Superdry warns on profit, and Ryanair boosts guidance

“Diminishing geo-political risks have got traders and investors pushing the buy button again as shares in consumer electronics giant Apple hit a new high and the Dow Jones index also reaches record levels overnight.

“This positive sentiment travelled across the Atlantic as the FTSE 100 traded higher first thing on Friday,” says AJ Bell investment director Russ Mould.

Superdry

“Co-founder Julian Dunkerton’s return to Superdry as CEO is starting to look like a difficult second album rather than an overnight success.

“A dodgy Christmas trading period means there may now be no profit at all in the current financial year. The weak performance partly blamed on old stock.

“Although this will come as a big disappointment to shareholders, Dunkerton looks to be taking a long-term view of the business.

“Reducing discounts may have hurt sales amid strong industry competition but this could be a price worth paying if it helps rebuild the integrity of the brand and improves margins.

“Slashing prices can damage shoppers’ perception of a brand or product and it can then be difficult to return to a higher price tag in the future.

“This is a high-wire act for Dunkerton though, as it relies on the patience of shareholders and there is a risk the brand just doesn’t have the same cachet it once did.

“After nine months in charge, and after a lengthy campaign to oust the previous management, there will be increasing pressure on him from the market to deliver tangible signs of progress as we move through 2020.”

Ryanair

“The whole airline sector was rising in Ryanair’s tailwind after a very encouraging update from the budget carrier.

“Investors’ attention will always be grabbed by a big number and Ryanair has duly delivered, raising the upper end of its full year profit guidance above the €1 billion mark.

“Despite the uncertainty created by Brexit and mounting concerns about the environmental impact of flying, it seems plenty of people fancied jetting away over Christmas and the New Year.

“There was some mild turbulence to contend with in the period, with Austrian subsidiary Laudamotion struggling thanks to an ongoing pricing war with its rivals.

“And despite the collapse of Thomas Cook last year, competition remains an issue in other markets too, while rising staff costs and a volatile fuel bill are continuing pressures on the company’s low-cost model.

“This is a critical point given how much of the businesses success has been built on keeping a very tight hand on the purse strings.

“The picture could look a bit less rosy in the summer due to further delays in the delivery of grounded Boeing 737 Max planes, which will stunt passenger growth.”

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.