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Good morning. Today we're talking about Deliveroo takeover discussions, stronger economic data and Nike’s setback.

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Big Stories

Takeaway takeover talk

Deliveroo's stock price jumped after news emerged of potential takeover talks with US competitor Doordash. While the initial discussions stalled due to valuation disagreements, analysts speculate that other suitors might emerge. This news comes after Deliveroo's share price plummeted over 50% since its disappointing stock market debut in March 2021. The company, once a pandemic darling, faced a harsh reality check as demand for online food delivery normalised and investors prioritised profitability. Despite these challenges, Deliveroo boasts a network of 180,000 restaurants and 140,000 riders, making it an attractive target. Doordash, already a major player in the US market, has stated it is keen to expand internationally, in 2021 it acquired Finnish rival Wolt. With Amazon already holding a significant stake in Deliveroo, the potential for further consolidation in the food delivery landscape remains high. The coming weeks could see additional companies entering the bidding fray, providing a much-needed boost to Deliveroo's stock price.

UK rebounds stronger

The UK economy bounced back from recession quicker than initially estimated. Official data reveals GDP grew by 0.7% in the first quarter of 2024, surpassing the previous estimate of 0.6%. This ends the short-lived recession that began in the latter half of 2023. Growth came primarily from services and production sectors, though construction dipped due to bad weather. This revision positions the UK as the fastest-growing G7 economy for the first quarter. However, the broader economic picture remains uncertain. While April saw no growth, an increase in services was offset by declines in production and construction. With the looming election, the UK's economic stability faces continued scrutiny.

Nike falters

Nike stock plunged 20% after announcing a disappointing sales forecast. The sportswear giant expects a 10% sales drop this quarter, worse than analysts predicted. This follows lacklustre performance last year and a strategic shift away from selling via retailers like Foot Locker in favour of direct sales through its website and stores, a decision the company later acknowledged was a mistake. Nike hopes to revive sales by focusing on new product lines and recapturing customers lost to competitors. However, ongoing challenges in China and competition from innovative upstarts like On Running and Hoka cast a shadow on their recovery plan. Investors reacted negatively, pushing the stock price further down after a year of decline.

Elsewhere...

On the mend: Marks & Spencer is to launch a clothing repair service for the first time from August, amid increased demand for sustainable fashion and reuse.

New owners: Mike Ashley’s Frasers has bought luxury goods websites from THG in a deal that will also include selling the online health and beauty retailer’s protein powder in Sports Direct shops.

Booted out: The CEO of Boots, Britain's biggest high street pharmacy chain, is quitting after its owner's plans for a £5bn sale or stock market listing stalled.

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Number of the Day

7%

How much household incomes have risen since 2010 according to thinktank Resolution Foundation. By contrast, disposable incomes rose 38% over the 14 years up to 2010.

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