UK stocks slipped into negative territory at midday Thursday as profit taking took hold after market gains of almost 5% in the first week of the new year.
The tilt towards ‘value’ names such as retailers and materials stocks continued while banks, the biggest risers on Wednesday, handed back some of their gains.
At 12pm the FTSE 100 of leading shares was down 0.66% at 6,803 points.
CHRISTMAS BOOM FOR SAINSBURY
Shares in the UK’s second-largest supermarket group Sainsbury (SBRY) jumped 4% to 242p after it reported a strong increase in third quarter trading including the key Christmas period.
Sales for the quarter to 2 Jan were up a record 8.6% on a like-for-like basis excluding fuel, with grocery sales up 7.4% thanks to a 128% surge in online revenues. Pleasingly, general merchandise sales were also robust, posting a 6% gain helped by an 8.4% increase in revenues at Argos.
As a result, the firm raised its guidance for underlying full year operating profits to ‘at least £330 million’ excluding the benefit of business rates relief, compared with a consensus estimate range of between £270 million and £285 million.
Discount store chain B&M European Value Retail (BME) posted a positive trading update for the third quarter to 26 December with UK revenues up 26.6% overall and 21.1% on a like-for-like basis thanks to its designation as an ‘essential retailer’.
The firm also raised its full year guidance for earnings before interest, taxation, depreciation and amortisation (EBITDA) to between £540 million and £570 million after the repayment of £80 million of business rates relief, and announced a 20p per share special dividend to be paid later this month. Despite the positive news, the shares drifted off 0.1% to 529.4p.
Shares in fashion brand Joules Group (JOUL) sank 5.5% to 171p after the company reported a 0.3% increase in total sales for the seven weeks to 3 January, with a 58% fall in in-store sales due to enforced shop closures offset by a 66% increase in online sales.
The firm projected that lost sales could amount to between £14 million and £18 million if the current lockdown extends to 1 April, the impact of which would be partially offset by better online sales and already-implemented cost reductions.
NO-FLY ZONE EXTENDED
Shares in Ryanair (RYA) dipped 2.8% to €15.2 after the low-cost airline slashed its forecast for passenger traffic for the full year to March from below 35 million to between 26 million and 30 million.
The firm also said it would cut flights between the UK and Ireland to ‘few, if any’ from 21 January but that the reduction would not have a material impact on expected earnings ‘since many of these flights would have been loss-making’.
Gaming and sports-betting firm Entain (ENT), currently fending off a takeover approach from US joint venture partner MGM Resorts, launched its own offer for Swedish online betting firm Enlabs.
The SEK 2.8 billion or £250 million offer represents a small premium to the current market value of Enlabs, one of the largest operators in the Baltic markets, and has already received acceptances from shareholders representing over 42% of the company’s capital.
Separately, Entain increased its guidance for full year earnings before interest, taxation, depreciation and amortisation (EBITDA) to between £825 million and £845 million, an increase of between 6% and 8% compared with its most recent forecast. The shares gained 0.9% to £14.73.
Shares in Marine services firm James Fisher (FSJ) jumped 8.7% to 997.6p after it lifted its forecast for full year operating profits to the higher end of its November guidance range of £35 million to £40 million after stronger than expected revenues in the quarter to December.
The company also said it would take a one-off, non-cash charge of between £75 million and £85 million to write down the value of 'goodwill, fixed assets and certain accounts receivable’ in its Marine Support division.
