Updates from Tesco and Burberry

The FTSE 100 ended almost 40 points down yesterday at 6,304. Reversing part of the earlier week's decline, Fresnillo climbed +7.50% yesterday while Evraz was the biggest faller, down -3.49%.

Overnight, Asian stocks climbed, part-helped by a weakened yen, with the Nikkei up +1.06% to 13,358 while the Hang Seng rises +0.12% to 21,697.
The big news this morning is Tesco and a profits shock. Full-year profits have slipped for the first time in nearly two decades. The UK's biggest grocer has announced it is abandoning its US Fresh & Easy operation, costing the company £1.2bn. Pre-tax profits have been cut by more than 50% thanks partly to the Fresh & Easy ejection.

Tesco is also having to undergo a £804m write-down on UK property projects. In total, Tesco statutory pre-tax profits slump from £3.8bn to £1.96bn. Tesco investors will be looking for reassurance that this morning's numbers are a strict one-off, though underlying profits are also down.

"We have set the business on the right track to deliver realistic, sustainable and attractive returns and long-term growth for shareholders," says boss Philip Clarke. "The consequences are non-cash write-offs relating to the United States, from which we today confirm our decision to exit, and for UK property investments which we will not pursue."

Next, a six month update from raincoats-to-fragrance player Burberry. Total revenues climb +9% on an underlying basis to £1,116m with retail revenues up +13% to £840m. Wholesale revenues were worth £220m, down -3% underlying, though Wholesale represents a reduced 20% of overall Group revenues. Comparable store sales are up +7%.

"With three-quarters of our revenue now generated in retail," says boss Angela Ahrendts, "we are pleased with the 13% growth in this channel in the second half, driven by continued innovation in product, marketing and customer service, especially over Christmas and Chinese New Year."

Looking forward, Burberry expects the global environment to remain challenging and is directing increased energy, it claims, at its digital platform and newly-integrated fragrance and beauty business.

Finally, a quarterly interim from asset manager Hargreaves Lansdown. It reports assets under Administration ("AUA") climbed by £4.7 billion in the three months to 31 March 2013 to £35.1 billion with "record" quarterly net inflows of £1.80 billion in the three months to 31 March 2013 (2012: £1.00 billion).

"All areas of the business have performed strongly," said the company. "Highlights include a 127% rise in net inflows to our discretionary Portfolio Management Service (PMS) year to date, and we have seen continued acquisition of new clients and assets through our Corporate Vantage division."

Year-to-date revenues are up +24% to £216.6 million. Net new active Vantage clients climb 30,000 in the quarter (2012: 17,500). It is too early to measure the potential effects of reduced access to financial advice for the UK public as a result of RDR1, says Hargreaves Lansdown.

Read Full Story