FTSE 100 lower as bumper retail sales overshadowed by worrying public debt and consumer confidence data, Nike replaces CEO and $8 billion wiped off value of FedEx

“The FTSE 100 started off on the back foot on Friday despite record highs in the US overnight. The index was dragged lower by a surge in the pound which affects the relative value of constituents’ overseas earnings,” says AJ Bell investment director Russ Mould.

“Chancellor Rachel Reeves’ regular warnings of ‘difficult decisions’ in the Budget will be carrying increasing weight after new figures showed public debt as a share of the economy had reached 100% for the first time since the 1960s.

“The last time debt was at this level and still rising, in March 1941, Winston Churchill had just dubbed German attacks on the country’s imports and maritime communications as the Battle of the Atlantic.

“Any optimism about blockbuster retail sales, as a reduction in interest rates and warm late-summer weather helped boost household appetite to spend in August, will have been tempered by the very weak consumer confidence data which accompanied it.

“This suggests the government’s downbeat messaging about the economy might become a self-fulfilling prophecy and that last month might be as good as it gets for retail. It will certainly be prompting nervousness among British shopkeepers ahead of their ‘Golden Quarter’ in the run-up to Christmas.”

Nike

“When a company struggles for more than a year, it’s natural for the board of directors to question if they’ve got the right leadership and the trigger has now been pulled on a new CEO.

“It’s the end of the road for John Donahoe at Nike as the sportswear giant has declared it is time for someone else to lead the company after a patchy few years. Donahoe will retire on 13 October and will be replaced by Elliott Hill who used to run the company’s commercial and marketing operations.

“Nike’s lack of product innovation has seen some of its competitors get one step ahead, including On and Hoka. Efforts to sell direct to consumers rather than through retailers hasn’t quite gone to plan, Chinese consumers seemed to have lost their appetite for Nike shoes, and Donahoe put too much reliance on selling limited edition shoes rather than positioning products as every day, essential items. His reorganisation of Nike also appears to have backfired, shifting from divisions organised by individual sports and towards men’s, women’s and children’s segments.

“Elliott Hill worked his way up the ladder in Nike, having previously spent 32 years with the company before leaving in 2020. This experience is priceless in an industry as ruthless and competitive as footwear. Fashions come and go but the key to success is being a trendsetter, not a follower, and Nike needs to get back on top.

“Nike’s share price jumped on the news that Donahoe is leaving, implying that investors are not only happy to see someone else take the reins, but also the return of someone who knows the business inside and out.”

FedEx

“Often seen as a good indicator of the health of the wider economy thanks to the breadth of its exposure across areas like transportation, logistics and e-commerce, FedEx’s big warning overnight might have wider resonance. It was severe enough to wipe $8 billion off its market value.

“FedEx’s shares were down by double digits in pre-market trading as the company slashed its guidance after missing first-quarter forecasts by a notable degree. The company’s core Federal Express business is really in the doldrums.

“The pressure on profitability shows FedEx is still a way off rightsizing its cost base after expanding rapidly to meet extra demand during the pandemic, when demand for shipping increased rapidly.

“The company is continuing to buy back shares in an effort to win investors over. However, this disappointing release, coming just a few months after raising its 2025 guidance, will do little for management’s credibility and will leave shareholders craving consistency.

“It will also ramp up the pressure for more radical changes at the business, with directors assessing whether now might be the time to get rid of its FedEx freight business.”

These articles are for information purposes only and are not a personal recommendation or advice.