UK stocks open weaker on Wednesday with the FTSE 100 index of leading stocks drifting off by 0.2% to 7,522 due to softness in Beverages, Personal Goods, Tobacco and Utilities

Housebuilder Barratt Developments (BDEV) delivers a positive trading update for the year to 30 June and forecasts annual pre-tax profit above the current market consensus of £884m thanks to a big improvement in operating margins.

After a year which saw the highest number of completions since 2008, the book of forward sales including joint ventures stood at £2.6bn at the end of June, almost 20% higher than a year ago. The shares add 1% to 581p.

In contrast to the positive tone from Barratt, building materials distributor Grafton Group (GFTU) issues a cautious trading update for the six months to 30 June after organic (like for like) sales growth slowed to 3.9%, although it has kept its full year guidance.

As well as strong prior year comparators in May and June, the group faced ‘softer than anticipated’ demand in the UK in the last two months due to weakness in the residential repair and maintenance markets and in house building. Shares slip 2% to 770p.

These comments echo those of building materials supplier SIG (SHI) last week. Like Grafton, SIG kept its full year profit target unchanged but said it would ‘monitor how trading conditions develop’ during the rest of 2019.

Recruitment firm PageGroup (PAGE) is the major loser today, down 11% to 448p after warning that operating earnings for the year to the end of December would be ‘towards the lower end of the range of market forecasts’ due to the weak global economic climate despite record trading in the second quarter.

Analysts had forecast operating profits of between £156m and £168m for this year compared with £142m last year.

Today’s fall is the biggest one-day loss for PageGroup shares since 2017 and sends shares in rival Hays (HAS) down 5.7% to 148p. Hays is scheduled to deliver a pre-close full year trading update on 16 July.

Shares in homewares retailer Dunelm (DNLM) edge up 1% to 895p after the company reports yet another quarter of double-digit organic growth.

Like for like sales in the fourth quarter rose by 15.4% thanks to strong growth both in-store and online, helped by favourable weather and a weak performance last year.

Despite some inevitable caution over short-term trading, Dunelm’s chief executive Nick Wilkinson sees ‘significant opportunity for continued growth’ in the year ahead both in-store and online.

Meanwhile pubs group JD Wetherspoon (JDW) releases a preliminary fourth quarter update which is long on pro-Brexit rhetoric as usual and short on detail regarding trading.

For the 10 weeks to 7 July organic sales were up by 6.9% while year to date organic sales were up by 6.7%. This marks a slight slowdown compared with the previous quarter’s trading update when organic sales were up by 7.6% and cumulative sales were up by 6.8%.

Despite this, Wetherspoon shares surge 3.5% to a new all-time high of £14.57.



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Issue Date: 10 Jul 2019