AO World and Johnston Press

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“After a weak open, the FTSE 100 recovered to trade flat on Tuesday morning ahead of Brexit talks later on,” says AJ Bell investment director Russ Mould.

AO World

“Investors are clearly willing to focus on AO World’s double-digit sales growth achieved in the year to 31 March judging by how the share price is rising today. However, if that’s the headline good news, there are plenty of negative issues behind it.

“The company is still unable to derive a profit despite the increase in sales. Losses widened year-on-year due to investment in European expansion and weak pricing in the UK.

“The spend in Europe is another reminder that just because a retailer operates online it does mean it is spared any costs of doing business.

“Management are also cautious on the outlook amid strong competition and economic uncertainty.”

Johnston Press

“Newspaper publisher Johnston Press becomes one of the first companies to warn of a hit from new Europe-wide GDPR privacy rules.

“The company blames the new regulations for pressure on its digital advertising revenue in a downbeat trading update.

“If Johnston’s experience is matched elsewhere then this digital advertising issue could crop up for other publishing outfits, advertising agencies and ad technology firms.

“Brands that use data to target and enhance their digital marketing now have to ensure they are complying with the new regulations. This may prompt a shift towards brands targeting customer segments without the use of personal data.

“Johnston itself is in the middle of a strategic review following the departure of chief executive Ashley Highfield – the company faces debt repayments of £220m due in just under a year’s time.”

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