What to watch: Regus owner IWG raises £320m, Boohoo buys PrettyLittleThing stake, stocks rise

Edmund Heaphy
·Finance and news reporter
·5 min read
Regus, a work space Provider in the City of London. (Photo by: Newscast/Universal Images Group via Getty Images)
IWG, which operates office and co-working space firm Regus, has £320m from investors. (Newscast/Universal Images Group via Getty Images)

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Regus owner IWG taps investors for £320m

IWG (IWG.L), which operates office and co-working space firm Regus, said on Thursday that it had raised £320m ($393m) from investors.

The company said it received support from new and existing shareholders, including chief executive Mark Dixon, who purchased 28.5% of the available shares for £91m.

In a trading update on Wednesday, IWG said the share placing would allow it to expand with a focus on flexibility and cost savings for customers in a post-coronavirus world, including by adjusting its offices to comply with social distancing.

Because most occupiers of Regus offices sign contracts, occupancy “held up well” in April, IWG said.

Overall revenue performance was affected by a drop-off in spending on ancillary services and lower new sales activity, which it said was a “direct result” of the pandemic.

“Accordingly, we are anticipating a greater impact in the second quarter compared with the first quarter given the increased number of lockdowns across the world and the lower levels of new sales activity across the group during March and April,” IWG said.

Shares in IWG rose by 15% on Thursday following the share placing.

Boohoo buys PrettyLittleThing stake for £270m amid short-seller pressure

Online fast fashion retailer Boohoo (BOO.L) is buying the remaining 34% of subsidiary brand PrettyLittleThing it doesn’t already own.

Boohoo said on Thursday it would pay £269.8m ($330.5m) in cash and shares to acquire the remaining stake in PrettyLittleThing. Acquisition costs could potentially rise to £323.8m if Boohoo’s share price continues to climb.

Online youth fashion retailer Boohoo has owned 66% of PrettyLittleThing since 2017. Boohoo said taking full control of the company would be “an important further step towards achieving its vision to lead the fashion e-commerce market globally”.

The move to take full control of PrettyLittleThing comes amid scrutiny of Boohoo’s relationship with the company.

UK short-seller Shadowfall earlier this week released a 54-page report claiming Boohoo gave a “misleading impression” of its free cashflow, partly due to its accounting treatment of PrettyLittleThing. Boohoo said it “strongly refutes” the claim.

Shares in Boohoo rose 13% on news of the deal. The stock had dropped over 12% after Shadowfall’s report was published.

EasyJet slashes up to 4,500 staff in 'knee-jerk' job cuts

EasyJet (EZJ.L) has announced plans to axe up to a third of its entire workforce, as it battles to survive the collapse in air travel sparked by the coronavirus pandemic.

Union leaders called the move a “kick in the teeth” and called job cuts a “knee-jerk reaction” to a temporary crisis facing the aviation industry.

Its latest statement on Thursday did not specify how many jobs would be affected, but it is thought likely to affect up to 4,500 workers.

EasyJet’s annual report at the end of last year said it had 15,000 employees across eight countries in Europe, including 4,000 pilots and 9,000 cabin crew.

Brian Strutton, general secretary of the pilots’ union Balpa said: “EasyJet staff will be shocked at the scale of this announcement. Only two days ago staff got a ‘good news’ message from their boss with no mention of job losses so this is a real kick in the teeth.”

ATM transactions plunge at PayPoint as consumers shun cash

ATM transactions in the UK have plunged since the coronavirus pandemic started, with consumers steering clear of cash in order to minimise transmission of the virus.

Transactions at PayPoint (PAY.L) cash machines fell by almost 40% in the first two weeks of April and were down by more than 33% in the four weeks between 18 April and 17 May.

In the three weeks following the UK-wide lockdown, which began on 24 March, PayPoint said its machines registered around 21 million transactions, a 60% reduction on the same period in 2019.

The firm operates a network of tens of thousands of ATM machines across the country.

“Whilst it is still too early to have visibility on the longer-term consequences that will ensue following COVID-19, the impact of consumers avoiding cash and remaining at home has significantly reduced ATM transactions,” PayPoint said on Thursday.

European stocks rise despite mounting US-China tensions

Stocks in Europe rose on Thursday despite growing tensions between the US and China and the approval of a controversial Hong Kong national security law.

The ascent came in the wake of the announcement on Wednesday of the European Commission’s €750bn (£657bn) recovery plan, which will see countries in the bloc jointly issue debt on financial markets for the first time.

The pan-European STOXX 600 index (^STOXX) rose by around 0.8%. London’s FTSE 100 (^FTSE) climbed by around 0.7%.

Germany’s DAX (^GDAXI) was up by around 0.6%, while France’s CAC 40 (^FCHI) was 0.7% in the green.

The gains in Europe followed a mixed trading session in Asia. China’s legislature on Thursday approved the introduction of a sweeping national security law on Hong Kong, bringing the semi-autonomous territory further under Beijing’s control.

What to expect in the US

Futures were pointing to a mixed open for US stocks on Thursday. Investors have been weighing signs of a stabilising US economy, along with hopes of a vaccine or treatment and the Chinese tensions.

S&P 500 futures (ES=F) rose by 0.3% after the index on Wednesday saw its highest close since early March.

Dow Jones Industrial Average futures (YM=F) climbed by more than 0.6%. Nasdaq futures (NQ=F), meanwhile, were down by more than 0.1%.