Sainsbury’s star poached by WPP, and momentum slows at Greggs

“The FTSE 100 is unable to take its cue from strong trading in the US and Asia overnight, barely nudging higher on Tuesday morning. Strength in sterling, as markets await the publication of UK plans for Brexit, weighs on the index,” says Russ Mould, Investment Director at AJ Bell.

WPP/Sainsbury's

“A potential succession plan at Sainsbury’s has been thrown into some disarray as its highly rated executive John Rogers jumps ship to join advertising giant WPP as chief financial officer.

“Rogers has performed several senior management roles at the supermarket, most recently heading up the Argos business where he has helped lead the transition to a more digital savvy operation.

“The exit of an obvious internal replacement for current CEO Mike Coupe could suggest the latter is staying put for some time despite the damage to his reputation from the failed merger with Asda.

“While Rogers’ retail experience might not make him an obvious fit for WPP at first glance, he will be familiar and have relationships with the companies behind the consumer brands in the company’s client base.

“He is also well used to the demands of being a senior executive at a major plc.

“For WPP it represents a further step on the path to recovery with the addition of Rogers completing the reset of the leadership of the group post the departure of founder Martin Sorrell.

“This new ‘dream team’ of WPP CEO Mark Read and Rogers will get to work in early 2020.

“Read successfully pitched 2019 as a year of consolidation and WPP’s shares have responded positively to solid rather than spectacular progress. Expectations may be higher in the coming 12 months.”

Greggs

“Today’s trading update was always going to be a tough one for Greggs. The publicity around its vegan sausage roll earlier this year was so effective that it drove more people to visit its stores and that had such a positive impact on earnings. Sales continued to beat expectations as the year went on, leading to a sharp rise in its share price.

“The new trading update shows that the rate of sales growth has now moderated, partially because the comparative trading period a year ago was fairly strong.

“While sales continue to be very good, the pace of new store openings has been scaled back to a net 90 from previous guidance of net 100 additions. It has also highlighted cost pressures from staff and food input costs.

“Interestingly the word ‘vegan’ isn’t even mentioned in the latest update, which might suggest that the buzz around its alternative sausage rolls is starting to die down. There is also no mention of plans to introduce vegan versions of the rest of its product range.

“Greggs may simply be trying to moderate expectations so that investors don’t get too carried away with this year’s stellar performance.”

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