M&S £300 Million Hit, JD Sports Slumps, UK Housebuilders Lower

On this episode of Stock Movers:
- JD Sports shares slide as much as 13%, the most since January, after the British sports retailer said like-for-like sales fell 2% in its fiscal 1Q, driven by a decline in North America
- Marks & Spencer is facing a £300 million ($403 million) hit to operating profit this fiscal year from a cyberattack that’s still disrupting the company’s sales and operations.
- UK stocks including housebuilders: Persimmon, Taylor Wimpey, Barratt Redrow, Berkeley Group, Bellway and Crest Nicholson are in focus today after inflation rose to its highest rate in more than a year, pushing FTSE 100 futures lower.

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.

Speaker 2 (00:08):
The Stock Movers report, your roundup of companies making moves
in the stock market, harnessing the power of Bloomberg data.

Speaker 1 (00:16):
Well, let's take a look at some of the stocks
on the move today here in Europe. Joe Easton from
our equities team joins us. Now, Joe isn't just any
stocks to watch segment, it's an MNS stop to watch segment.
What's going on with the UK retailer?

Speaker 3 (00:30):
Yeah, that was fantastic So m ands now they are
reporting that this cyber attack that's hit their online business,
it's going to cost them three hundred million quid in
operating profit for the year ahead. Now that is a
lot of cash. Apparently the disruption to online and home
sales for clothing as well, so online clothing and home
costing them three million pounds a day in sales. So

(00:53):
really a massive impact for the stock. So the stock
is down around two percent at the moment, taking a
month long decline to around twelve percent. Of the stocks
lost twelve percent. It's news of this cyber attack did
break and as the market reaction is showing, and it's
probably not pricing in as much of a hit as this,
So three hundred million pounds hitting the profit and m

(01:16):
ands lower this morning.

Speaker 4 (01:17):
Yeah, and cyber attacks really coming to the force. It's
not as if there hasn't been warning, but it's just
the names that are involved that you know. Obviously a
high street retailer like MNS, but also I think Harold's
and co Op and others have been affected to and targeted.
So I think something we're going to be hearing a
lot more about. Meanwhile, JD Sport getting a run for
its money because of a pretty bleak sales report.

Speaker 3 (01:40):
I just got that one that just run it. I
need to stay on my toes with these. So JD
now they have reported a five and a half percent
decline in light flight sales in North America. So JD
is interesting because they spent a lot of money, several
billions of investing in the US to make business more

(02:00):
US focus. They did that just as a downturn in
the US consumer came around a year and a half ago,
and therefore they haven't really made the money that they've
looked to from that investment. Now, JD Sports shares dropping
it the open today by around ten percent. I was
chatting to a couple of traders on this one, and
they say that one of the things, one of the

(02:21):
reasons people are trading the stock downstay is because they've
removed the specific numerical guidance in their statement and they've
just said it'll be a little bit weaker and that
has spooked traders today. So they've thought the stock hit hard.
And it's also one of those stocks that never seems
to trade up or down two percent. It's always either
up ten percent down ten percent. The moment is trading

(02:42):
down six percent after ten percent drop at the open,
down thirty percent over the past year.

Speaker 1 (02:47):
All right, and just talk us through how that latest
UK inflation data is affecting the house builders because we've
got beats at the headline services and care levels.

Speaker 3 (02:54):
Yeah, so with the move high in guilt yields, we're
seeing the likes of Taylor Wimp, Barrett Drove, Berkeley Person
and pretty much all of them down by one percent
to two percent extending declines as well. Now, this is
a sector where the valuations are so low they trade
below their book values. So essentially these companies they're worth
less than the land they own. So if essentially, if

(03:16):
you wanted to buy a plot of land, it'd be
cheaper to buy the actual home builder rather than land itself.
So it's kind of one of these weird things where
the valuations are so low and not pricing in a
recovery volumes. So the UK government looking to build one
point five million homes. Of course we only built around
three hundred thousand homes last year, so the market is

(03:37):
just not pricing that in atol. Really it's not giving
any value to the government's plan to boost home builders.
They're all waiting for rates to come down, and given
the hot than expected inflation, they're not pricing that in
today either, and the sector is lower once again.

Speaker 2 (03:52):
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