Warnings in consumer discretionary
Macro & Overnight
The US economy slowed into December but grew by an annualised 2.9%. The idea that a US recession is nailed on remains unconfirmed.
News from China that covid cases and deaths plunged more than 70% from the prior month’s peak also instilled optimism about the outlook for China.
Energy prices firmed, and the $ remained weak.
Attention for the oil market will turn to the OPEC meeting next week.
Macro & Overnight
There are warnings from fashion retail and used cars today but also interesting stakebuilding in Sainsbury’s, the supermarket group.
On the Beach, the online holiday company, updated that bookings since the start of the financial year are up 68% vs the equivalent period in FY22.
Motorpoint, the used car retailer, issued a warning reporting a return to volume growth but much lower margins. Financing deal attach rates have reduced, and EV prices have been particularly weak, as we know from the announced Tesla price reductions.
The privately owned UK wholesale business Bestway has announced it holds a 3.45% stake in Sainsbury. Unusually it also added that it would like to buy more shares, but just for investment purposes. It said that it had no intention of making a bid. Yes, well, they would say that, wouldn’t they?
Retail fashion brand Superdry said pre-Christmas retail revenue was up 24.9%, but gross margins were down 60 basis points, primarily driven by weak wholesale and increased promotional activity. A return to a normalised cost base coupled with the slow start to Q1 and the delayed recovery of wholesale have impacted profits. Profit guidance is now for a broadly breakeven performance from a previous £10m-£20m profit number.
Treatt, the ingredients, flavour and fragrance supplier, updated on a good start to the year, trading in line with management expectations. Q1 sales were 9% ahead of the prior year. The Group continues to implement strong cost discipline, and foreign exchange impacts were successfully managed by the Group’s revised hedging and currency management strategy.
YouGov, the online polling company, said it was cautiously optimistic about prospects for FY23. Its sales pipeline remains healthy, and it is confident its growth outlook is aligned with current market expectations.
This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.
Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position, and/or may perform services or solicit business from, any of the companies or related securities mentioned.
Any prices quoted in our research are as at the previous day’s close.