On Thursday, retailer Next shares jumped almost 4% on the update 2024 profit before tax guidance, which was upped 4% due to better-than-expected festive season sales.

The fifth update to Next’s 2024 forecast was triggered by the news of the brand’s total sales experiencing a 5.7% surge during the 9 weeks ending on December 30, surpassing the initial projection of a 2% increase.

The profit before tax forecast for the fiscal year 2024 was raised by £20 million to £905 million. 

Additionally, the company has provided full-year guidance for fiscal year 2025, anticipating a 6% growth in total sales and a 5% increase in profit before tax.

All of this can help explain “why the shares are reaching new peaks, too, especially as management expects further progress to £941 million in fiscal 2025, including £19 million in brand amortisation costs, which will be excluded from headline profit forecasts and figures going forward,” said Russ Mould, investment director at AJ Bell.

Next’s online sales were especially robust, “reflecting better stock availability and excellent operational execution,” said Charlie Huggins, manager of the ‘Quality Shares Portfolio’ at Wealth Club.

“This stands in stark contrast to other retailers like Superdry, which have struggled in the prevailing economic environment,” he added.

Overall, the positive figures “are a further reminder, as if one were needed, that retailers can thrive, regardless of what the weather does, if they sell the right product at the right price point in the right format for the target customer base. Doing this correctly will improve stock turn and sell through, reduce the need to discount, and in turn help profit margins and cash flow,” once again said Russ Mould.

What is clear here is that “UK consumer spending appears to have defied gravity. A strong employment market and rising wages have helped cushion inflationary cost pressures, meaning consumers have continued to fill their Christmas stockings with Next’s wares, despite the gloomy economic headlines,” said Charlie Huggins.

“Next’s core proposition is clearly resonating with the UK consumer and is being augmented by intelligent acquisitions of brands like Fat Face. With inflation falling and wages rising, the economic picture also looks a lot less bleak than at the start of last year,” he added.

The FTSE 100 looked set for its first positive day of 2024 on Thursday as firmer oil prices provided support for the index.

BP and Shell helped offset sharp declines in JD Sports after the sports retailer issued a shock profit warning following a slower festive trading period.

“The FTSE 100 started Thursday on the front foot despite selling in Asia and the US overnight,” said AJ Bell investment director Russ Mould.

“There were decent gains for BP and Shell as oil prices extended their recent upwards movement on concerns over Middle Eastern supply. The region remains a tinder box due to the Israel-Gaza war, and disruption to shipping routes through the Red Sea is also a key factor behind the surge in crude.

“A big drawdown in US crude supplies – robust North American production played a key part in keeping a lid on prices in 2023 – is also a contributing factor.”

The FTSE 100 was trading up 0.35% at the time of writing.

Next

Next was the FTSE 100’s top gainer after the retailer again produced a sterling trading update and upgraded their guidance for the year.

Next shares were over 4% higher at the time of writing as the group said it was increasing full-year profit before tax guidance by £20m to £905m.

While Next provided a reason for investors to be cheerful, FTSE 100 retailing peer JD Sports’ shock profit warning would have been a major disappointment for shareholders used to positive updates.

Earlier in 2023, JD Sports had guided for pre-tax profits in excess of £1 billion. This guidance was rolled back today after the group said margins were pressured by increased promotional activity.

JD Sports said they now expected profit for the year to be £915m and £935m, the lowest profit since 2021.

“When one of the biggest names in retail issues a profit warning, you know life is hard for the sector,” said Russ Mould.

“For JD, issuing a profit warning is a terrible start to the new year. It will put pressure on management to up their game and find innovative ways to shift more stock without sacrificing too much margin. Any interest rate cuts from the Bank of England will be a gift to the consumer and therefore to companies like JD, but there is no guarantee that will happen any time soon.”

JD Sports shares were down 22.9% on Thursday.

JD Sports plunged on Thursday after the sports and pleasure retailer said it would miss its profit guidance as promotional activity hit margins.

JD Sports shares were down 22% at the time of writing on Thursday.

“When one of the biggest names in retail issues a profit warning, you know life is hard for the sector,” said AJ Bell investment director Russ Mould.

Alongside Next, JD Sports is one of the first FTSE 350 retailers to report festive trading updates. JD Sports has previously defied economic concerns making today’s announcement even more concerning for investors.

The company had been targeting record pre-tax for the full of over £1 billion.

“News from JD Sports that full-year pre-tax profit will be up to 12% below the £1.04 billion guidance given last September has disappointed the market. Sales growth has been softer than expected and margins have been squeezed by high levels of promotional activity,” said Russ Mould.

“For JD, issuing a profit warning is a terrible start to the new year. It will put pressure on management to up their game and find innovative ways to shift more stock without sacrificing too much margin. Any interest rate cuts from the Bank of England will be a gift to the consumer and therefore to companies like JD, but there is no guarantee that will happen any time soon.”

JD Sport has traditionally been a retailing powerhouse and the strength of its brand and the resilience of its customer base will prevent any major sales drop-off.

A possible buying opportunity for JD Sports shares.

Canadian Overseas Petroleum’s death spiral continued on Thursday after the stricken oil and gas explorer issued shares to satisfy the conversion of bond payments.

COPL shares fell 8% on the news and are down 99% over the past year.

Canadian Overseas Petroleum issued 305,598,679 common shares. This issuance is a result of the share settlement option being exercised by a Bondholder for the settlement of $1.1 million in Conversion Payment amounts, along with related accrued interest, as per the terms of previously converted 2027 Bonds and 2028 Bonds.

The issue represents around 22% of the shares outstanding following the issuance.

Today’s news follows the cataclysmic deterioration of COPL’s finances. Investors had been hoping for a joint venture agreement to develop US assets, but COPL’s dire situation hit home after discussions were terminated.

The company recently announced its US affiliate has defaulted on its obligations and entered a Forbearance Agreement with senior creditors. COPL agreed to highly dilutive terms and ravaged shareholder value.

The CEO resigned shortly after Christmas.

The company has backed itself into a corner, and shareholders will likely be left with very little.

Elon Musk’s Tesla shares dipped as it was dethroned by the Chinese automaker BYD in electric vehicle (EV) sales in the fourth quarter of 2023.

While Tesla remains the global EV leader on an annual basis, BYD is emerging as a strong competitor in the race to become the world’s largest seller of electric vehicles.

Beyond surpassing Tesla in all-electric sales, BYD achieved sales of over 400,000 plug-in hybrid electric vehicles in the fourth quarter, contributing to a total of more than three million passenger vehicles sold last year.

Now, “the next twelve months look like they could be challenging for the company that had been streets ahead in the EV race up until now,” said Danni Hewson, head of financial analysis at AJ Bell.

Tesla’s shares were down by almost 1% in the US premarket, while BYD’s were up by almost 0.50% at the time of writing on Wednesday.

BYD’s achievement comes on the back of six consecutive months of setting new records in monthly sales.

The positive results and the rise in the brand’s global market share have propelled BYD to become the world’s top seller of plug-in cars and the fifth best-selling car brand globally.

The Shenzhen-based automaker operates in 59 countries, including major markets such as China, the European Union, the United Kingdom, Japan, and Korea.

However, it does not currently sell in the US due to the high import tariffs.

Furthermore, in September 2023, the European Commission initiated a probe to consider the imposition of punitive tariffs with the aim of safeguarding European Union producers from the influx of inexpensive Chinese EV imports. 

“While price is something that is being probed by EU regulators and could create a bit of a speed bump down the road, momentum is currently on BYD’s side. Though Tesla managed to hang onto the EV crown in 2023, it’s coming under increasing pressure from legacy carmakers and Chinese models alike,” Hewson added.