Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
“The FTSE 100 is now only inches away from hitting the all-time high achieved in January 2018 and potentially breaking a new record. The blue chip index traded at 7,670 in early trading on Thursday versus the all-time high of 7,778 four months ago,” says AJ Bell Investment Director Russ Mould.
Next
“Next has defied its critics by reporting a very strong first quarter trading update. The company now makes more profit from its online operations than its physical stores, so it is particularly pleasing to see the online arm soaring ahead with 18.1% sales growth in the 14 week period.
“Despite its best-in-class reputation, Next has recently been making some basic adjustments to its business model which perhaps should have been done a long time ago.
“For example, 10% of stock that customers attempt to order online has historically been sold out, and a further 20% not available for immediate delivery.
“However, many of its stores would have still had the stock sitting on the shelves, so Next has launched a find-in-store function to help customers find stock that is unavailable online.
“Many people may wonder why it is still bothering to spruce up its stores when online is clearly the stronger business. In reality the stores play an important role for click-and-collect and keeping Next’s brand in front of shoppers.
“It is also worth noting that landlords have recently been helping with some store refurbishment costs, illustrating how Next’s presence is considered to be a magnet for consumers to visit shopping centres.”
Royal Bank of Scotland
“Royal Bank of Scotland’s agreement to pay a $4.9bn penalty with US regulators to end a probe into the sale of financial products including toxic mortgage bonds from 2005 to 2007 has major significance.
“Of this amount, $3.46bn will be covered by existing provisions and there will be an incremental charge of $1.4bn which is considerably below analyst expectations. It theoretically clears one of the major issues that’s been hanging over the company and its share price.
“It also implies that the bank could have excess capital which could be returned to shareholders in the form of a special dividend or a share buyback.
“Furthermore it could signal the return of ordinary dividends, thus making the stock potentially appealing to income funds which have had to ignore the bank for the past decade thanks to the absence of any dividends since 2008.”
BT
“There is a lot to pick through in BT’s latest update, some positive, some negative. The market is the ultimate arbiter though and the substantial restructuring plan is not meeting with its approval given that the shares have fallen sharply following the news.
“The announced 13,000 job cuts will result in a saving of £1.5bn but this is only a little more than the £1.2bn it splashed out on exclusive rights for Champions League and Europa League football a year ago. It would argue this content helps bolster its offering to customers, although viewing figures have been falling.
“Elsewhere, the company’s investment in ultrafast broadband and 5G mobile is being ramped up and the company is moving to plug a hole in its pension deficit. Full year results are rather overshadowed although, notably, fourth quarter revenue fell 3%.
“With the share price now down 36% since his appointment in September 2013, chief executive Gavin Patterson will be under serious pressure to get this turnaround effort right.”
These articles are for information purposes only and are not a personal recommendation or advice.