Bloomsbury Publishing flies on demand for fantasy genre books and Dunelm pays special dividend

“The FTSE 100 was up in early trading as yesterday’s negative inflation shock in the US was followed by a surprise of a more positive variety as UK inflation came in flat and below expectations,” says AJ Bell investment director Russ Mould.

 “This raises a prospect which would have felt unlikely a matter of weeks ago of the Bank of England cutting its own rates before the US, and the subsequent drop in the pound has helped the big multinational names in the FTSE 100. The relative value of their overseas earnings is boosted by weaker sterling.

“For global markets, the US reading is significant and suggests the battle against inflation is far from over.

“For once, water companies were making positive headlines as United Utilities and Severn Trent reported positive operational performance and, crucially, suggested they were on track to hit forecasts. The sector has been under a cloud thanks to the much-criticised practice of discharging raw sewage into rivers and seas.”

Bloomsbury Publishing

“Bloomsbury’s latest trading update shows a business enjoying strong momentum. Covid lockdowns rekindled people’s love of reading and unlike many other past times, this one seems to have stayed popular as the pandemic is confined to the rear-view mirror.

“The sign of a clever publisher is recognising talent early on and signing up authors who go on to produce a rich library of books. Bloomsbury has dined out on JK Rowling’s Harry Potter series for a long time yet success with other titles shows it is not a one trick pony.

“Sarah J. Maas has become a phenomenon around the world and her 16 books published by Bloomsbury are flying off the shelves, helping to drive profits for the company.

“Each time a new Sarah J. Maas title is published, booklovers delve into her back catalogue which acts as a sales catalyst for the publisher beyond the latest release. Bloomsbury has at least another six of these potential sales waves locked in from future releases under contract with the author.

“The fantasy genre is thriving in the book world and Bloomsbury is well placed to benefit as consumers seek to bury themselves into a novel so they are transported to a different world.

“Importantly, Bloomsbury is also active in educational publishing which provides revenue diversification. Just over two years ago it bought a business called ABC-CLIO to strengthen its position in digital academic resources, including a big presence in the US high school library market. It also has an academic streaming content platform which provides students with access to a wide range of subjects to support their learning.”

Dunelm

“The steady performance from home furnishings retailer Dunelm is impressive given the pressures on household budgets in the UK. It suggests the company is getting the balance right on pricing, quality and product.

“Having the right stock available at the right time for the right customer is key to being a successful retailer and is reflected in Dunelm continuing to capture market share. The company’s reference to attracting new customers suggests some people may be trading down from more premium outlets to Dunelm’s more affordable offering.

“The company has worked hard to enhance its online presence in recent years and it continues to see robust web-based sales. All in all, the impression you get from Dunelm is that this is a company which really understands its market and knows how to capitalise on emerging trends through product innovation.

“Dunelm’s move to increase the ordinary shareholder payout and pay a special dividend on top demonstrates its confidence in the outlook. It may help to reassure any investors concerned about the company’s reference to being impacted by the disruption to Red Sea shipping routes. Notably, workarounds to address this issue mean the improvement in margins seen in the first half is set to slow in the second half.”

These articles are for information purposes only and are not a personal recommendation or advice.