Date: Thursday 11 Oct 2012
London enjoyed a solid morning sparked by a return to favour of stock market darling Burberry, the luxury fashion chain.
Burberry, which issued a profit warning last month, confirmed like-for-like (LFL) sales growth in its stores slowed dramatically in the July-September quarter, but the good news is that towards the end of the period things started to pick up again.
LFL sales over the half-year were up 3%, but much of the heavy lifting was done in the first quarter, when LFL sales were up 6%, while in the second quarter LFL sales growth eased to 1%. However, that second quarter performance was better than some market observers were expecting; Seymour Pierce, for instance, was wrong footed by the late September revival as it had predicted second quarter like-for-like retail sales would be down 2%.
Burberry also had good news on the operating margin front, saying the Retail/wholesale operating margin in the six months to September 30th 2012 is now expected to be at least in line with the same period last year (14.9%), rather than lower as previously guided.
Elsewhere in the world of retail investors are far from sanguine about the impending departure of Kate Swann, the Chief Executive Officer of newsagent chain WH Smith.
The share price fall is recognition of how well Swann has maximised returns from what was considered at the onset of her stewardship a cash cow with little growth potential. She will leave the company on June 30th 2013 after nine years as boss and will be replaced by Steve Clarke, Managing Director of the firm's high street business.
Greggs, the hot pastry-based snack dispenser of choice for British politicians seeking a photo-opportunity, left a sour taste after it said LFL sales will remain negative in the final quarter of 2012.
LFL sales fell 2.6% year-on-year in the 14 weeks to October 6th as consumers continued to tighten their purse strings.
Supermarket chain Morrisons is friendless after Credit Suissee downgraded to a neutral stance, having previously expecting the shares to out-perform. Market research from Kantar Worldpanel suggests Morrisons has not regained its mojo after a mediocre first half of the year.
"Although management expects negative like-for-like again for the second half (the first was down 0.9%), we were initially more hopeful, but, following the new data, we have now revised down our expectation of second half like for like to -3.0% from 0.0%," the broker revealed.
In other broker action, French broker SocGen is sweet on Tate & Lyle, moving to "buy" from "hold".
Irish broker Goodbody, meanwhile, has initiated coverage of building-materials company Wolseley with a "buy" recommendation and a share-price target of 3,400 pence.
Royal Bank of Scotland (RBS) said it has priced Direct Line at 175p a share, valuing the insurance firm at over £2.6bn. The offer comprises 450m existing shares, representing 30% of the 1.5bn total, raising RBS £787m. The flotation price is in the bottom half of the indicated range of between 160p and 195p a share.
Assets under management at fund manager Ashmore picked up sharply in the July - September quarter, largely on the back of a positive investment performance. The quarter saw assets under management increase 6.8% to $68.0bn, driven by positive investment performance of $3.7bn and net inflows of $0.6bn. Investment performance was positive across all investment themes, it said.
Hot on the heels of its failed merger with Airbus owner EADS, defence firm BAE Systems has confirmed that trading since its interim results at the beginning of August has been in line with management expectations. The shares are higher on speculation that following the collapse of the deal with EADS, the firm could be a break-up candidate.
Peace could be about to break out at Bumi, the Indonesia-focused mining giant. It has received a proposal from major shareholder, the Bakrie Group, which wants to swap its stake in the group for a stake of equivalent value in Bumi Resources, Bumi's Indonesia-listed affiliate which is under investigation for alleged financial irregularities.
The group has been the subject of a board room battle between the influential Bakrie family and blue-blooded London financier Nat Rothschild. The shares shot up on hopes that the complicated cross-holdings situation at the firm would be simplified by the new proposals.
Packaging firm DS Smith said its purchase of SCA Packaging was expected to deliver a return on investment above the cost of capital this financial year, together with substantial earnings enhancement.
FTSE 100 - Risers
Burberry Group (BRBY) 1,108.00p +10.47%
Croda International (CRDA) 2,300.00p +3.56%
Petrofac Ltd. (PFC) 1,635.00p +3.09%
Capita (CPI) 744.50p +2.41%
CRH (CRH) 1,141.00p +2.33%
BAE Systems (BA.) 328.00p +2.21%
Barclays (BARC) 226.85p +2.18%
Tate & Lyle (TATE) 703.50p +2.18%
Eurasian Natural Resources Corp. (ENRC) 327.50p +2.09%
Intertek Group (ITRK) 2,753.00p +2.08%
FTSE 100 - Fallers
Morrison (Wm) Supermarkets (MRW) 270.00p -1.46%
SSE (SSE) 1,418.00p -0.49%
GlaxoSmithKline (GSK) 1,430.00p -0.42%
Smith & Nephew (SN.) 652.50p -0.38%
National Grid (NG.) 688.00p -0.36%
Bunzl (BNZL) 1,097.00p -0.27%
Unilever (ULVR) 2,295.00p -0.26%
Severn Trent (SVT) 1,671.00p -0.18%
Reed Elsevier (REL) 598.50p -0.17%
Antofagasta (ANTO) 1,289.00p -0.15%
FTSE 250 - Risers
Bumi (BUMI) 246.00p +32.47%
Home Retail Group (HOME) 104.80p +6.18%
Smith (DS) (SMDS) 197.50p +3.95%
Stobart Group Ltd. (STOB) 116.20p +3.29%
Barratt Developments (BDEV) 179.70p +2.98%
Rank Group (RNK) 152.90p +2.76%
Ruspetro (RPO) 105.10p +2.74%
Taylor Wimpey (TW.) 58.05p +2.47%
Bellway (BWY) 935.50p +2.46%
Persimmon (PSN) 752.50p +2.45%
FTSE 250 - Fallers
Kenmare Resources (KMR) 36.92p -4.23%
Greggs (GRG) 498.00p -3.58%
WH Smith (SMWH) 629.50p -3.45%
Man Group (EMG) 90.65p -2.94%
Fenner (FENR) 370.60p -2.47%
Daejan Holdings (DJAN) 2,780.00p -1.42%
Dialight (DIA) 1,148.00p -1.37%
PayPoint (PAY) 755.00p -1.31%
JPMorgan American Inv Trust (JAM) 954.00p -1.24%
Yule Catto & Co (YULC) 161.00p -1.17%
FTSE TechMARK - Risers
Gresham Computing (GHT) 68.00p +5.43%
Sepura (SEPU) 89.25p +3.78%
Phoenix IT Group (PNX) 162.00p +3.76%
XP Power Ltd. (DI) (XPP) 905.00p +3.31%
Promethean World (PRW) 17.25p +2.99%
RM (RM.) 85.00p +2.26%
FTSE TechMARK - Fallers
AEA Technology Group (AAT) 0.040p -20.00%
Hiwave Technologies (HIW) 1.15p -6.12%
BATM Advanced Communications Ltd. (BVC) 16.50p -2.94%
Optos (OPTS) 197.75p -2.94%0
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