Tesco raises profit outlook amid strong results

Safiya Bashir
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Tesco raises profit outlook amid strong results

After strong sales in the last quarter, Tesco has raised its profit outlook.

Compared to last year sales were up 0.3%, however, compared to pre-pandemic levels sales jumped 8.8%.

CEO Ken Murphy commented: “We are delighted that we were able to help our customers have a great Christmas.”

“Despite growing cost pressures and supply chain challenges in the industry, we continued to invest to protect availability, doubled down on our commitment to deliver great value and offered our strongest ever festive range.”

“This put us in a strong position to meet customers’ needs as, once again, COVID-19 led to a greater focus on celebrating at home. As a result, we outperformed the market, growing market share and strengthening our value position,” he added.

Richard Lim, CEO at Retail Economics, commented: “The retailer’s single-minded focus on competitive pricing and driving loyalty through its Clubcard-only discounts has won over customers this Christmas. The use of Clubcard has been a masterstroke from the retailer, enhancing the perception of value and playing on the hugely powerful customer instinct of FOMO – the fear of missing out.

“Online continued to deliver strong gains as a wave of new e-commerce converts stuck to a new way of getting their groceries over Christmas. Sales growth was mightily impressive in the wholesale part of the business with Booker seeing double-digit growth as catering and convenience boosted sales.

“Looking forward, the imminent squeeze on incomes will force many households into recessionary behaviours, trading down to own-brand and shopping around as they look to make budgets stretch that little bit further. Tesco is well placed to win new customers with their laser-like focus on value as they double-down on their Clubcard success.”

M&S posts strong sales but shares drop

Safiya Bashir
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0
M&S posts strong sales but shares drop

M&S has posted strong Christmas results, with sales up 8.9% in the last quarter.

The group posted a rise in food sales by 12.4% and customers increased basket sizes and spent money on higher end products to celebrate the festive season.

Clothing & home sales were up 3.2%.

“Trading over the Christmas period has been strong, demonstrating the continued improvements we’ve made to product and value,” said chief executive, Steve Rowe.

“Clothing & Home has delivered growth for the second successive quarter, supported by robust online and full price sales growth. Food has maintained its momentum, outperforming the market over both 12 and 24 months.”

“The market continues to be impacted by the headwinds and tailwinds that we reported in the first half, but I remain encouraged that our transformation plan is now driving improved performance.”

Despite the strong results, shares in M&S dropped 5.6% at the time of writing on Thursday morning.

“Well, “Super” Thursday is traditionally the best day to “bury” bad news about Christmas trading, given the huge number of companies usually reporting at the same time, but the field is a bit thin this year…and although we can’t see any bad news, we can’t see that much good news either, with the City likely to be disappointed by the lack of a profit upgrade at M&S…” said analyst Nick Bubb.

Miners help FTSE 100 trade at pre-pandemic highs

UK Investor Magazine
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Miners help FTSE 100 trade at pre-pandemic highs

The FTSE 100 continued convincingly broke through 7,500 on Wednesday morning, touching 7,555 and the highest level since January 2020.

The rally was driven by stronger miners that dominated the FTSE 100 top risers in Wednesday trade. Anglo American, Rio Tinto, BHP, Glencore and Antofagasta were among the top gainers as commodity prices surged supporting mining share prices.

A culmination of hopes China’s steel making industry would continue to recover, and disruption in Brazilian iron ore production pushed Iron ore Futures on the key Dalian Exchange in China to the highest level this year.

Copper futures traded on the London Metals Exchange also rose to trade above $9,600 per tonne. Copper miner Antofagasta was the FTSE 100 top riser at the time writing, gaining 4.8%.

“The FTSE 100 traded 0.6% higher, with miners dominating the index’s top performers. The top six risers were all metal producers, and this sector is a bellwether for global economic activity,” said Russ Mould, investment director at AJ Bell.

Improving sentiment

The general risk-on rally began in Asia overnight and the optimism continued into the London session, following comments from Fed Chair Powell on the trajectory on inflation, and suggestions interest rate hikes in the US may not be as dramatic as previously thought.

“Volatility is down, equities are up. Investors look to be regaining their confidence after a choppy start to 2022 with all the main indices across Europe and Asia pushing ahead, following a similar performance on Wall Street last night,” said Russ Mould.

“Driving confidence were remarks by Federal Reserve chairman Jay Powell that the central bank would do everything it could to stop inflation running out of control.”

Highlighting the risk-on nature of today’s trade, Mould pointed to declines in defensive shares as investors rotated to cyclical stocks.

“Risk appetite appears to have returned given how more stodgy companies like BT, Reckitt Benckiser and Imperial Brands were among the fallers on the FTSE. Instead, investors were more interested in bidding up some of the tech plays which have been beaten up recently, including Scottish Mortgage,” said Mould.

“Also in vogue were a slew of consumer-facing companies riding high after upbeat trading statements. These included Sainsbury’s which upgraded its profit guidance, and Whitbread which said it continued to trade ahead of the market.”

Sainsbury’s posted an upbeat festive trading report that showed they had gained market shares paying testament to their efforts to take in the discount supermarkets such as Aldi and Lidl.

“Sainsbury’s is the latest supermarket directly trying to take on the discounters, with massive investment in reducing prices helping the supermarket up its market share,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

“The group also benefitted from another year of customers wanting to treat themselves over the festive season, as rules were relaxed and people went all-out, piling trollies and virtual baskets high.”

Sainsbury’s, Bidstack and US Tech Stocks with Alan Green

UK Investor Magazine
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Sainsbury’s, Bidstack and US Tech Stocks with Alan Green

The UK Investor Magazine Podcast is joined by Alan Green for a discussion around key market themes and a selection of UK equities.

This Podcast explores Sainsbury’s (LON:SBRY), JD Sports (LON:JD), Bidstack (LON:BIDS) and ECR Minerals (LON:ECR).

Sainsbury’s and JD Sports can be viewed as bellwethers of the UK’s consumer and their festive updates provide an insight into consumer behaviour and propensity to spend.

Sainsbury’s enjoyed the fruits of their strategy to provide low cost lines in an effort to take on discount supermarkets, whilst still offering a significant range of branded goods. Having all if this under one roof proved a success for Sainsbury’s and their festive update was well received by markets.

JD Sports are seemingly immune to the strife elsewhere on the high street posting a respectable set of festive trading figures. We question where growth could come from in 2022.

Bidstack have signed a commercial agreement that guarantees a minimum of $30 million advertising spend through their new partner. This will dramatically increase Bidstack’s revenue in the coming periods and was immediately reflected in the Bidstack share price. However, it may have come too late for Bidstack to take a dominant position in the market given the level of competition in the market.

We also briefly touch on the latest from ECR.

Topps Tiles sales up 21%

Safiya Bashir
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0
Topps Tiles sales up 21%

Topps Tiles has reported strong sales for the 13-week period ended 1 January.

Sales were up 21% over the period for a two year period.

“We have made an encouraging start to the new financial year, with strong customer demand during the first quarter and like-for-like sales growth on both a two year and one year basis against tough comparatives,” said CEO Rob Parker.

“Global supply chain challenges, higher staff absence due to Covid-19 and material cost price inflation continue to provide significant headwinds, however we are managing these challenges effectively.  I am confident that our successful strategy and strong balance sheet leave us well-positioned to deliver sustainable long term growth and our 20% market share goal of ‘1 in 5 by 2025’.”

The group has made many precautions in the last quarter to mitigate against higher shipping costs and inflation.

DFS shares up on strong sales

Safiya Bashir
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0
DFS shares up on strong sales

DFS has reported strong results as sales were up 10% compared to the same period in 2019.

Sales remain 2% lower than in 2020, where there was a surge in people carrying out home improvements over the lockdown.

Chief executive Tim Stacey said: “While the market remains hard to predict, we believe our scale, brand strength and integrated retail strategy will allow us to drive market share gains ahead of the competition.”

“Looking ahead we will continue to invest in our digital platforms and our showrooms, our delivery network, our UK manufacturing capacity, and with expansion into other home categories, we are well positioned to succeed.”

Shares in the group jumped 3% in morning trading.

Sainsbury’s raises profit guidance

Safiya Bashir
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0
Sainsbury’s raises profit guidance

After a strong Christmas period, Sainsbury’s will be raising profit forecast for the year to April.

Strong grocery sales from people staying at home meant the group is now expecting pre-tax profits of at least £720m in the year to March 2022.

“We were bold in our plan for product, value, innovation and service and delivered volume growth ahead of the market. We delivered our best value food this Christmas, launched our lowest ever priced Christmas dinner heading into the key Christmas shopping week and we had our biggest ever New Year,” said chief executive Simon Roberts.

“Customers also treated themselves and new Taste the Difference products in party food, desserts, wines and spirits were really popular and we had record sales of champagne and sparkling wines. Offering great value will be more important than ever this year and we have just launched our bold new Sainsbury’s Quality Aldi Price Match campaign, which targets 150 fresh products that customers buy most often.”

Zoe Gillespie, investment manager at Brewin Dolphin, commented: “UK supermarkets faced tough comparisons against Christmas 2020, when lockdown caused a boom in food and drink sales, but the spread of the Omicron variant saw consumers stay away from bars and restaurants last year as well. Sainsbury’s is continuing to deliver strong results on the back of the range of measures it took to improve business performance.”

“Encouragingly, profit guidance has been lifted, cost savings are helping to stave off the effects of increased inflation, and debt reduction is ahead of schedule. Even the supermarket’s banking operation is seeing a turnaround in fortunes. Sainsbury’s is in a good position and that is being reflected in its increased market share and a share price that is up more than 50% since the very beginning of the pandemic – although, it is still off recent peaks.”

Following the report, shares in the group jumped 2% and analysts pointed to the increase in their market share as reason to be optimistic.

“Sainsbury’s is the latest supermarket directly trying to take on the discounters, with massive investment in reducing prices helping the supermarket up its market share,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

New standard listing: Electric Guitar’s digital plan

Andrew Hore
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0
New standard listing: Electric Guitar’s digital plan

Electric Guitar is the latest shell that has joined the standard list. The plan is to be a consolidator in the digital advertising sector. Management hopes to secure an initial acquisition within 24 months. The company acquired would have an enterprise value of at least £5m.
Digital privacy legislation is changing the digital marketing arena, including the limitation in collecting third party data. The UK is set to come up with its own data protection standards and this will affect areas such as the use of cookies.
The share price ended the day at 3.25p. There were three trades worth just over...

Haydale: Enhanced Growth with Nanomaterials

Jon Levinson
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0
Haydale: Enhanced Growth with Nanomaterials

Haydale (LON: HAYD), floated at 210p in 2014   there was a WOW factor in the possibilities for the technologies and the provision of services facilitating the integration of graphene and other nanomaterials into the next generation of industrial materials and commercial technologies. There have, however been ‘issues’ with the cost and functionality of the original formulations so most of WOW disappeared along with the institutional support. The shares are 6.45p with a £33m Mkt Cap. 
Haydale aim to deliver improvements to the functionality of products with electrical, thermal, and mechanical pr...

FTSE 100 lifted by global tech optimism

UK Investor Magazine
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0
FTSE 100 lifted by global tech optimism

The FTSE 100 made reasonable gains on Tuesday as the mood around global tech shares briefly improved, lifting overall market sentiment.

Technology shares, particularly in the US, have been under since the Federal Reserve outline plans for tapering their asset purchases. The tech-heavy NASDAQ is down 6% so far this year, but a late rally yesterday in US names such as Apple, Amazon and Meta spilled over into the morning session in London.

Facing heavy selling at the beginning of yesterday’s session, tech shares were bought into during the session to finish largely flat.

“In the US, the tech-heavy Nasdaq index is down nearly 6% year to date, but yesterday’s session saw investors start to buy on the dip meaning that losses earlier in the day were eventually clawed back by the market close,” said Russ Mould, investment director at AJ Bell.

“It might be too early to call the start of a proper recovery for tech as pre-market indicative prices show minimal gains in the Nasdaq on Tuesday. Investors are likely to be waiting for US inflation figures tomorrow before committing to any big trades on the market.”

Technology shares account for a significant proportion of US equity indices and drove a recovery in S&P 500 and Dow futures overnight.

The FTSE 100 was 0.56% at 7,486 at the time of writing on Tuesday morning.

Scottish Mortgage Investment Trust was the FTSE 100’s top riser due to their exposure to the US tech sector. The trust includes Tesla, NIO, NVIDIA and Tencent in their top ten holdings.

“Scottish Mortgage Investment Trust was among the other UK-listed technology-related stocks trying to push ahead on the markets on Tuesday. Its shares jumped 3% following recent weakness caused by concerns of how rising interest rates would affect valuations for fast-growth stocks, many of which populate Scottish Mortgage’s portfolio,’ said Russ Mould.

Dechra Pharmaceuticals was also among the risers on Tuesday as investors stepped in to buy up the beaten down stock that is already down 16% in 2022.

Darktrace was the top riser on the FTSE 250 after the company raised their profit guidance, which was well received given a backdrop of general optimism around tech.

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