BUSINESS LIVE: UK wages up 5.9%; De La Rue agrees £263m takeover; Sports Direct to launch in Australia

Halfords has announced the appointment of a new chief executive officer, coinciding with the release of a report indicating increased revenues despite a ‘very challenging’ trading environment and escalating costs stemming from the October budget.

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Henry Birch, formerly the head of the Very Group, a prominent retailer, has assumed the CEO position with immediate effect. He succeeds Graham Stapleton, who served as Halfords‘ chief for seven years.

The group reported a 2.3 per cent rise in like-for-like sales for the year ending March 28th, compared to the prior year. Furthermore, projected profits are anticipated to reach the upper range of previous estimates, between £32 million and £37 million.

This positive performance was achieved despite implementing cost-saving measures exceeding £30 million across the company, in what Stapleton described as a ‘very challenging trading environment’.

Mr. Birch noted that the present ‘difficult consumer and economic outlook is unlikely to diminish in the near future.’ However, he expressed optimism that Halfords is ‘well-positioned for success in the years to come’.

Lindsay James, Investment Strategist at Quilter, offers insights:

‘The recent UK GDP figures released on Friday offered some reassurance, primarily driven by continuous expansion in the service sector. Recent surveys suggest an uptick in business activity.’

‘Nonetheless, the economy is confronted with substantial challenges. While the UK has successfully avoided a recession to date, it is not yet entirely clear of potential economic difficulties.’

‘These surveys also indicate that the employment outlook remains a concern.’

‘Elevated payroll expenses are diminishing the appeal of job creation for employers. This is further compounded by adjustments to employer national insurance contributions and the prevailing high levels of economic uncertainty, prompting companies to postpone hiring decisions.’

‘The likelihood of further tax increases in the autumn is growing. The OBR’s projection of a near doubling of GDP by 2026 faces significant headwinds due to potential deceleration in global trade. The yet-to-be-realized full economic consequences of Trump’s tariffs will likely further deter employers from committing to expansion strategies.’

Luxury goods conglomerate LVMH is exploring strategies to bolster its manufacturing operations in the United States as a buffer against potential adverse effects from Donald Trump’s tariffs.

Chairman Bernard Arnault disclosed in January that he was ‘seriously contemplating’ expanding the French luxury giant’s existing American facilities. These already include a Louis Vuitton workshop in Texas and two others in California.

Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, comments:

‘This data provides a pre-tariff overview of the economic landscape. The jobs market appeared relatively robust, characterized by consistent wage growth and an increasing employment rate. However, preliminary indicators of instability emerged as job vacancies declined for the 33rd consecutive quarter, ultimately falling below pre-pandemic levels.’

‘On a positive note, wages continue to increase, outpacing inflation, which should improve workers’ financial wellbeing month-on-month. The recent HL Savings & Resilience Barometer indicates that the average household has approximately £196 of disposable income at month-end, facilitating savings of around 5.5% of their income for the future.’

‘Signs of resilience were apparent in the jobs market, with a decrease in the inactivity rate, a steady unemployment rate, and an increase in employment. Conversely, the number of vacancies presented a less optimistic picture.’

‘The impending rise in employer taxes in April likely prompted employers to moderate hiring activities. This is a straightforward mechanism for businesses to decelerate operations, proving less costly and disruptive than workforce reductions, potentially signaling future trends. Disappointing business investment figures, showing a 1.9% decrease at the close of last year, further dampen economic optimism.’

The chief executive of Goldman Sachs has signaled that the firm is navigating a ‘significantly different operating environment’, despite experiencing a robust beginning to the year.

The Wall Street financial institution reported a 15 percent increase in first-quarter profits, reaching £3.5 billion, propelled by market fluctuations that generated record revenues from equity trading.

While the market volatility initiated by Donald Trump has benefited Goldman Sachs‘ trading operations, investment banking fees witnessed an 8 percent decrease as deal-making activity slowed.

Sports Direct is preparing to launch in Australia and New Zealand after Frasers Group reached an agreement with Accent Group, an Australian footwear retailer.

Accent Group will be responsible for launching and managing Sports Direct operations across both countries, with intentions to establish 100 retail locations.

Michael Murray, CEO of Frasers Group, stated: ‘Since acquiring a strategic equity stake in Accent, we have cultivated a strong and effective partnership between Frasers and Accent.’

‘Accent possesses a remarkable, well-established platform encompassing diverse sneaker concepts and a robust brand distribution network.’

‘This initiative reinforces our dedication to expanding the Sports Direct brand internationally and signifies a major advancement in our ambition to become the foremost global sporting goods retailer.’

De La Rue, the British banknote manufacturer, is set to be acquired by US private equity firm Atlas Holdings for £263 million, both companies announced on Tuesday.

The all-cash transaction, priced at 130 pence per share, represents a 16 percent premium over De La Rue‘s closing share price on the preceding Monday and has received the unanimous recommendation of the company’s board as ‘fair and reasonable’.

De La Rue, which recently printed the new King Charles currency notes for the UK, had previously rejected a 125 pence per share takeover bid in January from a consortium led by British financier Edi Truell’s firms, subsequently initiating a formal sale process a few weeks later.

Clive Vacher, CEO of De La Rue, commented: ‘Since 2020, De La Rue has undergone a significant transformation, successfully executing our Turnaround Plan to enhance operational efficiency and agility, while simultaneously boosting profitability within our industry-leading Currency business, as evidenced by our robust order book.’

‘Atlas stands as the ideal partner to guide De La Rue into its next phase of development. Crucially, under Atlas’s ownership, we can ensure sustained stability for our clientele and workforce, positioning the business optimally for its forthcoming chapter. I am eager to collaborate closely with Atlas and both our teams to realize this exciting prospect for De La Rue.’

Thomas Pugh, Economist at RSM UK, provides analysis:

‘The most significant decrease in payroll figures since the pandemic suggests that companies began to reduce their workforce in March, anticipating the considerable rise in employment costs that took effect in April.’

‘More importantly for the Bank of England, wage growth in the private sector also slowed. This development would have increased the likelihood of an interest rate cut in May, even without the economic disruptions caused by President Trump’s tariffs. An interest rate cut next month now appears highly probable.’

‘Official employment figures showed an increase of 206,000 in the three months to February, with the unemployment rate remaining stable at 4.4%. However, the reliability of official data is currently questionable, limiting the reassurance we can derive from these figures. More significantly, payroll numbers declined by 78,000 in March.’

‘Nevertheless, pay growth remains excessively high for the MPC to consider easing monetary policy. Indeed, at 5.9% for the three months to February, private sector regular pay growth is approximately double the 3% estimated by the MPC as consistent with a 2% inflation target.’

‘Overall, there are now distinct indications that the labor market is weakening, which should contribute to a slowdown in wage growth throughout this year. This factor, combined with the anticipated negative impact on growth and employment from the tariff situation, suggests that an interest rate cut in May is likely, potentially followed by two more cuts, bringing rates down to 3.75% by year-end.’

Weekly UK wages, excluding bonuses, increased by 5.9 per cent in the three months to February, according to new data from the Office for National Statistics. This rate is slightly below the projected 6 per cent increase.

The Bank of England is closely monitoring wage growth and its influence on overall inflation, factors that are crucial in determining the future direction of interest rates.

Separate data from the ONS indicated a cooling in the UK labor market. The number of job vacancies has fallen below pre-COVID pandemic levels for the first time since the three months leading to May 2021, in the three months to March.

Preliminary figures from employers to tax authorities revealed a decrease of 78,000 employees in March. February’s data was also revised to show a reduction of 8,000, contrasting with a previous estimate indicating an increase of 21,000.