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What to Watch: Shoe Zone warns over stores, stimulus lifts markets and Laura Ashley woes

Yahoo! Finance UK logo Yahoo! Finance UK 17/02/2020 Tom Belger
a sign above a store: Shoezone store shop, Martlesham, near Ipswich, Suffolk, England, UK. (Photo by: Geography Photos/Universal Images Group via Getty Images) Shoezone store shop, Martlesham, near Ipswich, Suffolk, England, UK. (Photo by: Geography Photos/Universal Images Group via Getty Images)

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

Shoe Zone threatens 100 store closures

The chief executive of UK retailer Shoe Zone (SHOE.L) has warned around 100 stores could close unless the government reduces business rates.

Anthony Smith issued the stark warning in interviews with PA and the BBC on Monday, saying the property-based taxes on firms did not reflect the current market. He said the company paid more in rates in 2019 than in 2009, despite reducing its store numbers from around 800 to around 500 over the decade.

But he said the company had secured an average 23.6% cut in its rents on the 60 leases it renewed over the past year. It comes after the company announced last month its pre-tax profits had slid by 15% to £9.6m in the year to 5 October.

The comments appeared to boost shares, trading 1.4% higher on Monday.

Chinese stimulus lifts markets

Chinese stocks rebounded on Monday after the country’s central bank moved to stimulate the country’s economy, helping them erase February’s record coronavirus-related sell-off.

The People’s Bank of China cut one of its key interest rates, injected 200bn yuan (£22bn, $28.6bn) into the economy, and made 100bn (£10.9bn) yuan worth of short-term securities purchases.

The SSE Composite Index (^SSEC) climbed by more than 2% in Shanghai, as did the CSI 300 Index (000300.SS). The blue-chip SSE 50 (^SSE50) was up by around 1.9% at market close.

Stocks in Japan fell meanwhile after official data showed that the country’s economy shrunk by 1.6% in the final quarter of 2019, the sharpest contraction since 2014. The Nikkei (N225) closed down 0.7%.

Stocks in Europe were more muted, but made small gains. The FTSE 100 (^FTSE) was up by more than 0.2% in London. Germany’s DAX (^GDAXI) was up similarly, while France’s CAC 40 (^FCHI) was up by less than 0.1%.

“European shares were a little indecisive at the start of play following a mixed bag overnight in Asia, but are leaning higher with stimulus from China helping to lift the mood,” said Neil Wilson, chief markets analyst at Markets.com.

Fears Laura Ashley on the brink amid urgent funding talks

Struggling fashion and home wear brand Laura Ashley (ALY.L) is in crisis talks to secure more funding as sales dive.

The retailer on Monday confirmed it was holding crunch talks with its bank, Wells Fargo (WFC).

Falling sales have left the company unable to borrow as much as expected, so Laura Ashley and its owner, MUI Asia, are trying to convince Wells Fargo to unlock cash “to meet the group's immediate funding requirements and to draw down additional amounts to meet ongoing working capital needs.”

“If the group remains unable to access the requisite level of funding, then the company will need to consider all appropriate options,” Laura Ashley said in a statement.

The cash crunch suggests Laura Ashley could collapse into administration if funding cannot be secured, but management downplayed any risks.

UK property prices near to record highs

Average property prices in the UK are close to record highs after a boom in buyer numbers, according to Rightmove.

Asking prices on the property site have jumped by £2,589 ($3,378) over the past month, reaching an average of £309,000 in early February. It leaves prices just £40 short of their all-time high for Rightmove sales in June 2018.

Rightmove’s director Miles Shipside said he expected demand from buyers to keep outstripping supply, pushing prices to new records next month.

The election is widely thought to have unlocked confidence among buyers, easing some of the Brexit uncertainty that has hung over the market since the 2016 referendum. Now the optimism about the market also appears to be spreading to sellers.

Retailers warn on Brexit trade talks

Retailers are warning prime minister Boris Johnson’s Brexit trade plans could lead to higher food prices and reduced stocks in UK shops.

The prime minister wants to leave the single market and customs union by 2021, leaving Britain to strike trade deals around the world and diverge from EU rules.

But a trade body for UK retailers fears that could mean a “mountain of paperwork” and new border checks on goods traded between Britain and the EU. Trade is currently still friction-free as Britain remains under EU rules, as part of a transition deal until the end of the year.

The British Retail Consortium (BRC), whose members include M&S and Boots, said food stocks for UK supermarkets and other shops could be at particular risk. Many retailers rely on just-in-time supply chains across the continent, with more than 80% of all food imports reported to be from the EU.

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