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“The FTSE 100 managed to escape the gloom that spread across other European markets on Monday morning. The blue chip index was flat at 7,348 versus declines of between 0.3% and 0.7% across markets in Amsterdam, Paris and Frankfurt.
“India’s BSE Sensex extended last Friday’s rally with another 3.5%, spurred by finance minister Nirmala Sitharaman announcing various measures to boost the Indian economy,” says Russ Mould, Investment Director at AJ Bell.
Thomas Cook
“The demise of Thomas Cook is a sad day on many accounts.
“Lots of people who have booked months in advance will have found their holidays are now cancelled. Thousands of people who work for Thomas Cook will have unfortunately lost their jobs.
“Hundreds of Thomas Cook stores will now be shut, adding to the woes depressing the high street; and investors owning Thomas Cook shares will have lost everything.
“Fortunately arrangements are being made to fly back customers already on holiday. Anyone who bought a package holiday (and hasn’t yet started it) will be protected by the ATOL scheme and will get a refund.
“Anyone who bought a Thomas Cook flight or holiday which is now cancelled should talk to their credit card or debit card provider to seek a refund, or apply to their travel insurance company.
“Ultimately Thomas Cook failed because it didn’t have the cash flow to reinvent itself to fight off growing competition as so much money was going on debt repayments.
“It struggled with very thin profit margins, high levels of competition, rising fuel prices and large borrowings. It also had expensive stores on the high street to maintain and leasing fees on aircraft to keep paying.
“Despite having 22 million customers, the business only made £250 million underlying earnings before interest and tax which equates to about £11 a customer. That’s barely anything given the amount of effort involved to run its business and market its holidays.
“A weak pound and concerns about the impact of Brexit on consumer finances and the economy have resulted in many consumers holding off from booking holidays, plus there has been a growing trend for staycations where people holiday in the UK.
“Removing Thomas Cook from the holiday equation will see increased demand for other holiday companies and sadly that could result in higher prices for consumers.
“In the short term the situation is likely to see a boost in earnings for TUI and Jet2-owner Dart Group, both of whom have seen their share prices jump by 6% to 7% on Thomas Cook’s demise. Quoted airlines have also benefited with EasyJet’s shares up 5.1% and Ryanair up 3.8%.”
Marks & Spencer
“The departure of Marks & Spencer’s finance director Humphrey Singer is the latest red flag from a business struggling to keep itself relevant in the modern retail world.
“Having only joined in 2018, Singer’s exit could suggest there are tensions in the boardroom as the retailer tries to sharpen its proposition.
“The news of his departure comes only two months after Jill McDonald, the clothing, home and beauty managing director, left amid criticism over clothing stock levels.
“Chief executive Steve Rowe has been fairly aggressive with plans to close underperforming stores and reshape the business, but his patience levels are clearly being tested given how Marks & Spencer’s profit is still falling.”
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