Midday Market Comment
There wasn’t much going on in the macro-sense this Thursday, with the focus instead on the latest dispatches from the UK retail war – and most of them were pretty ugly.
Tesco (LON:TSCO) came out of Christmas as one of the sector’s winners, posting a 1.9% jump in like-for-like sales as it celebrated a ‘record’ festive period. Yet investors were not impressed, sending the biggest of the Big Four supermarkets 4.5% lower as that comparable sales figure feel short of expectations (which were anywhere between 2.4% and 2.8%).
Worse was high street dinosaur Marks and Spencer (LON:MKS), which plunged 6.6%. Though a 2.8% decline in like-for-like sales in its clothing and home business sounds nastier than a 0.4% drop in its food division, at least the former is dealing with an outdated image and the shock departure of its head Jo Jenkins. It’s perhaps a sign of the UK’s current economic climate that M&S’ Simply Food has been upstaged by the likes of Aldi, Lidl and Morrisons over Christmas.
Beyond the FTSE 100 there was even more drama. Card Factory (LON:CARDC) became the latest victim of rising costs, as the warning that ‘continued margin pressure’ would leave annual earnings between £93 million and £95 million – down from the previous year’s £98.5 million – overshadowed a 2.7% jump in full year comparable sales. Investors likely didn’t bother sending a ‘sorry for your loss’ card as they ditched the company in droves, with the stock haemorrhaging more than 18% in value.
So, was there any good news from the retail sector this Thursday? Well, boohoo.com's (LON:BOOH) latest update was typically electric: for the 4 months to the end of 2017 the online fashion outlet doubled its revenue to £228.2 million, with its full year sales growth forecasts rising to a whopping 90%. Yet investors wouldn’t bite, with a dip in gross margin sending the stock 2% lower.
Despite this barrage or retail-negativity the FTSE continued to shuffle to fresh highs, rising 0.2% to lurk a few points shy of 7760. As for sterling, the currency wasn’t really interested in showing up this Thursday, dipping 0.1% against the dollar while sitting flat against the euro.
There wasn’t much more action from the eurozone indices. The DAX slipped 10 or so points, ignoring Germany’s best annual GDP reading in 8 years, while the CAC nudged back above 5500 after adding 5 points. The region could see a bit more movement following the release of the latest ECB meeting minutes, with the euro on the lookout for any signs of a wind-down.
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