Redrow (RDW) 439.7p

Loss to date: -39.7%

Original entry point: Buy at 729.54p, 19 December 2019

Our confidence in housebuilder Redrow (RDW) as a winning stock for 2020, originally buoyed by greater certainty on the UK’s political situation, has been badly undermined by the coronavirus crisis.

The latest update from the company (30 Jun) laid bare the impact that the pandemic has had as it announced profit for the year to 28 June would be substantially below last year’s level.

The company also announced a shift in strategy, stepping away from London and focusing on higher-margin areas like its regional operations and its traditionally styled Heritage homes.

This reflects changes in customer appetite, as people look to buy outside city centres and prioritise outside space and things like home offices.

Scaling back in London involves a short-term hit as it writes down the value of some assets. The company will give further detail on this change in direction when it unveils full year numbers on 9 September.

There was more positive news on trading since the housing market reopened with the ratio of net sales per outlet hitting 0.56 compared with 0.59 for the same period a year ago.

SHARES SAYS: Redrow’s performance has clearly been very disappointing but we hope it can recover some ground in the remainder of 2020. Stick with the shares.

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