The FTSE 100 has got off to another decent start to the day as it looks to retest the four-year highs of yesterday, helped by more positive pre-Christmas trading updates from the retail sector.
Premier Inn owner Whitbread shares have started well, after the company reporting a strong Q3 performance, helped by a healthy rebound in its Germany business, which appears to be performing well, as more hotels open there, even though the business is still performing at a loss. Sales growth in Germany rose 158%, helped by the extra capacity. On a like-for-like basis, it still showed an improvement of 81.7%.
UK sales also performed well, with a rise of 19.2%, pushing overall like-for-like sales growth up by 16.6%. Total like-for-like sales for the group rose 18.3%. On costs, Whitbread kept its guidance unchanged but did say that for 2024 it was expected to see inflation of about 7% and 8% on its £1.6bn cost base, which the company said were 75% hedged.
Tesco’s Q3 numbers have shown a similar resilience to its smaller peer Sainsbury’s yesterday, with total group sales rising by 5.7% quarter to date. This accelerated to 7.9% in the weeks leading up to Christmas, with the UK and Ireland business seeing sales growth of 5.2%. Central Europe also performed well seeing like for like sales growth of 12.3%. Its Booker business also saw a decent performance with a 19.2% increase on the catering side.
The UK’s number 1 supermarket maintained its market share position of 27.5% despite the increasing competition from the likes of Aldi and Lidl, while reconfirming its full-year guidance or adjusted operating profit of between £2.4bn and £2.5bn. The shares have slipped back in early trade, pulling back from the three-month highs that we saw earlier this week.
Marks & Spencer's share price has seen a decent rebound since its October lows, with the shares up over 40%, so today’s Q3 trading statement had high expectations to meet. The update would appear to have met and cleared those expectations, with the food business outperforming, while clothing sales have also done well. Despite this, M&S shares have slipped back in early trade on light profit-taking after the shares closed at five-month highs yesterday.
With food sales now contributing to the bulk of M&S earnings, the turnaround strategy started by previous CEO Steve Rowe continues to bear fruit. Total food sales rose 10.2%, while on a like-for-like basis they rose 6.3%, as its food business grew its share of the grocery market. More importantly, clothing sales also saw decent growth of 8.8%, and 8.6% on a like-for-like basis, and according to management achieved over 10% market share during the period, the best level since 2015.
Total group sales came in at £3.6bn, a rise of 9.9%. Click and collect orders saw a big increase of 20%, helped in some part by the Royal Mail strikes as customers collected their own parcels. Despite the strong Q3 performance, management maintained their full-year guidance, perhaps mindful that Q4 could see a slowdown after a strong Q3. Disappointment over this could explain why the shares are slightly lower in early trade.
Asos shares have had a brutal last 12 months, with the shares down over 70% and almost 90% down from their pandemic peaks, although we have seen a small rebound from the record lows in October. Today’s numbers will have offered little comfort, with the disruptions caused by Royal Mail strikes and a lack of capacity contributing to a 3% fall in revenues. Four-month sales came in at £1.34bn, below expectations of £1.38bn, with adjusted gross margin broadly flat.
UK sales saw a decline of 8%, coming in at £591.3m, down from £645.2m a year ago. On a more encouraging note, management reiterated its full-year guidance, saying it expects to see a better performance in the second half of the year, as it looks to reduce inventory levels and reduce cash outflow. Asos says it still expects to return a loss in H1, and then improve profitability in H2. This statement appears to be being greeted with relief with the shares pushing higher in early trade.
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