Losses mount at French Connection, supermarket shopping boosts Tesco shares and Rolls-Royce falls

French Connection shop in Covent Garden. (Credit: Dave Rushen/SOPA Images/LightRocket via Getty Images)
French Connection shop in Covent Garden. Photo: Dave Rushen/SOPA Images/LightRocket via Getty Images

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Losses mount at French Connection

Fashion chain French Connection (FCCN.L) saw a loss of £12.2m ($15.69m) in the six months to 31 July 2020, compared with a loss of £3.6m during the same period in 2019, according to a company statement released on Tuesday.

The COVID-19 pandemic led to a “significant decline” in sales, forcing the business to shut down its stores from the end of March to mid-June, in line with UK government guidelines, it said.

This caused store sales to slump 57% to £10.1m in the six months to the end of July, compared to £23.8m in the same period last year.

“The timing of the COVID-19 outbreak has had a material impact on our business and therefore our financial performance for the majority of the first half of the year,” said Stephen Marks, the company’s chairman and chief executive officer.

He added that “given the overall continued uncertainty about how trade will be over the next few months and particularly with the biggest trading period of the year still to come, it is imperative that we focus our attention on cost control and preserving cash.  While looking at all aspects of our cost base, this is being done in light of what the business is likely to need once we come through these unprecedented times and what will be needed in terms of infrastructure and resource at that time.”

Supermarket shopping boosts Tesco shares

Tesco (TSCO.L) shares were up 1.2% around 10:30am in London as it continues benefiting from strong demand as more people eating at home.

UK grocers saw sales growth accelerate in September as shoppers prepared for further lockdown restriction to reduce the spread of COVID-19, though there was “limited evidence” of a new wave of stockpiling, according to industry data from Kantar that was released on Tuesday.

Watch: Profits jumps 28.7% at Tescos

The market researcher added that sales rose 10.6% year-on-year in the four weeks to 4 October as shoppers moved a greater proportion of their eating and drinking back into the home.

“This is likely a response to rising COVID-19 infection rates, greater restrictions on opening hours in the hospitality sector, and the end of the government’s ‘Eat Out to Help Out’ scheme,” said Fraser McKevitt, head of retail and consumer insight at Kantar.

Rolls-Royce falls amid lockdown fears

Rolls-Royce (RR.L) is among the top laggards on the FTSE 100 (^FTSE) as COVID-19 fallout continues to roil markets in the UK.

Shares were down as much as 7.5% in early trading in London on Tuesday.

“Another negative day for Rolls Royce after some impressive gains last week on the back of rising confidence that the fund raising seen in the past few weeks has given the company a buffer to ride out the current economic uncertainty,” said Michael Hewson, chief markets analyst at CMC Markets.

“The recent declines are a timely reminder that in the face of the prospect of further localised lockdowns, here in the UK and across Europe over the winter months, that the return of air travel on any meaningful basis still seems some way off.”

Markets cautious as coronavirus vaccine trial delayed

Asian shares had a post-holiday cooling off and European shares opened weaker as caution on the vaccine front started to be felt in the market.

Risk sentiment increased overnight as Johnson & Johnson (JNJ) said that its COVID-19 Phase 3 trial has been paused due to an unexplained illness in a participant. There are also reports out of China that Sinopharm (1099.HK) has started to administer its two vaccines to residents in Wuhan and Beijing.

European markets opened in negative territory. The pan-European STOXX 600 (^STOXX) was down 0.2%. Germany’s DAX (^GDAXI) was also lower by 0.2%, and France’s CAC 40 (^FCHI) tilted lower by 0.3%. The FTSE 100 (^FTSE) was down by 0.3% in London.

US futures are lower. The S&P 500 futures (ES=F) was down by 0.5%, Dow Jones futures (YM=F) was down by 0.4%, and Nasdaq futures (NQ=F) also went lower by 0.3%.

Watch: What is a recession?

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