On a poor day for the markets, with the FTSE 100 down 1.6%, Britain's biggest sporting goods retailer Sports Direct (SPD) has brought a welcome smile to investors. It sprinted 5% higher to 435p on a stonking third quarter update. The cash-generative £2.49 billion cap known for its competitive pricing is mopping up market share, increasing online penetration and expanding internationally.
In the three months to 27 January, Sports Direct grew sales 21.1% to £589.5 million and gross profit by 22.7% to £244.8 million. The key driver of this growth, achieved with an improving gross margin profile and excluding the contribution from the 20 stores acquired from fallen JJB Sports in October, was the Sports Retail division. The core business grew revenues by 21.2% to £495.8 million including online sales, which have received a fillip following a website relaunch.
In a confident statement that had City number crunchers purring, the FTSE 250 stock says it is 'certain' of hitting full-year £270 million earnings target. Analysts at Panmure Gordon remain buyers with a 450p target price. 'We think that there is more to come and that this is not yet reflected in the valuation', says the broker.
Kingfisher (KGF) dipped 0.3% to 277.6p after the home improvement giant confirmed poor fourth quarter sales figures, capping off a tough year of weak consumer confidence and unpredictable weather. Analysts also fretted over recent investment in promotions to stay price competitive, saying this will crimp the £6.6 billion cap's profit margins. Over the 14 weeks to 2 February, like-for-like sales at B&Q in the UK and Ireland fell by 6.4%. In France, same-store sales at both Castorama and Brico Depot languished in negative territory.
Restructured Hovis-to-Mr Kipling maker Premier Foods (PFD) advanced 3.6% to 93p on better-than-expected profits for the year to December. Ongoing trading profits of £123.4 million were ahead of the £119 million figure forecast by Investec analyst Martin Deboo, driven by lower costs.
The St Albans-based food producer also pleased with news of 2.1% growth in sales of Power Brands including Oxo, Bisto and Sharwood's and flagged up a further £20 million of cost savings to come in 2013. Reduction in the year-end net debt pile to £950.7 million (2011: £995.1 million) also provided some cheer and improved. Today's statement went some way to improving sentiment towards Premier Foods, rocked by the surprise departure of chief executive officer (CEO) Michael Clarke after less than 18 months in the hot seat.
'This looks like a decent, reassuring statement in the light of the shenanigans that preceded it', says Investec's Deboo who has a 'hold' rating and 95p price target. The analyst points out the UK grocery market remains 'epically tough' and says new CEO Gavin Darby has his hands full. 'Plenty of challenges remain. The trading environment is tough and marketing investment remains low by peer standards. And despite good work on disposals, leverage (including pensions) remains stubbornly high,' says the analyst.
The non-life insurer is to pay a final dividend of 10c, plus a special dividend of $1.05. However, there was little reaction with the company showing a small fall of 0.3% to 867.50p after its shares rallied ahead of the results. Joanna Parsons at Westhouse Securities says: ‘We anticipate that the market will react very favourably to the latest special dividend and fans of the company will continue to be glad they own the shares. However, the shares have had a good run and the question is how far investors might wish to chase.’
Media group Informa (INF) was down 0.7 to 484.4p after investors bemoaned a lack of earnings upgrades on the back of today's full-year results which hit market forecasts. The £3 billion cap has rallied 30% in the past three months on talk that it is being stalked by Germany’s Axel Springer and a private equity consortium including Apax and Carlyle.
The broader market malaise dragged British Sky Broadcasting (BSY) down 1% to 818.5p despite unveiling a new TV channel to be launched in co-operation with Disney.
Cash-generative microchip-maker CSR (CSR) jumped 9% higher to 420p after the company regaled the market with news of record full-year sales of $1.03 billion and proposed a buyback of up to $50 million. For the year ended 28 December, the £634 million cap developer of silicon and software for the consumer electronics market also treated investors to a 15% hike in the dividend to 11.8 cents.
A chipper trading update sent Quindell Portfolio (QPP: AIM) 3.7% higher to 14p. The Rob Terry-led software, consultancy and technology provider to the insurance and telecommunications sectors, said its conversion of all outsourcing pilot deals into long-term contracts means it has the market's 2013 sales forecasts are readily achievable.
Beating a retreat were shares in Micro Focus (MCRO), the enterprise software firm, which surrendered 15p to 645.5p. The Newbury-based business says trading is in line with expectations over the third quarter to January, although news of an adverse currency swing in the quarter, compared to a $3.6 million currency gain last year, worried investors.
FTSE 250 paper and packaging specialist Mondi (MNDI) dipped 0.7% to 839.5p after reporting a 19% drop in full-year pre-tax profit to €371 million. Cash generation remains strong and it has increased the total dividend for 2012 by 8% to 28c.
Cigarette filter specialist Filtrona (FLTR) dropped 1.4% to 587.5p despite full-year results hitting market forecasts. The £1.2 billion cap is expanding into the Middle East through a joint venture with Indian cigarette exporter BBM.
Another stock to drop on results is Ladbrokes (LAD), down 2.3% to 225.7p, albeit subject to profit taking after a lengthy share price rally since last summer. The full-year numbers actually beat forecasts but its digital offering had a dreadful year. Canaccord Genuity says the share price rally could run out of steam unless Ladbrokes can provide evidence of a recovery in its online business.
Cadogan Petroleum (CAD) slipped 3.7% to 13p, the market seemingly unimpressed by an operations update which outlined its short-term plans ahead of the results of an ongoing review of its asset base. Last week (15 Feb) the £30 million cap jumped sharply after the High Court in London awarded it £13.5 million, inclusive of interest, relating to its litigation against Global Process Systems.