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“There’s plenty for investors to fret about over the next few days and it doesn’t look like they’re feeling too positive about life, with the FTSE 100 starting Tuesday firmly lower.
“The UK general election looms, as does the latest US decision on interest rates and the question of whether the Trump administration will go ahead with tariff hikes on Chinese goods on 15 December as scheduled,” says AJ Bell Investment Director Russ Mould.
Ted Baker
“Ted Baker is truly having the nightmare before Christmas. Following the departure of its founder Ray Kelvin, several profit warnings and a £25 million inventory blunder, along comes another shocking trading update, the departure of CEO Lindsay Page and chairman David Bernstein and the suspension of the dividend.
“Page’s days were already looking numbered given the inventory blunder related to prior years when he was finance director.
“There were some rumours earlier this year that Mr Kelvin may take the business private in order to regain control, given that he already owns 34.87%. It feels like each passing day since his departure creates an opportunity to buy even cheaper given how the share price has plummeted. The stock is now down 85% since the founder left Ted Baker on 4 March.
“The business appears to be unravelling with accounting issues and potentially product issues given how Ted has gone from being a retail superstar to one very much out of fashion. And that’s not forgetting Mr Kelvin’s alleged inappropriate behaviour towards staff.
“If you thought Julian Dunkerton had a big challenge in trying to reset fashion retailer Superdry, imagine what it will take to sort out Ted Baker. It seems there is a complicated web of problems to navigate before trying to establish exactly what’s gone wrong.”
Ashtead
“Today’s first-half results from construction equipment hire firm Ashtead may raise questions over the long-term position of its UK business within the group.
“As profit tumbles at its domestic A-Plant unit, investors may hope a plan to refocus these operations ultimately becomes a plan to recycle them, to prevent them dragging on a robust North American business.
“The impact of changes to accounting rules makes these numbers a bit of a tricky read, though the company does its best to spell out the impact, and once you read the small print there may be some concern over slowing growth and modest margin pressure in its key Sunbelt US division.
“Given its reliance on this market, a more pronounced slowdown could put a real spanner in the works for Ashtead.
“Recent strength in the pound is also affecting performance as the company’s predominately dollar revenue is translated back into sterling and the outlook comments could be read as a very mild profit warning. Ashtead says results will be in line with expectations ‘except for the UK and a currency headwind’.
“A double-digit hike in the dividend at least means the group’s credentials as a dividend grower are intact. The last decade has seen the payout increase ten-fold.”
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