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“It is voting day for Theresa’s May Brexit plan which means investors are likely to remain nervous until we get the result. Surprisingly the markets opened in positive fashion with a 0.7% gain in the FTSE 100 and a 0.2% advance in the FTSE 250, the latter thanks to a small gain in the pound against the US dollar and the euro. “Key to the FTSE 100’s advance are new measures by China to stimulate its economy, which sends some reassurance to investors who had worried about the Asian superpower slowing down and this feeding into weaker performance in other parts of the world. “Miners and packaging groups lead the charge among London’s largest companies with notable strength also seen in banks, oil producers and tobacco stocks. In early trading only nine stocks in the FTSE 100 were in negative territory,” says Russ Mould, Investment Director at AJ Bell.
BooHoo
“The retail sector is alive and well if your name is BooHoo. The company has proven it is possible to keep growing sales and, importantly, push up profit margins.
“BooHoo is certainly among the winners of the latest round of retail updates with stellar growth rates and upgraded future earnings guidance.
“Of its brands, Boohoo and Nasty Gal’s revenue was below market expectations but PrettyLittleThing’s sales were considerably ahead of forecasts. The latter is important as PrettyLittleThing’s gross margins are higher than Boohoo’s.
“The result is overall group revenue beating market estimates by about 2%. While nobody is perfect in the world of retailing, you cannot deny that BooHoo seems to have the edge over its rivals.
“The reality is that people are still spending money; they are simply being more picky about with whom they shop. BooHoo is very much ‘in fashion’ in terms of having the right styles to appeal to younger people and its marketing seems to be very effective.
“It is also able to swiftly introduce new designs thanks to a fast-fashion model which involves testing new concepts and quickly producing the ones that have the best response from customers.
“This is basic retailing – give people what they want and in an efficient manner. You might think that’s obvious and everyone does it, but the reality is that many well-known retail companies fail on so many basic measures.”
Provident Financial
“You might have assumed now would be a good time to be a doorstep lender with an increasing number of people unable to borrow from mainstream operators.
“Today’s mild profit warning from Provident Financial suggests otherwise. The impairments at its Vanquis Bank subsidiary, which will result in profit at the lower end of market expectations, reflect the stricter rules facing this space.
“There has been a continued increase in the use of payment arrangements – a way of easing the burden for customers who are struggling to pay their debts – driven by regulatory pressure.
“Meanwhile a Financial Conduct Authority probe into its Moneybarn vehicle finance business rumbles on. Its consumer credit division, whose disastrous restructuring helped wipe £1.7bn off its market value in a single day in August 2017, also has ongoing issues.
“The reaction to this trading update shows how little credit in the bank the company itself has with shareholders, left bruised by the precipitous collapse in the stock which saw it exit the FTSE 100.”
These articles are for information purposes only and are not a personal recommendation or advice.