Proactive Investors -
- FTSE 100 higher, shop price inflation eases
- JD Sports slips as sales growth slows, US softening
- Wise soars as revenue and profit leaps
8.35am: JD Sports slips as sales growth slows, US "softening"
Some more on JD Sports which sits top of the FTSE 100 fallers.
The sports retailer has enjoyed a strong year with shares up 18% year-to-date but today's trading update has left it 4% lower.
Why. Well, the firm said sales growth in May was 8%, below the rate of growth of 15% seen in the first three months of the year. It also highlighted "some softening" in North America.
JD said: "This moderation in the growth was in line with management expectations and reflects tougher comparatives in the prior year as the supply chain normalised and the availability of product improved."
However, it still expects full-year profit in line with current expectations of just ober £1bn.
House broker, Peel Hunt said: "The US performance will probably catch the headlines but Europe and the UK are in rude health and have picked up any bottom line slack."
"JD continues to outperform all of its major competitors and the shares discount far too much bad news, in our view."
The broker reiterated a buy rating as did Shore Capital.
"While conscious of the macro backdrop challenges, we maintain our Buy stance on JD due to its strong structural position: the company’s robust balance sheet allows it to outinvest its peers, particularly in the US market," analysts at Shore Capital said.
8.15am: FTSE 100 higher but JD Sports knocked by US "softening"
The FTSE 100 has opened higher boosted by a welcome deceleration in shop price inflation and as China said it is on course to hits its 5% economic growth target.
At 8.15am, London’s lead index was up 32.78 points at 7,486.36 while the FTSE 250 jumped to 18,078.19, up 103.52 points, or 0.58%.
Richard Hunter at interactive investor said; “The comments from China gave an early boost to a premier index in the UK which had given up any gains in the year to date prior to today’s open.”
Mining and Asia-focused stocks led the rally with Rio Tinto (LON:RIO) up 1.6%, Anglo American (LON:AAL) up 1.8%, Prudential (LON:PRU) up 2.1% and HSBC (LON:HSBA) up 1.3%.
There was also some better news for the Bank of England as it battles stubborn inflation.
According to the latest British Retail Consortium-NielsenIQ tracker, annual shop price inflation in the UK eased to 8.4% in June, from 9.0% in May, and below the three-month average inflation rate of 8.7%.
Food inflation, a thorn in the side of the UK consumer, ebbed to 14.6%, from 15.4% with fresh food inflation falling to 15.7% from 17.2%.
"Households up and down the country will welcome the easing of shop price inflation in June,” BRC Chief Executive Helen Dickinson commented.
In company news, JD Sports Fashion PLC (LSE:LON:JD.) slipped 4.4% to 140.15p after reporting some “softening” in North American markets.
The sports retailer said sales growth of 8% in May was below the 15% posted in the first three months of the year.
Nonetheless, the company held current profit guidance of just over £1bn.
“While the pace of growth has slowed, it is worth noting that the Group remains pleased with the positive trading trends across all regions, indicating a stable and resilient performance in the face of market challenges,” analysts at Shore Capital said.
PZ Cussons (LSE:LON:PZC) was another faller as it cautioned that a devaluation of the naira in Nigeria would cause a one-off hit to profit in the coming year.
However, the maker of Carex and St Tropez did forecast top of the range full-year profit in the current financial year.
7.44am: PZ Cussons (LSE:PZC) ups guidance despite Nigerian hit
PZ Cussons (LSE:PZC) PLC is also in upbeat mood, expecting top of the range full-year profit despite a one-off hit from the devaluation of the naira in Nigeria.
In a trading update, the maker of Carex and St Tropez forecast adjusted profit before tax for the year of at least £70mln reflecting a particularly strong Q4 performance in Afric, above a company compiled consensus of £68.4mln.
Like-for-like revenue in the financial fourth quarter grew 6.7%, resulting in annual growth of 6.1%.
Group revenue for the year is forecast to be around £655mln with like-for-like growth in each geographic region in the fourth quarter.
PZ Cussons welcomed moves in Nigeria to liberalise the foreign exchange regime although it said the resultant devaluation of the naira would result in a one-off hit.
The company explained every 10% devaluation in the Naira is estimated to result in a £23mln reduction in revenue, £3mln reduction in adjusted operating profit, and 0.5p reduction in adjusted earnings per share.
“Management believes that the Group will be well placed to withstand any macro-economic volatility in Nigeria given our market position and the significant improvement in the profitability of our business there in recent years,” the company said.
7.27am: Wise lifted by jump in customers and volumes
A strong update from Wise PLC (LON:WISEa) (LSE:WISE) kicks off the day. The firm said growth in active customers and volumes, combined with increased adoption of the Wise account led to jump in full year revenue.
In the year to March 31, the payments technology firm reported revenue of £846.1mln, up 51% while pre-tax profit jumped 234% to £146.5mln.
Customer numbers increased 34% to 10.0mln supporting a 37% year-on-year rise in volumes to £104.5mln.
This customer growth led to a 37% YoY increase in volumes to £104.5 billion.
Wise predicted further growth in the coming financial year.
“We expect income to grow by between 28-33% in FY2024, and for income to grow by more than 20% CAGR over the medium-term,” the firm said in a statement.
“We continue to expect our adjusted EBITDA margin to be at or above 20% over the medium term, but for it to remain higher than our target in FY2024 due to a higher proportion of interest income flowing to adjusted EBITDA.”
7.06am: Shop price inflation cools in June
Some better news on inflation. UK shop price inflation decelerated in June, with price cuts for staples such as milk and eggs easing some pressure on the consumer, figures released on Tuesday showed.
According to the British Retail Consortium-NielsenIQ tracker, annual shop price inflation in the UK eased to 8.4% in June, from 9.0% in May, and below the three-month average inflation rate of 8.7%.
Food inflation, a thorn in the side of the UK consumer, ebbed to 14.6%, from 15.4% with fresh food inflation falling to 15.7% from 17.2%. Ambient food inflation decelerated slightly to 13.0% from 13.1%.
"Households up and down the country will welcome the easing of shop price inflation in June. Food inflation slowed for the second consecutive month, particularly for fresh products, as retailers cut the price of many staples including milk, cheese and eggs. Clothing and electrical goods also saw falling prices, helping customers to pick up a bargain ahead of the summer holidays," BRC Chief Executive Helen Dickinson commented.
"If the current situation continues, food inflation should drop to single digits later this year. However, it is imperative that government does not hamper this progress by introducing costly new policies."
7.00am: FTSE 100 seen higher, China on target to hit growth target
Good morning. The FTSE 100 is expected to open higher taking heart from a fall in the rate of growth of shop price inflation and news that China is on course to hits its 5% economic growth target.
Spread betting companies are calling London’s lead index up by around 27 points.
China is on course to achieve its 5% target for economic growth in 2023 set by Beijing earlier this year, Premier Li Qianq.
"For the whole year, we are expected to achieve the target of about five percent economic growth set at the beginning of this year," Li said as he opened a meeting of global political and business leaders in northern China.
Asian markets were mixed. In Tokyo, the Nikkei 225 index was down 0.5%. In China, the Shanghai Composite was up 1.3%, while the Hang Seng index in Hong Kong was up 2.0%.
US markets fell back in late trading to end in the red. As Wall Street headed to the close, Russian President Vladimir Putin gave a defiant address to the nation in which he condemned the organisers of last weekend’s shortlived mutiny, saying they had betrayed their country and the fighters in their command.
Back In London, and, aside from the shop price inflation date – more to follow shortly - updates from PZ Cussons (LSE:PZC) and Wise will provide an early focus.