London’s FTSE 100 traded 0.66% higher at 7,540.92 points by lunchtime on Wednesday amid the release of a slew of positive local earnings updates, including guidance upgrades from retailers Sainsbury’s (SBRY), JD Sports Fashion (JD.) and Dunelm (DNLM), and as investors awaited the release of key US inflation data due later in the day.

The global mood already had been lifted by testimony from Federal Reserve Chair Jerome Powell, who reassured investors by saying the US central bank wasn’t afraid to raise rates to ease inflation.

RETAILERS RAISE GUIDANCE

Supermarket giant Sainsbury’s rose 3.8% to 290p after the retailer increased its profit guidance for the year to March thanks to a stronger than expected performance in the third quarter and over Christmas in particular.

After its better than expected third quarter performance, the firm raised its forecast for underlying pre-tax profits for the year to March from £660 million to at least £720 million.

Sportswear retailer JD Sports Fashion was flat at 218.8p as it too forecast a full year earnings beat after enjoying bumper sales over Christmas period. The tracksuits-to-trainers seller now forecasts a headline pre-tax profit of at least £875 million, ahead of market expectations averaging £810 million.

Homewares retailer Dunelm gained 5.2% to £14.09 as it posted a record quarterly performance amid bumper Christmas trading and pointed to a full year profit ‘materially ahead’ of expectations.

The outlook was supported by strong sales and margin performance in the second quarter and the first half of the year, with pre-tax profit in H1 expected to have jumped to £140 million from £84 million. The company now expects full year pre-tax profit to comfortably beat the £181 million market estimate for the 12 months to June 2022.

However, home improvement retailer Topps Tiles (TPT) slipped 1.6% to 63p as it achieved a modest rise in first quarter like-for-like sales, but also warned supply chain pressures would hurt its margins.

AROUND THE MARKET

Premier Inn hotels owner Whitbread (WTB) improved 0.8% to £32.25 on announcing that it still expect its revenue per room rates in the UK to recover to pre-Covid levels in 2022.

Whitbread’s sales in the three months to December, including from properties in the UK and Germany, rose 5.0% year-on-year, with higher accommodation sales offset by an 10% drop in food and beverage sales.

Customer review platform Trustpilot (TRST) ticked up 2.6% to 286p after guiding for a 29% rise in annual revenue, beating its expectations.

Trustpilot’s revenue for the year to December is seen jumping to $131 million, up from $102 million year-on-year, with growth on a constant currency basis of 24%.

Building materials distributor Grafton (GFTU) was also in on the upgrades, firming 2.6% to £12.13 after it said it expected annual adjusted operating profit within the top end of expectations.

Recruitment company PageGroup (PAGE) perked up 0.6% to 638p, having nudged up its annual profit guidance after it boosted its fourth quarter net fee income by 49%.

Operating profit for the year to December is now expected to be ‘marginally in excess’ of previous guidance of in the region of £165 million.

Shares in Accrol (ACRL:AIM) slumped 18.7% to a one-year low of 25p after its second severe profit warning in four months.

Accrol, which supplies loo rolls, tissues and kitchen wipes to many leading UK supermarkets and discounters, is being tightly squeezed by rising energy costs but paper pulp prices have also been rising sharply, as have supply chain costs.

The warning is serious enough to spark the company into kick-starting a full strategic review of the business, which explains the severity of the share price plunge.

Fantasy worlds video game developer and publisher Frontier Developments (FDEV:AIM) dropped 25% to £13.32 after management lowered guidance again after delaying the release of its Warhammer Age of Sigmar IP real-time strategy game.

The company reported an operating loss for the first six months to 30 November and narrowed its forecast revenue guidance for 2022 to between £100 million and £120 million from £130 million at the top end.

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Issue Date: 12 Jan 2022