Greene King, William Hill and Morrisons

“European markets were looking a bit wobbly on Tuesday with the FTSE 100 and Germany’s Dax indices both down 0.1%. On the London market, strength among miners and financials was more than offset by weakness among construction firms and telecoms,” says Russ Mould, investment director at AJ Bell.

Greene King

“One of the London market’s longest serving chief executives is to hang up his boots after being in the top job since 2005.

“Rooney Anand will next year leave Greene King after a long period in which the business gobbled up numerous rivals and expanded into the fish restaurant sector, gaining the nickname ‘Greedy King’ among some hardcore beer fans.

“Anand has certainly expanded the size of the business, yet his departure comes at a more difficult time for the company.

“Greene King’s shares hit a seven-year low earlier in 2018 following a series of earnings downgrades amid disappointing trading. It has battled with rising costs associated with the higher minimum wage and a rise in business rates, plus heightened competition putting pressure on the business.

“Anand is seen as an old-school operator with a love of traditional pubs. It may be time to bring in someone with a more modern approach, particularly as the competition is very strong. There are now so many trendy micro-breweries with smart interiors to attract drinkers, plus some of Greene’s King more established rivals have been investing heavily to spruce up their pubs.

“Greene King hired a new chief financial officer earlier this year in Richard Smothers who has a background in retail including stints at Tesco and Mothercare. It wouldn’t be a surprise to see someone equally experienced in retail come in as CEO to help bring a greater focus on the customer experience.

“The company arguably should stop making acquisitions and streamline its estate to focus on the best bits. One can imagine the new boss will immediately conduct a full strategic review and make the business leaner and stronger.”

William Hill

“It seems odd that William Hill has issued a profit warning when many of the negative factors in today’s announcement were already known to the market. It suggests that analysts weren’t on the ball when it came to forecasting, forcing William Hill to say earnings would miss estimates in the market.

“The gambling firm says adverse regulatory and tax changes are behind today’s profit warning, such as having to carry out extra checks on people betting online.

“We already knew that UK remote gaming duty would increase from 15% to 21%, as it was announced in the Budget last month. And the Gambling Commission warned in the summer that it would impose fiercer penalties on betting companies if they didn’t step up controls in areas like money laundering and problem gamblers.

“The only real new bits of information were weaker than expected football and racing margins, plus customers winning lots of bets on international fixtures in October. It also suffered challenging high street conditions, but that shouldn’t be a surprise.”

Morrisons

“After a party there is usually a hangover and that’s what supermarket Morrisons faces this morning as it reports slowing growth for the three months to 4 November, slightly short of analysts’ expectations.

“This follows on from a great summer when the World Cup and UK heatwave helped the company achieve its best sales performance in nearly a decade.

“None of this should detract from what chief executive David Potts has achieved at Morrisons and it is worth pointing out this is the 12th consecutive quarter of like-for-like sales growth.

“Morrisons will be hoping that shoppers have been saving up for a Christmas splurge which could herald a strong end to the year for the business.

“Elsewhere, some of Potts’ key strategic initiatives, like the expansion into the wholesale market and a boost to its online presence through a tie-up with Ocado, are progressing nicely.

“This broadly positive picture is clouded a little by the legal action the company is facing from staff caught up in a serious data leak dating back to 2014.

“While Morrisons argued it could not be held responsible for the actions of a former employee who posted salary and bank details online and sent them to national newspapers, the Court of the Appeal disagreed in its ruling last month.

“The next step is to appeal to the Supreme Court but, in the meantime, investors are left with the uncertainty of whether the business will be forced into a mass payout to compensate those affected.”  

These articles are for information purposes only and are not a personal recommendation or advice.