It’s been a big day for updates from retailers today, and the clear winner is Primark-owner Associated British Foods PLC (LON:ABF).
There is more to the company than simply Primark, though it often seems from coverage (including our own) that all the media cares about, or understands, is the Primark business.
“Sales at Primark continue to rise in the third quarter and overall underlying operating performance was ahead of forecasts with an improvement in its sugar business,” observed Russ mould, the investment director at AJ Bell.
The company said: “Following the result of the EU referendum, sterling has weakened further and at these rates we expect a bigger translation benefit in the final quarter with no material transactional effect.”
As a result, the company no longer expects a decline in adjusted earnings per share for the group for the full year.
Skid Rowe
The chaps down at spread betting firm IG do not seem to be in the mood to give new Marks & Sparks boss Steve Rowe much time to turn the ship around.
“The firm has entered the painful period of adjustment its CEO had promised, and while the market will be patient for now, Mr Rowe needs to deliver results soon. The read-across to other retailers is not pretty, as UK consumers rein in their already weak spending patterns thanks to ongoing uncertainty,” opined Chris Beauchamp.
Clothing and home sales in the first quarter at Marks and Spencer Group PLC (LON:MKS) plunged 8.3% from a year earlier, with like-for-like sales down 8.9%, with the group lobbing in uncertainty caused by the EU referendum as a half-hearted excuse.
The market is likely to pay more attention to Rowe’s indication that his recovery plan, which includes cutting prices and reducing promotions, would initially lead to a step back.
Offside, ref(erendum)
If M&S is up the proverbial creek without a paddle, things are taking a turn for the worse at “trackies” seller Sports Direct International PLC (LON:SPD), as it announced an 8.4% fall in underlying pre-tax profit from a year earlier.
Chief executive Dave Forsey said: "The group has delivered a disappointing full-year financial performance, impacted primarily by a tough trading environment in the second half across our sports retail businesses."
Well, at least he did not blame the EU referendum. Most of the retailer’s customers probably did not know there was one.
Love me Tendara plus hands, knees & Ncondezi
Away from the retailers, and on to energy tiddlers Sound Energy PLC (LON:SOU) and Ncondezi Energy Limited (LON:NCCL), both of which have been piquing the interest of retail investors this morning after updates.
In what was described by its house broker Cantor Fitzgerald as “another encouraging development” in relation to its acreage onshore Morocco, Sound has received a non-binding Expression of Interest – these things Need To Be Capitalised in the strange world of stock market announcements - from Oil & Gas Investment Fund, its partner on the Tendrara licence, expressing interest in funding, building and operating a new pipeline connecting Tendrara to the Gazoduc Maghreb Europe pipeline.
“The company’s shares have rallied in recent weeks as the market continues to recognise the successful execution of Sound’s Mediterranean gas strategy, but we believe its current valuation remains undemanding,” said Cantor’s Sam Wahab.
The somewhat more disinterested finnCap is also a buyer of the stock, as the arrangement, if consummated, will allow for the rapid commercialisation of Tendrara and removes a key funding question for the company.
As for Ncondezi, there have been some high level talks going on between officials in Mozambique, Ncondezi and its partner SEP, about the Ncondezi power project.
“The meetings in Maputo between senior members of SEP, Ncondezi and high level ministers in the Mozambique Government and the signing of the Term Sheet seem to mark a significant milestone in the development of the project,” suggested John Meyer, at broker SP Angel.