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“While UK inflation has hit a 30-year high at 5.4%, this is only marginally ahead of expectations, and certainly shouldn’t shock the markets. Indeed, the FTSE 100 and FTSE 250 indices barely budged on the news,” says Russ Mould, Investment Director at AJ Bell.
“Ongoing weakness among tech-related stocks was offset by strength in housebuilders, retail and oil producers in the FTSE 100. Brent Crude continues to charge ahead with a 0.4% gain to $87.84 per barrel, stoking speculation that it could soon return to $100 per barrel amid supply constraints and robust demand.”
Burberry
“There’s a lot to like in Burberry’s latest trading update. Not least the improved margins which are driving guidance for a much larger than previously forecast increase in full-year profit.
“As we emerge from the pandemic and people start to socialise and travel more it appears the wealthy are lapping up luxury items, with Burberry the latest name in this space to report strong trading.
“The company’s ability to drive full price sales is also testament to the appeal of its offering and a feather in the cap for its creative director Riccardo Tisci.
“Burberry is demonstrating its ability to appeal to new and younger consumers which is absolutely critical to the future of the business. And it is selling lots of big-ticket items like leather goods and overcoats.
“Geographically, it is notable that its performance in the Americas remains strong and the easing of restrictions elsewhere have helped sales recover in Europe and Asia.
“All of this has been achieved without a full return for the tourism which benefits Burberry’s airport concessions but also its stores in popular destinations in Europe and elsewhere as Asian tourists buy items as part of their trip. The company will be hopeful of this trade returning to some extent in 2022.
“This should help get ex-Versace man Jonathan Akeroyd off to a good start when he takes over from Marco Gobbetti in a few months’ time.
“Akeroyd will want to put his own stamp on the business, but he may want to consider an ‘if it ain’t broke don’t fix it’ approach given the strategic progress under Gobbetti. Retaining the services of Tisci is likely to be a priority as will be the continued development of its online proposition.”
WH Smith / Best of the Best
“WH Smith’s trading update played out as expected – the high street operations are doing their very best to support the group while the travel arm still has some way to go with its Covid recovery.
“Strategically the company has remained focused on the longer term and there are some interesting developments that put WH Smith in a stronger place to thrive once life returns to normal.
“It has secured more stores in travel hubs, and it is rolling out an initiative whereby it houses a pharmacy within travel shops. If Covid can stop interrupting everyday life, then WH Smith arguably stands a good chance of bouncing back sharply.
“The same can’t be said for spot the ball competition organiser Best of the Best which may be secretly praying for everyone to be told to work from home permanently.
“It thrived during the early stages of the pandemic as people were bored at home, potentially on furlough, and wanted to find a way of making a quick buck. Revenue and profit soared, and the company even put itself up for sale, perhaps thinking if ever there was an opportunistic time to get top price for the business, this was it.
“The sale didn’t happen and interest in its games faded as work from home restrictions were lifted. Now customer acquisition costs are soaring, and profit is falling, with the share price having slumped by 78% in the past 12 months. While the business is still making money, shareholders are likely to be losing patience fast and perhaps thinking that its stock market code BOTB might actually stand for BoOm To Bust.”
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