FTSE endures Bank Holiday hangover, kitchen sinking at Dixons Carphone, Smiths Group break-up calls to be realised?

“Political chaos in Italy sees the FTSE 100 sink as traders return to their desks after the Bank Holiday, down 0.9% at 7,659.01,” says AJ Bell investment director Russ Mould.

DIXONS CARPHONE

“Often when a new chief executive joins a company, particularly if has faced operational challenges or is in a difficult sector, he will look to rebase expectations.

“Eight weeks in to his tenure at electronics retailer Dixons Carphone, chief executive Alex Baldock has followed this playbook to the letter.

“In what can be described as a kitchen sinking exercise, the company is guiding for a significant drop in profit in the current financial year and reveals plans to shutter 92 Carphone Warehouse stores.

“The mobile phone part of the business has suffered thanks to rising competition, increases in handset prices and changing customer habits with consumers holding on to their phones for longer.

“Investors may forgive Baldock the pain caused by this shock profit warning if he can back up his assertion that the problems the company faces are ‘fixable’.

“However, he needs to get it right as there is unlikely to be a second opportunity to ground expectations in this way.”

SMITHS GROUP

“Smiths Group is a diverse collection of businesses providing everything from sensors for explosives to hospital equipment and oil services.

“There have frequently been calls for the company to be broken up or certain assets to be sold, on the basis these divisions would be worth more as individual entities.

“These calls have largely been resisted by management but there are now signs this resistance may be softening.

“Confirmation the company is in ‘very early stage’ discussions over a sale of its medical business to ICU Medical helps lift Smiths to the top of the FTSE 100 leaderboard on Tuesday morning.”

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