Finance Friday – a brief look at this week’s finance and investor news from around the UK
Marks and Spencers
M&S’ first quarter results show group sales rose 2.7%. Like-for-like sales in the ‘Clothing & Home’ division fell by 1.2%, with overall sales falling 0.5%. Like-for-like sales in food stores fell 0.1%. On a total sales basis, however food sales were up 4.5%, thanks to new outlets being opened. Easter provided a boost to performance, increasing revenues in Food by 0.7% and in Clothing & Home by 0.6%
International revenues fell 4% excluding currency movements, and M&S has now closed more than half the stores in the owned markets they are exiting overseas. A falling pound meant overall international revenues increased by 3.8% however.
In a brief trading update, GoCompare.com (GoCo) revealed a 4% rise in revenue in the first quarter, notably slower than the previous half, although adjusted operating profits are expected to be up 22% thanks to an improved marketing margin. The shares rose 4.6% following the announcement.
Barratt Developments released a healthy trading statement for the year to 30th June 2017, shrugging off concerns that Brexit would dent performance. The company sealed the highest number of house completions for nine years, rising from 17,319 in 2016 to 17,395 in 2017.
Barratt is also selling these houses for more – the average selling price rose by 5.9% to £275,000. As a result, profits for the year are expected to rise by 12% to £765 million, ahead of market expectations of £699 to £740 million. This should mean a nice rise in the dividend come September, which is based on a dividend cover ratio of 2.5 times, or in other words the dividend equates to 40% of earnings.
Earlier this year, a £115bn takeover approach from Kraft Heinz disappeared almost as quickly as it arrived. Shortly after that whirlwind couple of days, the group announced a wide-ranging review, and accelerated its ‘Connected 4 Growth’ strategy.
While it is still early days, progress against its new targets, which include boosting underlying operating margins to 20% by 2020, will be under the spotlight.
The four months to 30 June 2017 saw ASOS ship 16.9m orders. This helped total retail sales grow 26% to £660m, in line with analysts’ prior expectations. The shares were little moved on the news.
Burberry shares jumped 5.3% after the group released a trading update showing Q1 sales around 1.5 percentage points ahead of prior analyst expectations.
Retail revenue rose 3% to £478m, with like-for-like sales up 4%. This growth was driven by a strong performance in mainland China and the UK, with some improvements seen in Hong Kong. However, other markets, including Korea and Italy were weak. In the US, sales conversion improved but footfall trended down as the strong dollar deterred both domestic and tourist shoppers, leading to a low single digit percentage drop in sales.