Greggs and Countrywide

Thursday, March 7, 2019 - 10:46

“The FTSE 100 dipped 0.4% to 7,165 on Thursday as several big names traded without the right to their dividends including Rio Tinto, Evraz and Persimmon. Disappointing results from Admiral and Schroders also weighed on the index. “Asian shares were also weak including a 0.9% decline in Hong Kong’s Hang Seng index and a 0.7% decline in Japan’s Nikkei 225 index,” says Russ Mould, Investment Director at AJ Bell.


“Greggs continues to ride the vegan sausage roll boom with group sales surpassing £1 billion for the first time. Shareholders are benefiting from growing dividends and the value of the stock has nearly doubled since last summer.

“There is no doubt that Greggs is on a roll and it is giving customers what they want – something that many retailers often overlook.

“Yet where does it go from here? The vegan sausage roll has the hallmarks of being a fad and its huge publicity success could prompt management to focus on more product innovation to try and repeat this trick.

“That could easily backfire if new products aren’t a hit and could also be a distraction to management who should be focused on the day-to-day business.”


“Estate agent Countrywide is trying desperately to get back on track but like a swimmer fighting against the tide it seems there is little it can do against the perilous waters surrounding it.

“In March 2018 a revamped management team, with executive chairman Peter Long promoting industry veteran Paul Creffield to the role of group operations director, announced a return to a back-to-basics approach, after a seemingly half-hearted attempt to emulate online disruptor Purplebricks.

“A year on and an emergency fundraise later, the weakness in the property market as a whole is preventing the turnaround from gaining any traction.

“Pointing to an increase in its market share of listings from 7.29% to 7.73% over the course of 2018 as evidence of the progress enjoyed by its recovery plan feels like clutching at straws.

“And the current environment, with Brexit uncertainty weighing on transactions, would test a company in the rudest health let alone one which is beset by significant structural and cyclical problems.

“Even hitting today’s reduced guidance requires a significant rebound in the second half of the year – often a situation which results in another profit warning if the shortfall can’t be made up.

“The company outlined a three-year turnaround plan last year, so there is still time left, but patience from the market looks to be rather thin on the ground.”

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

The daily market update is written by Russ Mould, AJ Bell’s Investment Director and his team. The article highlights the movement in the main index, winners and losers on the day and any macro-economic announcements.