London’s FTSE 100 advances by 64 points to 6,923, the blue chip benchmark now trading at its highest level since the start of December as the market does its best to climb out of a hole. Housebuilders, tobacco stocks, miners, engineers and retailers all look strong on Wednesday. Hopes of progress with US-China trade talks are certainly giving markets support, so too a lack of major shocks among corporate trading updates.
On a busy day for post-Christmas retail reporting, Sainsbury’s (SBRY) cheapens 2.6p to 263.9p after revealing a worse than expected drop in festive sales, confirming Britain’s second biggest grocer has fallen behind rivals amid discount competition and the distraction from its battle to acquire Asda.
Like-for-like sales excluding fuel dropped 1.1% in the 15 weeks to 5 January, versus 1.1% growth a year ago. CEO Mike Coupe is forced to report third quarter sales declines in general merchandise (including Argos) and clothing in retail markets he describes as ‘highly competitive and very promotional’, with the consumer outlook remaining ‘uncertain’.
Bakery food-on-the-go retailer Greggs (GRG) fattens up 6% to £14.49 as CEO Roger Whiteside upgrades full year underlying pre-tax profit guidance to ‘at least £88m’ following a tasty fourth quarter sales performance. Like-for-like sales grew 5.2% in the final quarter including Christmas, boosted by sales of Greggs’ iconic Festive Bake and freshly-baked mince pies and further progress in growth categories such as hot drinks and breakfast.
Out-of-favour fashion brand Ted Baker (TED) rallies 8.2% to £17.48 on news it boosted sales during Christmas, although acting CEO Lindsay Page concedes market conditions remain challenging. Retail sales rose 12.2% in the five weeks to 5 January and with gross margins holding up well despite promotional market conditions, Ted Baker insists results for the year ending 26 January will be in line with market expectations.
Away from the flurry of festive retail updates, Softcat (SCT) surges 15.8% higher to 682p on the news the IT infrastructure products specialist is trading ‘materially’ ahead of expectations following ‘strong’ trading since the end of November.
Also in demand is Taylor Wimpey (TW.), the home builder bid up 4.5% to 147p on relief it expects to post annual results in line with expectations after it completed more homes and selling prices rose in the year to December. ‘Despite wider macroeconomic uncertainty, the housing market remained stable during 2018 and we had a good trading performance,’ insists CEO Pete Redfern. ‘We are continuing to deliver against our strategy and ended the year in a positive position, underpinned by our strong order book and balance sheet.’
British logistics giant Wincanton (WIN) improves 3% to 239p after announcing a contract win with Weetabix.
Returning to retail, budget footwear seller Shoe Zone (SHOE:AIM) sparks up 11.4% to 200p after posting an 18% rise in annual profit and declaring an 8p special dividend as its new Big Box stores helped boost sales in the year ended 29 September. Analysts push through profit upgrades as Shoe Zone flags a solid start to the new financial year and says it is trading ahead of previous market expectations.
Baby and children’s goods purveyor Mothercare (MTC) is marked up 2.8% to 16p despite delivering an alarming 11.4% decline in UK like-for-like sales for the third quarter including Christmas. Investors are evidently relieved by the absence of another profit warning, as well as progress with the turnaround plan, falling bank debt and signs of recovery in the international business.
And Majestic Wine (WINE:AIM) edges 1.2% higher to 253p on news it boosted sales and margins during the Christmas trading period compared to a year earlier; sales for the 10 weeks ending 31 December rose 6.8%, while gross margins increased by 0.4%, led by a strong showing from Naked Wines.
