In a morning full of surprises the FTSE
has given back ground in early trade, lagging its European peers as the retailers endured a tough session with key updates from Sainsbury’s and Mothercare dragging the Index lower.
Those updates aside Europe as a whole remained fairly flat, with Italy again leading the pack despite a woeful set of Unemployment numbers with both the headline rate and youth employment hitting records, the latter an eye watering 41.6%.
The major story of the morning was an unexpected about turn from the major Supermarkets after Sainsbury’s and Waitrose released numbers. The session started off in good spirits, with both Sainsbury’s and Waitrose reporting bumper Christmas Sales, with the former extending a record 35 consecutive quarters of growth after having been tipped to end the run by some analysts. All the supermarkets, including Tesco and Morrisons who’s Christmas updates are yet to come, dovetailed initially only to spectacularly reverse after comments from Sainsbury’s in a morning conference call. CFO John Rogers revised full year guidance lower and warned of a tough financial Q4 as consumers reign in their spending after a loose Christmas and by mid-morning the news had everyone back firmly in the red again.
Staying with retail, It was a bit of bloodbath for Mothercare this morning, down over 30% after being forced to issue a full year profit warning and throwing a dummy to a market caught off guard after a strong start to January prior to the update. Sales were down 6.1% in the 12 weeks to January 4th but a move of this magnitude is unlikely just a reaction to the results in isolation, but perhaps more worryingly a void of confidence in their UK turnaround plan.
Dialight was another stock sent to the slaughter on the opening bell, shedding 25% of its value after the company said it will miss expectations as the late receipt of £3m in lighting orders will push deliveries into 2014, leading to the deferral of a number of orders in the US. The firm was upbeat on the year ahead, confident that its positioning in a buoyant industrial lighting market will lead to profitable growth for 2014 and beyond.
One move remaining a mystery for now is Tate & Lyle, who see their stock 3.5% lower with no supporting headline, albeit on low volume.
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