The main part of the case against Amazon involves consumers losing money and getting bad deals due to its alleged monopoly. Photo: Getty.
Investors will be keeping an eye on Amazon stock today after the US Federal Trade Commission (FTC) filed a long-awaited 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 this was “incorrect on the facts and in law, and we look forward to presenting that case in court”.
The case revolves around allegations that Amazon’s alleged monopoly is causing consumers to lose money and get bad deals.
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The FTC said in a statement Tuesday, “The FTC and its state partners say Amazon’s actions prevent it from preventing competitors and sellers from undercutting prices, reducing quality for buyers, overcharging sellers, Stifles innovation and prevents rivals from competing against Amazon.” ,
Despite the news, Amazon shares were set to trade higher on Wednesday. Its stock has increased by about 50% year-on-year.
Fashion retailer H&M on Wednesday reported third-quarter operating profit of 4.74 billion crowns (£0.35 billion, $0.43 billion), in line with analysts’ expectations and above the same period last year.
The company also announced plans to buy back shares worth 3 billion crowns and said it was returning to JD.com, the leading e-commerce platform in China.
However, H&M warned that sales this month would decline 10% year-on-year in local currencies, and that markdown costs in relation to sales were higher in the third quarter than last year.
“This year it is opening about 100 new stores, mostly in developing markets and closing 200 stores, mainly in established markets. H&M is expanding into Latin America with plans to open its first store in Brazil in 2025. It also aims to gradually reopen most of its Ukraine stores from November. However, it faced a $2.1 billion one-time cost when it exited Russia,” said Victoria Schaller, head of investments at Interactive Investor.
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He also noted that sales appear to be struggling in the near term as warmer-than-expected weather has kept customers from stocking up on warm items like coats for the colder months ahead.
“It is struggling to compete with Inditex-owned Zara, which appeals strongly to fashionistas, as well as Shein and Primark which offer much lower prices. “H&M is trying to cut costs and preserve margins, but passing on inflationary pressure to customers in the face of higher prices has become challenging.”
The company’s shares have risen nearly 40% so far this year, outperforming the broader market and today, its stock was up nearly 4% at the time of writing.
Shares in insurer Saga fell nearly 4% after the company reported it expects significant double-digit growth in revenue and underlying profit ahead of market estimates.
It reported a 15% rise in revenue in the first half due to growth in its cruise and travel businesses – and it is reducing its debt.
However, its insurance business is going through more challenging times, battling a tough inflationary market backdrop. Its insurance broking business recorded a six-month profit of £23.8m, down from £36.7m the previous year.
Victoria Schaller said, “The stock is down about 12% so far in 2023. Over the past five years, Saga has shed more than 90% of its stock market valuation.”
Russ Mould, investment director at AJ Bell, looked at the aging population and explained how selling travel and insurance products to the over-50s, many of whom are in a stronger financial position than younger groups, was a win-win. There should be a strategy.
“However, Saga’s execution since joining the market a decade ago has been terrible. “There are some tentative signs that Saga is finally doing its job, supported by travel reform,” he said.
UK car dealership Pendragon (PDG.L) has posted higher profits in half a year as the group also finds itself at the center of a bidding war.
The company recorded underlying pre-tax profit of £36.7m, up from £33.5m, while like-for-like revenue for the group, which includes Stratstone, Evans Halshaw and Carstorem, was up more than 15% to £2.09bn.
Meanwhile, US company AutoNation (AN) has made an unsolicited takeover offer for Pendragon worth around £447m, 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 considering all three proposals “in consultation with shareholders”. Pendragon shares rose 10.38% after the update.
“Amid a difficult market backdrop, Pendragon’s strong first half results help explain why there is a bidding war for the car retailer. A three-way race to buy the business could make shareholders the major winners,” commented Russ Mould, AJ Bell Investment Director.
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