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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December 12, 2023

UK jobs market softens, another big UK bid premium & Sosander defies the odds

Macro & Overnight

UK’s unemployment rate for October was unchanged from the previous month. Annual average earnings growth over the three months to October fell, and job vacancies rose, indicating a softening labour market.

Investor focus today will be on the US CPI inflation data a day ahead of the Fed’s FOMC rate-setting meeting. Although rates are expected to be put on hold again, the focus will be on clues for the direction and speed of travel for 2024.

In Japan, slightly higher producer prices allowed BoJ officials to dismiss suggestions of an imminent end to its negative rates policy.

UK Company News

In the UK, another smaller company has announced a potential offer at a significant premium. This time, small and struggling Smartspace, a software provider to the office market, has been approached about an offer at a 144% premium to yesterday’s closing price. At £25m, it is not material in a market context. However, it is illustrative of the UK market’s value. 

FRP Advisory, the specialist Restructuring, Corporate Finance, Debt, Forensics and Financial Advisory business, said it is experiencing increased demand for advice. Its restructuring team is much more active than during the same period a year ago. It expects to exceed current consensus market expectations. 

Headlam, the UK’s leading floorcoverings distributor, updated that its results will be broadly in line with expectations. September and October were weaker than expected, but November trading improved. However, volumes and revenue remain below last year, better in the UK but lower in Europe. Operating cost inflation in H2 remains elevated but should moderate next year. Headlam states that UK floor covering volumes are around 20% lower than in 2019 on a rolling 12-month basis. 

Sosandar, the online women’s clothing brand moving to an omnichannel modelupdated that its sales growth had accelerated with better full-price sales, improving gross margins. The rollout of its store estate should allow it to deliver profitable growth with less discounting and accelerated delivery of its medium-term target of £100m+ revenue and a 10% margin. Market expectations for the year ending 31 March 2024 are currently revenue of £46.8m and PBT of just £100,000. 

Sosandar is an example of how difficult it is to create a new fashion brand from scratch. The co-CEOs Julie Lavington and Ali Hall have worked wonders to grow this company and bring it to the verge of household recognition. However, the business is still hardly profitable after seven years, six as a listed company.   


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