total cost headwinds for the year to narrow to around £65m, supported by a reduction in energy prices and a slowing food inflation.

The owner of the Toby Carvery, Harvester and All Bar One brands said adjusted operating profit for the year ended September 30 was £221m, up from £240m a year earlier.

“While we remain aware of the pressures facing the UK consumer, the strength of our sales growth combined with a declining cost environment gives us confidence for the financial year ahead,” CEO Phil Urban said in a statement.

The chairman of UBS has warned of “harsh cuts” facing investment bankers at Credit Suisse, paving the way for thousands of job losses in Britain.

Colm Kelleher acknowledged it was inevitable that London’s workforce would shrink as the two banks, which together employed around 11,000 people in the capital before their merger, prepare to move into a single head office.

When asked on the sidelines of the FT’s global banking summit, he could not say how many jobs would be lost in London, amid speculation that 35,000 could be lost worldwide.

Deutsche Bank’s chief executive has called on the European Union to follow Britain’s lead and abolish caps on bankers’ bonuses so the country can compete with other financial centres.

“We need a level playing field in the battle for the best talent,” Christian Sewing said at the FT’s global banking summit.

Mulberry has flagged ‘uncertainty’ in the global luxury market, but the handbag maker told investors it is well positioned to weather the storm as the group posts solid sales growth.

The group’s turnover rose 7 percent to £69.7 million in the six months to September 30, while international retail sales rose 34 percent to £23.5 million.

However, Mulberry’s reported pre-tax loss grew from £3.8 million to £12.8 million, largely due to ‘Software as a Service’ costs, the additional operating costs of opening new stores in Sweden and Australia, and ‘additional key investments for future investments’. growth of the Group’.

CEO Thierry Andretta said:

“Against a challenging macroeconomic backdrop, impacting the entire luxury landscape, we have continued to invest in our long-term future.

“Our strategy to transform our international operations to a direct-to-consumer model has enabled us to control the entire customer experience in Sweden, Australia, New Zealand and Japan. Our investments over the period in our digital systems, stores and products will drive future growth.

‘As one of the most iconic British luxury brands, product innovation remains at the heart of Mulberry. Our recent product launches, the Islington, Pimlico and Lana, have been well received by customers, testament to our heritage, fresh designs and modern craftsmanship.

‘Looking ahead, we are well placed to benefit from the key festive trading period and expect the usual weighting in the second half of trading.

‘However, there is no doubt that the macroeconomic environment has deteriorated, and this has had a knock-on effect on consumer confidence.

“At Mulberry, we have ensured we are prepared to navigate this challenging environment, and we are confident we can continue to execute on our strategy.”

Dr. Martens expects to post a sharp decline in profits this year after a slow start to the autumn-winter season, affected by warm weather in the three main regions and overall staggered demand.

The boot maker expects sales to decline by a high single-digit percentage year over year, at constant exchange rates.

Full-year core profit is also expected to be ‘moderately below the lower end of the range’ of market expectations of £223.7m to £240m.

The British company is struggling with declining demand, especially in the US – its second largest market by turnover – as wholesalers become cautious amid the bleak economic outlook.

“We expect that material improvement in U.S. performance will take longer to materialize than initially expected,” Dr. Martens said in a statement.

‘Wholesale customers have low inventory levels of our products in the market, and therefore we can expect them to reorder. However, the timing and level of these reorders are unpredictable, reducing visibility in our wholesale operations.”

Charlie Munger was Warren Buffett’s sidekick for more than forty years as they transformed Berkshire Hathaway from a failed textile manufacturer into a spectacularly successful investment empire.

Munger died on Tuesday at the age of 99, prompting an outpouring of tributes from businessmen, financiers and politicians.

Although Buffett was the star of the show, Munger had far more influence over Berkshire than his title as vice chairman suggested.

Metro Bank will cut 20 percent of its workforce as part of a £50 million cost-cutting effort that the embattled lender expects to complete early next year.

The bank, which received shareholder approval for a refinancing and recapitalization plan earlier this week, expects to incur one-off restructuring costs of between £10m and £15m in 2023.

Three Metro board members will also resign at the end of the year, leaving five non-executive and two executive directors.

‘The support of our investors through this transaction will enable Metro Bank to accelerate its growth plans, with the new capital allowing us to unlock the potential in the business and deliver sustainable profitable returns as we strive to become the number one community bank are.

‘We remain committed to the stores and high streets, but will move to a more cost-efficient business model, while continuing to focus on customer service. These actions, alongside other cost reduction initiatives, are expected to deliver annualized savings of up to £50 million per year.”