Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

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July 12, 2023

Low cost retail excels

Macro & Overnight

Oil prices are now up 10% from recent lows, with Brent closing in on $80.

The Pound returns towards the $1.30 level as the DXY weakens further and UK rates spike.

UK Company News

Bytes updated that it has continued to trade strongly and seeing resilient demand and pleasing win rates across both the corporate and public sectors. It says it is well-positioned to make further progress this year.

Hostelworld H1 update reported that revenue was +57% with net bookings of 3.4m (+64% YoY). Direct marketing spend as a percentage of revenue at 51% was down 9%. Its net debt position is €16.2m and reiterates previous earnings guidance.

PageGroup Q2 updated gross profit of £263.5m, -6.5% vs 2022 with temporary recruitment +11.1% and permanent -11.4%. Full Year operating profit is expected to be in line with consensus. 

RBG has announced the sale of LionFish for up to £3.07 million, comprising an immediate payment of £1.07m and an additional payment of up to £2.0 million, subject to performance conditions. 

Shoe Zone achieved an exceptional month of sales. Trading has significantly exceeded management expectations due to continued strong demand, with volumes up double-digit on last year, despite no price increases on our core ranges margin improvements due to the lower container rates and favourable foreign exchange rates with management expecting these improved margins to continue for the rest of the financial year.

Wetherspoon Q4 update Like-for-like sales increased by 11.0%. It opened three pubs and sold, closed or surrendered 28. The company expects profits in the current financial year to align with market expectations.

Wetherspoons’s typically lengthy statement included a section called Price, Quality and Myths, outlining its low-cost, high-quality philosophy. Along with Shoe Zone today, this is a lesson in the advantages of scale economy shared business models excelling in the current environment. The master exponent of this, Mike Ashley at Frasers, is trying to buy most of the UK high street, increasing its stake in Curry’s yesterday. With reports that container rates are now 45% below their average of the last ten years and the Pound nudging $1.30, low-cost UK retailing is enjoying very favourable terms of trade. 

Prognosticator 

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