Mike Ashley’s Sports Direct (SPD) is well supported by investors in early trading on Thursday as better than expected sales offset a big fall in profits. The shares rise more than 5% to 316.1p in spite of underlying pre-tax profit diving to £113.7m in the year to 30 April, a performance blamed on the slump in sterling and soaring depreciation charges.
That’s down from £275.2m in 2016. Yet investors are pleased with near 12% sales growth to £3.24bn at the pile ‘em high, sell ‘em cheap fashion sporting goods retailer. The company has also appointed Jon Kempster as incoming chief financial officer.
Sports Direct founder and major shareholder, Mike Ashley
Price comparison website Moneysupermarket.com (MONY) sees its share price crash 12% to 315.8p as it guides investors to expect full year profits towards the lower end of consensus estimates. That’s largely because of energy market pricing trends. That news is more than enough to offset a rise in first half revenue and adjusted operating profit. Consensus had been set at operating profit of £110.4m this year to 31 December 2017, but investors should probably expect downgrades to that estimate.
Shares in budget airline EasyJet (EZJ) slump more than 4% to £13.55 to top the FTSE loser board on Thursday. The counter-intuitive move comes despite the group upping its profit outlook after it filled more seats on its planes while keeping a tight grip on costs during the third quarter. Investors clearly see an opportunity to bank quick turnaround profits given the stock’s incredible near 50% rally since late February.
EX-DIVIDEND BREAK
On a wider view, UK stock markets are largely steady in early trade on Thursday, posting rough 30 point gains for the FTSE 100 index to 7,460. That’s relatively impressive given the day of the week, when so many big companies typically go ex-dividend.
That no FTSE 100 firms will do today explains the firm market feel, although there are several smaller companies where investors will lose the right to the next payout, including Vedanta Resources (VED), GB Group (GBG:AIM), Walker Greenbank (WGB:AIM) and Scapa (SCPA:AIM).
British home products giant Unilever (ULVR) nudges 1% higher to £43.495 as it reports slightly weaker than expected quarterly sales. But investors are reassured by reaffirmed full-year targets, as it works to move past the fallout from a rebuffed $143bn Kraft Heinz takeover bid earlier this year.
MINERS OVERLOOKED BY INVESTORS
FTSE 100 miner Anglo American (AAL) posts higher second quarter iron ore production on Thursday, leading it to raise its annual targets for the steel-making ingredient. The stock remains largely flat, however, at £11.395.
In-fighting continues at mining peer BHP Billiton (BLT). Activist shareholder Elliott Management says it has deep concerns over proposals for the company to enter what it believes is a currently over-supplied fertiliser market, and has reiterated its call for management change at the mining giant.
Offsetting that news is word that Chilean authorities have approved a $2.5bn expansion of BHP Billiton's Spence copper mine, according to reports, though the company has not yet decided whether to go ahead with the project. This all combines to leave investors non-plused, the share price flat at £13.195.
Big six energy supplier SSE (SSE) lost another 230,000 customer accounts in the three months to 30 June, the company says in an update. The major energy suppliers in the UK are all under enormous pressure from emerging independents, tariff pricing and perceived poor customer service. SSE shares are very modestly higher on Thursday at £14.73 with investors apparently not spooked much by any implied threat to the all-important dividend.
Premier Foods (PFD), the owner of Mr Kipling cakes, Bisto gravy and other British brands, reports a drop in first-quarter sales on Thursday, due to lower volumes in the grocery category. But the company claims that this is in-line with its expectations, and investors seem to agree, the shares virtually unmoved at 39p, valuing the cash-strapped business at £322m.
UPBEAT SMALL CAPS
Shares in back office optimising software supplier EG Solutions (EGS:AIM) jump 11% to 93.5p as the company confirms it will hit forecasts at the very least after a spell of very strong trading. Management say not less than £10.5m of revenue is on the cards this year to 31 January 2018, the estimate pencilled in by broker FinnCap.
Semiconductor technology company IQE (IQE:AIM) sees its share price shoot 9.5% up to 93p as the company confirms robust trading across its main end markets, particularly photonics. This continues a scorching run for the stock in 2017, having begun the year at around the 37p mark.
Going the other way are shares in payments business SafeCharge (SCH:AIM). The stock falls more than 6% to 258.5p despite the company issuing a confident trading update that reaffirms full year market expectations.
