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“The FTSE 100 has its hazard lights on, sitting still at 7,537 on Tuesday and awaiting a signal from investors whether they are confident enough to start buying equities again en masse,” says Russ Mould, Investment Director at AJ Bell.
Whitbread
“Coffee-to-hotels company Whitbread is managing to keep its head above water despite various headwinds. Weak first quarter like-for-like group sales isn’t deemed troubling enough for the board to change full year earnings guidance, which might explain why the share price went up after the announcement.
“Costa’s 2% like-for-like sales decline would suggest its high street dominance is being seriously challenged by rising competition including small chains and independent craft coffee shops. But ultimately weak high street footfall is likely to have been the key contributor to lower sales. It told analysts on a conference call that afternoon trading had been particularly weak.
“The troubles of the high street shouldn’t come as a shock; neither should weakness in Whitbread’s Premier Inn business where London trading was hit by lower occupancy rates. Both Premier Inn and other hotel operators have been expanding in the Capital and so there is greater capacity.
“Short-term this may present a challenge if demand doesn’t hold up, but longer term it makes strategic sense to increase capacity as London is likely to remain a major tourist destination for both domestic and foreign travellers.
“Anyone hoping for more information on the proposed break-up of Whitbread and demerger of Costa will be sorely disappointed. The company isn’t giving any details until its half year results in October.”
ITV
“Normally when you see a negative market reaction to a finance director’s exit it can reflect concern over the state of a company’s finances.
“However, the departure of ITV’s finance director Ian Griffiths, who also served as chief operating officer, is not one of those situations. In fact, the share price fall this morning is a tribute to his role in the turnaround of the company’s financial position from his appointment in 2008. When he came in, net debt stood at more than £600m – nearly three times forecast earnings.
“In the latest set of results borrowings had been reduced to just one times earnings and the company has rewarded investors handsomely with both ordinary and special dividends in the intervening decade as cash flow performance improved.
“There was always a good chance chief executive Carolyn McCall, who joined at the start of 2018, would seek to refresh the senior management team, and with Griffiths retiring in the next 12 months she will have that opportunity. However, any successor will have big shoes to fill.”
IWG
“Issuing a profit warning during takeover talks isn’t going to help get the best price for the business. That’s exactly what’s happened with serviced office group IWG which has been subject to considerable takeover interest in recent months.
“IWG’s UK business is struggling, perhaps because of greater competition from the likes of WeWork and Workspace.
“The company itself has also blamed the Brexit effect in the past, with overseas companies losing their appetite for a footprint in London. However, it seemed to signal a more bullish view earlier this year by expanding its presence in London in anticipation of a pick-up in the market.”
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