Carpetright enters CVA, WHSmith looks to travel, Saga cruises higher

The FTSE 100 starts more or less flat on Thursday despite mounting tensions between the US and Russia over Syria,” says AJ Bell investment director Russ Mould.

Carpetright

"Investors in carpet retailer Carpetright are having to endure more pain this morning as the company looks to enter a Company Voluntary Agreement (CVA) – essentially a formal process enabling a compromise with its lenders.

"The move forms part of a wider restructuring plan which will also involve closing 92 stores and cutting 300 jobs, as well as a £60m fundraise. The CVA still needs the approval of lenders and shareholders with meetings scheduled on 26 April and 30 April respectively.

“Time will tell if today’s actions are sufficient to secure the medium-term future of the business in an extremely tough retail environment.”

WH SMITH

“Shares in stationer and bookseller WH Smith dip slightly this morning on the publication of its interim results. These repeat the pattern of recent years whereby a weak performance from its high street operation is balanced out by a very strong contribution from the travel division which serves airports and train stations in the UK and beyond.

“The dividend is hiked 10% as the company maintains its track record of very strong cash generation. Having already taken out £12m worth of costs from its high street business in its previous financial year, the company is on course to repeat that trick in the current year.

“This has a price, and its shops are continually ranked by UK consumers as among the worst in the annual poll conducted by consumer champion Which?. 

“If the underinvested high street offering starts to damage the travel brand or if demand in this side of the business tails off for some over reason, then the company’s returns could come under pressure.”

SAGA

“A big rise in the shares of over-50s insurer and travel business Saga should be seen in the context of a weak performance following a profit warning in December.

“While statutory pre-tax profit was down 7.6% thanks in part to refinancing costs, underlying profit was up slightly thanks to a 37% increase in profit from its travel arm.

“The company was forced to restructure this part of the business in response to the 2017 collapse of Monarch Airlines which affected its tour operations.

“Since joining the stock market in 2014 the company has been trying to emphasise it is more than just an insurance business with a few ancillary strands tacked on. Today’s results may help underpin that argument.”

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