Primark owner Associated British Foods PLC (LSE:ABF) (Associated British Foods PLC (LSE:ABF)) joins the retail post-Christmas fray on Thursday, following an update in mid-December that it was increasing prices at its famously cheap fast-fashion chain as it struggled with the closures of some European stores, supply chain disruption and higher costs.
This Omicron-related squeeze might not be entirely over yet, so the FTSE 100-listed group’s outlook and guidance will be the thing to watch.
“We’re keen to get management’s take on the potential pitfalls ahead,” said analyst Laura Hoy at Hargreaves Lansdown.
Last time, the board expected Primark sales to be “significantly better” than sales in the comparable period in the last financial year, from December 2020 to April 2021, when the estate was largely closed.
Says Hoy: “Impressive stock control at Primark plus business as usual at its Grocery, Sugar, ingredients and Agriculture segments meant the group was able to weather the storm.
“However, despite easing restrictions, conditions are tough for retailers — ABF included.”
CMC and AJ Bell
Mid-cap financials are in focus as CMC Markets PLC and AJ Bell PLC both put out trading statements providing insights on the same day
CMC reported revenues fell by 45% in its latest half-year while active customer numbers dropped by 9%, though this is still well up on the pre-pandemic total.
The spread-better has also started an exploratory review into breaking-up into two separate businesses.
This would see the splitting off its contracts-for-difference (CFD) operations, labelled as the ‘leveraged’ business, from its growing investment platform and business-to-business operations.
More news on that might add some zip to a share price that has been flat now for about four months as trading volumes have stabilised.
Wealth platform group AJ Bell meanwhile has responded to the emergence of newer app-based rivals by launching its own product - Dodl, a commission-free app that targets younger investors.
Bell’s high-profit margins are the target for low-or-no-fee rivals such as Freetrade and e-Toro, and chief executive Andy Bell has already suggested the FTSE 250 group might sacrifice some profitability to maintain its market position.
AJ Bell recorded net inflows of £6.4bn during its last financial year with total assets under administration closing at a record £72.8bn and, again, how these have changed in a period of relatively stable markets will be things to note.
Netflix hits a sticky patch
Netflix updates on US time Thursday with attention focused on how the streaming giant is faring as lockdown fever eases.
Management has forecast 8.5mln net additions for the fourth and final quarter of the year to take total subs number to 222mln.
Big successes such as Squid Game will help the numbers but finding hits is a costly business and margins will reflect the focus on new content say analysts.
Consensus for the fourth quarter of 2021 is US$7.7bn revenues and sharply lower operating profits of US$$387mln (US$954mln).
For Q1 2022, current consensus forecasts are sales of $8.1bn
Thursday 20 January
Trading announcements: AJ Bell PLC, Associated British Foods PLC, City Pub Group PLC, CMC Markets PLC, Entain PLC, Ibstock PLC Kier PLC, Network International Holdings, Premier Foods PLC, QinetiQ Group PLC, Wickes Group PLC, Workspace Group PLC
AGMs: Countryside Properties PLC, GCM Resources PLC, Henderson Far East Income Ltd, MJ Hudson Group PLC, Smiths News PLC
Economic data: Continuing Claims (US), Initial Jobless Claims (US), Philadelphia Fed Index (US), Existing Home Sales (US)