Royal Mail blames everyone but itself and Jet-2 owner Dart Group soars

“It’s another down day for the markets with the FTSE 100 falling 0.7% to 7,213 as investors grow tired of the lack of progress with US/China trade talks and the Federal Reserve’s latest meeting minutes showed it is in no hurry to make further interest rate cuts in the US,” says Russ Mould, Investment Director at AJ Bell.

Royal Mail

Royal Mail is blaming the unions, the election and even Santa for having to invest more money because its transformation is behind schedule, but it doesn’t appear to be blaming itself.”

“Comments that a difficult backdrop and various other headwinds could see the UK business lose money next financial year have understandably spooked investors, sending the shares plummeting.

“This clearly makes for uncomfortable reading and promises to improve will only go so far to appease the market. What investors really want are positive results.

“Comments from chief executive Rico Back about shifting market trends seem a bit like a delayed lightbulb moment for the business. Mr Back says Royal Mail has to adapt to the fact that people are posting fewer letters and receiving more parcels. This has been the trend for some time and Royal Mail is now paying the price for not acting fast enough to align its business with the modern world.”

Dart Group

“It is little surprise that today’s interim results from Jet2-owner Dart Group have sent the shares soaring as the group has delivered a substantial upgrade to full year expectations and hiked the dividend.

“Many leisure companies have capitalised on the gap in the market caused by the collapse of Thomas Cook, and Dart appears to have been one of the big winners. Its share price has more than doubled since the demise of its erstwhile rival.

“Shareholders may have to strap themselves in for some turbulence in the near future though and it looks like the company is doing its best to ensure they are prepared.

“References to the Brexit outcome, the continuing cost pressures on the industry from fuel and staffing costs and the need to invest in its products and operations look like attempts to keep the market’s hopes grounded in reality.

“The company is putting money into the expansion of programmes at several of its UK bases ahead of next summer.

“In the background the often forgotten distribution and logistics business is continuing to chug along nicely – churning out double-digit growth – although it remains a very modest contributor to group profit.”

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.