Barclays looking for cost cuts, Team17 warns and big test for retail sector on Black Friday

“The usual adage is when the US sneezes the world catches a cold – in the latest case it appears when the US is on holiday global markets hit the snooze button,” says AJ Bell investment director Russ Mould.

“The FTSE 100 drifted lower on Friday as it lacked the usual direction provided by Wall Street. A sprinkle of profit taking and some weakness in the resources sector helped to put the index on the back foot.”

Barclays

“Reports Barclays is targeting £1 billion in cost cuts reflect the challenges facing the banking sector, despite higher interest rates, as inflationary pressures continue to weigh. 

“It also suggests CS Venkatakrishnan is starting to feel some pressure with the shares appreciably lower since his appointment in November 2021.”

TEAM17

“It may not be game over for Team17 but the game developer’s profit warning will definitely give any investors pause. While revenue will be modestly higher than expectations, earnings are expected to be lower than anticipated and fall materially from 2022 levels. 

“Failing to control overspending will not do anything for the firm’s credibility in the market and the decision to review games in development shows how this market has got tougher now people aren’t stuck indoors, with gaming representing one of the few possible escapes from the drudgery of lockdown.”

Black Friday

“It’s a big day for the retail and leisure sectors as the annual Black Friday discounting period is in full swing. While the promotion can run for multiple days or weeks, today is the key focal point.

“Those companies taking part in the promotion might have to slash prices deeply to tempt consumers, particularly as spending trends are not in their favour.

“Recent data from the ONS found nearly two-thirds of adults in Great Britain are spending less on non-essentials because of the rising cost of living. It says retail sales volumes have dropped to the lowest levels since February 2021, implying that people are being more wary when spending money and they are buying less stuff.

“This leaves the retail and leisure sectors in a sticky situation. Companies have three key choices: give up a big chunk of profit margins by cutting prices just to shift stock, protect margins by not taking part in the Black Friday sale, or water down the level of discounts compared to previous years.

“Picturehouse is a good example of the latter. It used to run 40% off membership prices each year – now it is just topping up gift card purchases by 20%. Given the financial strife its parent company Cineworld has been through, it’s no wonder that the cinema group is being less generous. However, it still gets to splash the words ‘Black Friday’ over its website to make it look like there’s something big in it for punters.

“Despite the headwinds, company bosses will no doubt be crossing their fingers for a shift in consumer mindset. We’re just over four weeks away from Christmas Day and the commercial marketing machine is in full motion, with TV adverts pushing products using a festive theme and high streets lit up with Christmas decorations. Consumers might feel now is the perfect time to get ahead with their Christmas shopping and snag a bargain.

“The latest consumer confidence survey from GfK implies that Christmas could still be a winner for shopkeepers. It shows a sharp rise in sentiment including a greater willingness to commit to major purchases.”

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