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“The FTSE 100 traded at its highest level since August 2018 with the market enjoying another strong session thanks to investors bidding up shares in tobacco, utilities and pharma companies. The blue chip index rose 0.6% to 7,600.
“Asian shares didn’t fare as well with most of the main markets flashing red. For example, Hong Kong’s Hang Seng index fell 0.3% with smartphone component maker Sunny Optical Technology the biggest faller,” says Russ Mould, Investment Director at AJ Bell.
Sainsbury's
“This is not an inspiring update as every single sales metric is pointing downwards. But is it really a surprise?
“We already know the supermarket sector is highly competitive and Sainsbury’s is stuck in the middle – being too expensive for value shoppers and not perceived as high enough quality for the premium shoppers.
“Now that a merger with Asda is no longer going to save the business, Sainsbury’s has to go it alone and find a way to survive and – most importantly – prosper.
“Unfortunately it’s hard to identify Sainsbury’s edge and how it will bounce back.
“On one hand it continues to push the non-food side of its business, helped by owning Argos. It talks about being the UK’s fifth largest clothing retailer by volume but clothing is only part of the mix and not the single factor that can save Sainsbury’s. Neither will beauty sales despite plans to roll out a larger proposition.
“On the other hand, it is cutting prices on own brand food products and it is ‘on trend’ with plant-based food which shows it is abreast of changing consumer tastes.
“There is still a sense that Sainsbury’s doesn’t really know what it wants to be. Without a unique selling point it will be hard to have clear marketing strategies, targeting the right type of people and commanding customer loyalty.
“A business lost at sea is just going to drift, either bobbing along until it reaches an unknown destination or it will sink.”
Puplebricks
“A good business strategy is to focus on what you know best and retain a sharp focus. Spreading yourself too thinly can lead to mistakes and an inability to do the job properly.
“Purplebricks has paid the price for going down the latter road. It is now in retrenchment mode after trying to do too much at once. Its international ambitions have been grossly scaled back following the decision to pull out of the US as well as Australia which was announced in May.
“This is probably the correct decision to make. It will allow Purplebricks to fine-tune its proposition in the UK and Canada where operations are more established. It is better to take time and make sure the core business is functioning well and new ideas are tested and refined. Indeed, investors seem to like the decision as the share price is up on the news.
“While longer-standing shareholders may have suffered losses – given how the share price has fallen so much in the past few years – the new strategy should give Purplebricks a stronger footing to try and bounce back.”
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