Greggs’ slow road to recovery and Games Workshop provides the right kind of escape

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“Stocks pushed ahead on Tuesday amid progress with new US government stimulus efforts, including a 0.7% rise in the FTSE 100 to 6,149. Hong Kong’s Hang Seng jumped by the same amount, while Madrid’s IBEX 35 reversed yesterday’s decline with a 0.6% advance,” says Russ Mould, Investment Director at AJ Bell.

“The gold price briefly hit $1,980 per ounce before easing back to $1,936. Brent Crude oil traded 0.5% higher at $43.66 per barrel.

“On the UK stock market, energy and tech stocks led the way, following by a good showing from consumer cyclicals and utilities. After recently rallying amid strong precious metal prices, miner Fresnillo was the biggest FTSE 100 faller after publishing half-year results.

“Shares in grocery sellers including Marks & Spencer, Morrisons and Ocado shrugged off news that Amazon Prime customers will be eligible for free grocery deliveries in London and the South East from today.”

Greggs

Greggs seems to have done every it can to adapt to the new conditions of retail, but some factors are still out of its hands.

“It has temporarily slimmed down the product range, so it is just selling the favourites. The digital channel has also been embraced to help support sales and make it more convenient for customers to order ahead. However, it is still reliant on high levels of footfall which remain well below normal levels.

“Greggs has thrived by appealing to two distinct groups of people. First is the work crowd – people pop into its shops for a coffee and a bacon roll on the way to work. At lunch, workers nip out for a sausage roll and a drink for lunch. Greggs then attracts custom from people on their way home looking for a quick snack.

“The second crowd is those going around the shops, popping into its stores for a cup of tea and a cake as part of their trip.

“Although people are slowly starting to return to shops, Greggs will almost certainly be suffering from so many individuals continuing to work from home rather than going back to the office. There is nothing it can do to reverse this trend.”

Games Workshop

“The past seven months have felt like a different place, with the pandemic turning the world upside down. In order to cope with the troubles of life, many people have turned to the land of fantasy to find a different world to the one they are experiencing day to day.

Games Workshop’s soaring sales are proof that its imaginary worlds have been much more appealing than present day Earth.

“A lot of its customers will have spent lockdown painting Games Workshop’s models and expanding their own collection of demons, wizards and warriors.

“Increased engagement also bodes well for the company’s strategic growth plan which focuses on exploiting its intellectual property through the creation of TV shows and other media projects.”

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