Entain gets a new CEO and Pets at Home is still riding the lockdown pet craze

“Wall Street celebrated the inauguration of Joe Biden with a decent day on the markets yesterday and this positive momentum extended across Asia and Europe on Thursday with equities pressing ahead,” says Russ Mould, Investment Director at AJ Bell.

“The FTSE 100 advanced 0.5% to 6,771 thanks to strength among financials, technology and healthcare stocks. Sage, HSBC and NatWest topped the leaderboard while media groups Pearson and Informa struggled.

“The Nikkei 225 moved 0.8% higher after the Bank of Japan upgraded its economic forecast for the next fiscal year to 3.9% expansion versus a 3.6% gain seen three months ago. The top riser was advertising group Dentsu, up 5.3%, as a stronger economy could drive more promotional activity among corporates. Also driving the share price was news that Dentsu might sell its headquarters in Tokyo for $2.9 billion.

“Germany’s DAX index traded 0.6% higher with healthcare, industrials and technology among the sectors in demand.”

Entain

“While MGM might have walked away from trying to buy the company, there are certainly no major embarrassments for Entain in its latest trading update. Putting its well-documented UK struggles to one side, its performance continues to be good.

“Most importantly, US net revenue was ahead of expectations which is positive as the business seeks to take advantage of the biggest growth opportunity in the gambling sector for a very long time.

“Reassuringly for investors, the company has wasted no time in finding a new chief executive following the recent surprise resignation of Shay Segev. His replacement is Jette Nygaard-Andersen who was already a non-executive director of Entain and well versed in the company’s business activities.

“She has significant experience across the media, entertainment and sports world and is well versed with getting the most out of digital channels. This broad expertise is exactly what Entain needs as it tries to plant flags in new territories and stay ahead of competitors in existing territories.

“The gambling market has progressed significantly from its stereotype of smoke-filled betting shops. It is very much a digital experience these days and there is continued evolution in ways that people can bet on a plethora of things, whether reality or fantasy.

“Many shareholders were opposed to MGM’s takeover price and they, along with many analysts, believed the business to be worth a lot more than the offer on the table. Nygaard-Andersen has a chance to prove them right and it helps that there is already significant momentum in the business as she takes the top job.”

Pets At Home

Pets at Home still appears to have plenty of pep as it benefits from an ongoing turnaround of the business and the so-called ‘pandemic puppy’ craze with pet ownership rising as people work from home.

“Able to operate as an essential retailer, the dog food, cat litter and veterinary services seller has demonstrated that the UK remains a nation of animal lovers.

“Pet retailing is a resilient niche engendering high levels of repeat business, since pet owners spend regularly on consumables and impulse-led accessories.

“Pets at Home is the market leader and offers a wide range of products, a significant own-brand offering and pet-related services (vets and grooming).

“And while it faces a competitive threat from non-specialists like the supermarkets and Amazon, under CEO Peter Pritchard, appointed in 2018, the company has introduced more customers to Pets’ complete pet care offer and signed up lots of loyalty card members.

“This has helped the company capture a greater share of their overall spend and increase its subscription-led income.

“The company has coped well with a shift online, ramping up its distribution capacity and the recent sale of its animal hospital business has boosted the balance sheet. This deal suggests the company is narrowing its focus to the online and retail stores and so-called ‘first opinion’ vet practices, though it also acquired an animal health telephone business at the same time in a smaller transaction.”

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.