BUSINESS LIVE: Nissan UK factory investment; L&G in Boots pension buy-in; Mothercare hit by MENA volatility

Wilko bosses face questions from MPs on the retailer’s collapse next week.

Former top dogs and its auditors appear before the Business and Trade Committee on Tuesday after Wilko went under in August – with the loss of some 12,500 jobs and 398 stores.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown:

‘Mothercare is in need of some self-care, after warning more of its franchise stores could close. Tough trading conditions, especially in the Middle East, are causing problems for a company that’s already had to peddle extremely hard to stay afloat.

‘The group’s turnover dropped to £29m in the first half, down from £38.5m last year – and is even further away from the £44.4m back in 2020. An area that needs a laser-like focus from management is the net debt pile, which stands at many times the amount of the group’s cash profits.

‘There’s also a sizeable pension deficit to clear. For now, profits are being supported by deep cost cuts, but these can only go on for so long and won’t be enough in the long run. The shares have dropped another 4% in recognition of the hard work ahead for this well-loved brand.’

Richard Hunter, head of markets at Interactive Investor:

‘Markets were again on the back foot in the absence of any positive leads. The premier index drifted lower, with the latest fall in China spreading its wings to cover the likes of the miners, as well as those stocks with a particular exposure to the region, such as Burberry, Prudential and Standard Chartered.

‘Stocks gaining were few and far between, as traders sat on the sidelines amid lower volumes. The FTSE100 is again approaching the flat line in the year to date, with the current gain of a marginal 0.2% constantly under threat.

‘Meanwhile, the FTSE250 continues to feel the reverberations of an uncertain economic outlook in the UK. While yesterday’s PMI data nudged back into positive territory, downbeat growth forecasts set against a tight monetary environment continue to weigh on a consumer who has not yet buckled under the weight, but who is increasingly retrenching as inflation remains elevated although reducing.

‘The index has now lost 2.2% so far this year, and the uncertainty is indicative of the UK’s current status as an investment pariah on the international stage.

‘It remains to be seen whether the increasingly cheap valuations placed on UK shares compared to global peers will at some stage ignite overseas investors’ appetite to consider selective company purchases.

‘There have been some recent examples of bid approaches in the mid-cap sector, but so far the premier index has remained exempt in what could yet become a feature next year should market conditions improve sustainably.’

James Bond and Christmas-themed toy car and train sets will fly off the shelves this winter, Hornby said.

The maker of model trains expects a £49.99 Scalextric James Bond 007 racing set and a £79.99 Santa train set to be popular as it sets course for a ‘positive’ second half, with a ‘strong’ order book.

The Margate firm has planned stronger seasonal promotions than in previous years but added that ‘like everyone, we are seeing the ramp up into Christmas trade coming later ’.

Mothercare sales have been severely affected by trading conditions in its key market of the Middle East.

The retailer’s international retail sales by franchise partners fell 15 per cent year-on-year to £137.2million in the first half, reflecting ‘difficult trading conditions in the Middle East’ where sales fell 20 per cent over the period.

Chairman Clive Whiley said: ‘These results are testament to our continued drive to preserve the strength of the Mothercare brand in a fast changing retail and macroeconomic trading environment.

‘Against significant headwinds in the Middle East, one of our core markets, we are pleased that our business model and disciplined approach to cost has resulted in an increase in profitability for the first half.’

British life insurer and asset manager Legal & General ohas agreed to a £4.8billion full buy-in of the Boots Pension Scheme, in what it said was the largest such transaction in Britain by premium size.

The deal forms part of a rising trend for pension risk transfer, whereby trustees of pension schemes, such as the Boots one, pay a premium for the insurer to assume some of the liabilities of a scheme, to reduce uncertainty.

Rising funding ratios for pension schemes are driving unprecedented demand, Legal & General said, as funds scramble to protect schemes against the vagaries of market movements amid rising interest rates worldwide.

Jeremy Hunt was given a double boost yesterday as figures showed the economy was returning to growth and experts upgraded their GDP forecasts after his Autumn Statement.

The UK purchasing managers’ index (PMI) revealed Britain’s private sector was just about back in expansion mode after three months of decline – and ahead of the eurozone which continues to struggle.

Businesses were buoyed by the end of interest rate increases and falling inflation, the closely-watched survey found.

Nissan will invest £1.12billion to build electric versions of two popular crossover models at its Sunderland plant in a fresh boost for Britain’s auto industry amid the switch to electric vehicles.

The Japanese automaker said its plans for electric versions of the Qashqai and Juke – which are currently produced at the Sunderland plant – will require an investment of up to £2billion in a third battery plant in the UK and infrastructure projects.

Nissan did not provide additional details on those investments.

Japan’s third-biggest automaker said it would announce the names of the new EV models and timings for production launches at a later date.

‘With electric versions of our core European models on the way, we are accelerating towards a new era for Nissan,’ CEO Makoto Uchida said in a statement