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“Markets have started to recover after yesterday’s brutal bloodbath. While stocks still have a long way to go to make up for Monday’s losses, it is encouraging to see share prices starting to move up. It would suggest there are plenty of investors confident enough to go shopping for bargains rather than widespread fear,” says Russ Mould, Investment Director at AJ Bell.
“The FTSE 100 advanced 0.4% to 7,184 with travel stocks among the biggest winners. In Europe, the DAX index jumped 0.2% and in Asia the Hang Seng traded 0.3% higher. Japan’s Nikkei fell 3.3%, playing catch-up as its market wasn’t open for trading yesterday due to a public holiday.
“Oil prices jumped 0.3% while gold slipped back 0.5%."
Hammerson
“When will Hammerson’s problems go away? Its latest full-year results show ongoing issues with a big drop in rental income and asset valuation. It is selling assets as fast as possible but the retail sector’s pains are struggling to be healed.
“Tenants’ CVAs and administrations have resulted in a painful drop in income for Hammerson, which has subsequently warned shareholders to expect a near-50% decline in the dividend in 2020 to 14p per share. The cut is considerably greater than forecast by the market with the analyst consensus estimate being 23.37p.
“Hammerson is taking important steps to protect its business, which includes last week’s news that it will exit from the retail park sector, having agreed a £400m sale. It first announced intentions to leave this sector in July 2018, illustrating how property owners cannot move fast as it takes a long time to shift real estate.
“Shareholders have suffered a disastrous few years with Hammerson’s share price having fallen by 60% since May 2018. Anyone still left owning the shares will hope that Hammerson has reached a turning point and the worst is over.
“There are some bright spots such as the scale of debt reduction and an encouraging performance from its premium outlets. However, the structural changes in the retail sector mean that Hammerson will still have to keep adapting to be match fit for the future.”
Hotel Chocolat
“First-half results from premium chocolatier Hotel Chocolat are a bit of a treat after a day of wider market turmoil.
“Double-digit sales and earnings per share growth suggest the company’s investment in bringing out new products and the enduring strength of its brands is being met with a healthy appetite by consumers.
“The company acknowledges it messed up on the supply chain as it dealt with the complexity of selling through an increasing number of different channels – but now seems confident it has fixed this issue. Notably this is a vertically integrated business which grows its own cocoa.
“The company is doing something of a taste test of international markets, checking Hotel Chocolat actually works as a concept in the US and Japan through a handful of locations.
“Sensibly the company looks set to continue to take things slowly overseas, ensuring it has got the recipe right before commencing a more ambitious roll-out in either country.
“In the interim, management seem to recognise that the company has more to do online in the UK, with efforts put into growing its VIP membership scheme.
“The development of an in-home hot chocolate system might not sound like something to make a song and dance about but it offers a route to subscriptions as people sign up to receive refills, thereby generating a predictable revenue stream.”
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