Investors will be keeping an eye on Amazon stock today after the US Federal Trade Commission (FTC) filed a long-anticipated anti-trust case against the online retailer, accusing it of harming consumers by stifling competition.
The legal dispute was filed in Amazon’s home state of Washington and follows a four-year investigation.
Amazon said it was "wrong on the facts and law, and we look forward to making that case in court".
The case revolves around allegations that consumers are losing money and getting worse deals due to the alleged monopoly Amazon has.
“The FTC and its state partners say Amazon’s actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon,” the FTC said in a statement on Tuesday.
Shares in Amazon were poised to trade higher on Wednesday despite the news. Year-to-date, its stock has gained about 50%.
Fashion retailer H&M reported third quarter operating profit of 4.74bn crowns (£0.35bn, $0.43bn) on Wednesday, in line with analysts’ expectations and up from the same period last year.
The company also announced plans to buy back up to 3bn crowns worth of shares and said it is returning to JD.com, a leading e-commerce platform in China.
However, H&M warned that sales would drop by 10% this month in local currencies year-on-year, and highlighted the cost of markdowns in relation to sales was higher in the third quarter than the previous year.
“This year it is opening around 100 new stores, mostly in growth markets and is closing 200 stores mainly in established markets. H&M is expanding in Latin America with plans to open its first stores in Brazil in 2025. It is also aiming to gradually reopen most of its Ukraine shops starting in November. However, it faced a one-off cost of 2.1bn crowns from exiting Russia,” Victoria Scholar, head of investment at Interactive Investor, said.
She also noted how sales look set to struggle near-term as hotter-than-expected weather has deterred customers from stocking up on warmer items like coats for the cooler months ahead.
“It is struggling to compete with Inditex owned Zara which strongly appeals to the fashionistas as well as with Shein and Primark which offer rock bottom prices. H&M has been trying to cut costs and preserve margins, but it has found it challenging to pass on inflationary pressures to customers in terms of higher prices.”
Shares in the company are up by around 40% so far this year, outperforming the wider market and today, its stock was up nearly 4%, at the time of writing.
Shares in insurance company Saga fell nearly 4% despite the company reporting that it expects to deliver significant double-digit growth in revenue and underlying profit, ahead of market estimates.
It reported a 15% increase in revenue for the first half thanks to growth in its cruise and travel businesses – and it has been reducing its debt.
However, its insurance business is having more of a challenging time, grappling with the backdrop of a difficult inflationary market. Its insurance broking business reported a six-month profit of £23.8m down from £36.7mi in the prior year.
“The stock is down by around 12% so far in 2023. Over the past five years, Saga has shed over 90% of its stock market valuation,” Victoria Scholar noted.
AJ Bell investment director, Russ Mould, noted the ageing population and how selling travel and insurance products to an over-50s demographic, many of which are in a stronger financial position than younger cohorts, should be a winning strategy.
“However, Saga’s execution has been horrible since it joined the market the best part of a decade ago. Supported by a travel recovery there are some tentative signs Saga is finally getting its act together,” he said.
UK car dealership Pendragon (PDG.L) has posted higher half-year profits as the group also finds itself at the centre of a bidding war.
The company reported underlying pre-tax profits of £36.7m, up from £33.5m, while like-for-like revenues for the group, which includes Stratstone, Evans Halshaw and Carstorem, were up more than 15% at £2.09bn.
Meanwhile, US company AutoNation (AN) has put in an unsolicited takeover proposal worth around £447m for Pendragon, while US motor group Lithia Motors (LAD) has offered to buy its UK motor and leasing businesses for £250m.
In response, Pendragon said it was looking at all three proposals "in consultation with shareholders". Shares in Pendragon climbed 10.38% following the update.
“Strong first half results from Pendragon, against a difficult market backdrop, help explain why there’s a bid battle afoot for the car retailer. The three-way race to buy the business could leave shareholders as the major winners,” AJ Bell investment director, Russ Mould, commented.
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