Operating across the sports, gaming and personal finance sectors this global digital publisher connects advertisers and targeted, engaged audiences in helping to build up the brands.

The interim results for the half-year to end June from this XLMedia (LON:XLM) showed revenues of $44.5m ($32.2m) and an adjusted EBITDA of $10.6m ($6.6m).

The group ended the period with $17.7m in cash and short-term investments.

Rationalisation having its benefits

The recent rationalisation of the group’s activities and its online portfolio saw a massive reduction from over 3,000 sites to just around 45 currently. It has also set about cost saving to the tune of $4m a year.

The company saw a very strong performance from its Sports vertical which generated first half revenues of $14m, some 76% of group revenues.

It has a very strong focus upon the US sports sector, especially with an easing of regulations permitting sports betting across various of the US states. After opening its legal online sports betting in New York in January this year and is now operating in 16 US states. 

Strong US Sports advance

The group expects its full year adjusted EBITDA results to be in line with last year, while expecting to return to profits in 2023.

CEO David King stated that:

“Refocusing the business towards the rapidly growing US online sports betting market, managing the reduction in Personal Finance, while stabilising the Gaming vertical, alongside rightsizing the Group’s cost base, remains a key priority to ensuring new XLMedia is well placed for further growth.”

Broker’s opinion

Analysts Andrew Renton and Simon Strong at Cenkos Securities have rated the group’s shares as a Buy. 

They are estimating $69.8m ($66.5m) of revenues for this year to end December and an EBITDA of $16.5m ($17.9m).

The 2023 year could see $72.4m of sales and $17.3m of EBITDA.

The brokers consider that the group will have a healthy cash balance to fund both organic growth and future acquisitions to build its market share in US Sports.

They conclude that XLM’s valuation remains compelling trading on an EV/EBITDA multiple of 5.1x against its peers on 6.0x.

The group, which is a dollar dominated business, has its shares currently trading at 34.5p.

Next has been the latest retailer lower sales and profit forecasts in the face of slowing economic conditions.

After recording a 16% increase in profit before tax to £401m in the first half of 2022, the retailer says they are now lowering their full year profit guidance to £840m from £860m.

Next provided a detailed explanation of the now all too familiar economic pressures causing a downgrade in their guidance including rising prices, cost of living crisis and raised concerns about performance in August.

As the retailer said they saw sales being down 2% this, they did provide the caveat that government actions still had the ability to support the Uk consumer, in which case their 2% drop in sales would be too pessimistic.

Nevertheless, the combination of a reduced profit guidance and a backdrop of market volatility saw Next shares down 10% in early trade on Thursday.

Declining retail sales

Next joins a raft of consumer facing companies recently lowering their outlook. Boohoo this week warned on profit and ASOS have also said they see conditions deteriorating.

However, analysts note that Next’s outlook will be of particular concern for investors due to their place in the psyche of markets.

“Next is seen as a bellwether of the UK High Street and today’s cut to full year guidance lays bare the challenges being faced. Asos and Boohoo’s trading performance has been nothing short of dire. Even Primark’s recent trading update called out significant margin pressures. In this context, Next’s half year results are more resilient than most,” said Charlie Huggins, Head of Equities at Wealth Club.

“The fact that many retailers are struggling shouldn’t be a surprise. This is arguably the most difficult trading environment since the 2008/09 financial crisis. Inflation is at levels not seen for four decades. Sterling is in the doldrums, trading at its weakest level against the dollar since 1985. Add to this, the war in Ukraine and the spectre of further interest rate rises. It’s not exactly conducive to consumers restocking their wardrobes.”

The FTSE 100 rebounded from it’s worst levels on Wednesday after the Bank of England stepped in to support the bond market with long dated purchases.

UK 10-year Gilt yields had hit 4.611% on Wednesday before dropping back to 4.03% following the announcement of the BoE’s actions.

Soaring bond yields were a result of the UK governments mini-budget which was criticised by the IMF due to the timing of the measures.

The move by the Bank of England would have been unthinkable just a week ago as markets were focused on the bank’s tightening of rates.

The pivot has arrived:
Bank of England will carry out temporary purchases of long-dated UK government bonds from September 28 to restore orderly market conditions, according to a statement.

— zerohedge (@zerohedge) September 28, 2022

With bond yields around 4.5%, they rivalled the FTSE 100’s yield and made the equity index look less attractive for income seekers who would have been able to gain a similar yield in the safety of government bonds.

The Bank of England’s measures helped lift the FTSE 100 off lows of 6,836 to trade at 6,963, down 0.3% at the time of writing.

Burberry rallies

Burberry topped the FTSE 100 risers after the luxury brand announced Riccardo Tisci will be stepping down as Chief Creative Officer.

“The rise in Burberry’s share price is perplexing given the news that chief creative officer Riccardo Tisci is leaving, as he was well respected. Yet in the fickle world of fashion, trends come and go, and so the arrival of someone new may just have excited investors,” said Russ Mould, investment director at AJ Bell.

“Tisci’s replacement is Bradford-born Daniel Lee who is credited for helping to breathe some new life into Italian luxury brand Bottega Veneta.”

Burberry shares were 4.3% higher at the time of writing.

Housebuilding shares and UK banks were among the gainers as they cheered the Bank of England’s action at a time the news around the UK economy and housing market was deteriorating.

Asset managers and insurance companies were the biggest drag on the FTSE 100 with Legal & General, M&G, Aviva and Phoenix Group among the top fallers.

Boohoo shares suffered on Wednesday as the online retailer said they expected revenue to fall over the rest of the year after posting a 10% revenue decline in the six months to 31st August.

Compounded a poor performance so far this year, the company said the macro-economic environment and cost of living crisis would continued to hurt sales.

The company said of their outlook for the rest of the year: “our expectation is for a similar rate of revenue declines to persist over the remainder of the financial year if these conditions continue.”

Despite a gloomy outlook for Boohoo, there sales for the period are significantly higher than the same period prior to the pandemic highlighting the progress the business has made.

Nonetheless, such as stark warning on future earnings will not please investors.

“Once again Boohoo feels like a very apt name for the fallen fast fashion firm. Today’s warning shouldn’t come as a shock given the backdrop the business is facing but that doesn’t make it any less sobering,” said Russ Mould, investment director at AJ Bell.

“The peak in the shares above 400p at the height of the pandemic feels an awful long time ago. Though questions had emerged about the business model even during those heady days as the company was dogged by a scandal over working conditions in its supply chain.”

“If Boohoo leaned on unsustainably cheap labour to make the model work, it faces a very tough task now when other costs are going through the roof. This has not been helped by a big increase in return rates.”

Boohoo shares were down 6.5% on the day at 34.3p and are now down 72% year-to-date.