Market report

Shoe Zone | SIG | Unite | Games Workshop | Hornby

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4.30pm: London lower on Fed warning

The FTSE 100 30.45 points lower at 7,694.49 ahead of the Federal Reserve chairman addressing an event tonight.

AJ Bell investment director Russ Mould said: “Sentiment soured on Wall Street as two members of the Federal Reserve indicated rates would need to move above 5% in 2023 to curb inflationary pressures and this helped erase earlier gains.

“So far this year there has been increasing hope of a softish landing for the US economy – that hope could be punctured if the Fed retains a hard line on rates. With that in mind all eyes will be on Fed chair Jerome Powell when he addresses a conference on central bank independence in Stockholm later.

“Inflation figures out on Thursday also represent a test for the relative optimism of the markets so far this year.”


7am: Romar-Abrado acquired

Oil tools company Archer has acquired the Aberdeenshire plug and abandonment specialist Romar-Abrado for an enterprise value of $8 million, plus earn-out pending trading performance over 2023 to 2025. The acquisition is on a debt free basis and financed by cash. Full story here


7am: Shoe Zone positive

Shoe Zone said it had a very positive year due to a normalised trading period post-pandemic.

Profit before tax for the year to 1 October was £13.6m for the period (2021: £9.5m) and £11.2m (2021: £9.5m) on an adjusted basis. Revenue came in at £156.2m (2021: £119.1m).

The company ended the period trading out of 360 stores, having closed 63 stores, opened 13 stores and converted a further 11 existing stores to new formats.

“Our average lease length is now 1.8 years, giving us the opportunity and flexibility to respond to changes in any retail location at short notice,” it said. “Property supply continues to outstrip demand and we expect to take advantage of this environment and significantly improve our property portfolio over the medium term.”

The board proposed that a final dividend of 3.3 pence per share will be paid on 22 March based on a 40% pay-out ratio. It is also proposing an additional special dividend of 8.2 pence per share (paid on 22 March 2023), giving a total dividend of 17.0 pence per share.


7am: SIG revenue rises

Building materials group SIG expects expects to report revenue for 2022 up 17% to £2.74 billion from £2.29bn.

Full-year underlying operating profit is expected to be at least £80 million from £41.4m.

The company said its return to growth strategy implemented in 2020 delivered the progress seen in the year, with results underpinned by improvements in operational performance.

Market demand softened in the second half as expected, but the company said it continued to benefit from its commercial strategy, strengthening its position. Input price inflation eased in the second half, but remained a strong tailwind.

SIG will publish its full-year results on 8 March.


7am: Robert Walters sees market softening

Recruitment agency Robert Walters said there had been a softening of recruitment activity levels across many of the group’s markets as the quarter progressed. Full story here


7am: Unite Students upgrades rental forecast

Student accommodation provider Unite Students has raised its rental growth target to at least 5% for 2023/24 from 4.5%-5.%.

Higher than expected rental income in term 1 of the 2022/23 academic year has more than offset the impact of higher interest costs in the second half of the financial year.

Richard Smith, chief executive, said: “Reservations are significantly ahead of recent sales cycles, reflecting strong demand from new and existing students as well as new nomination agreements with universities.

“Despite the challenging economic environment, the business remains well positioned thanks to increasing student numbers and growing demand for high-quality, purpose-built student accommodation across our markets. Moreover, our alignment to the strongest universities and the capabilities of our best-in-class operating platform mean we remain confident of continuing to deliver strong operational results.”


7am: Hornby cautious

Models firm Hornby said sales in its fiscal third quarter rose on year, though year-to-date sales are still behind budget, and it forecast a modest full-year underlying pretax loss.

Sales in the three-month period ended 31 December were up 6%. The company said this reflects better availability of stock, price increases, and investment in e-commerce platforms and digital media.

However, sales figures are behind budget due to the challenging consumer economic climate and will hurt the result for the year ending 31 March.

The order book remains strong ahead of its 2023 product range releases, and its direct to consumer sales are 44% up on the year.


7am: Games Workshop hit

Games Workshop saw revenues rise but reported a drop in interim profits as it suffered from a fall in licensing operating profits.

The manufacturer of miniature war games said in the 26 weeks to 27 November revenue rose to £226.6m from £211.6m but pre-tax profits fell to £83.6m from £88.5m.

Licensing revenue dropped to £14.3m from £20.1m meaning licensing operating profits declined to £12.9m from £18.8m.

The company said it was “another record half year sales performance led by a great recovery in all channels in Australia, Canada and the UK” but “it isn’t where we wanted to be, particularly in the US.”


7am: Inflation masks retail sales

Retail sales across the UK rose in December but the increase masked a drop in volumes as a result of inflation, the latest BRC-KPMG Retail Sales Monitor has found.

Total sales for 2022 increased by 3.1% from 2021, with food growth posting a 3% rise and non-food recording a 3.2% uplift for the year.


Global markets

Persistent concerns about central bank policy towards inflation and interest rates saw greater caution on Wall Street ahead of a speech today by Federal Reserve chairman, Jerome Powell, at a banking conference in Stockholm. The Dow Jones Industrial Average was down 0.33%, the S&P 500 fell 0.08%, while the Nasdaq Composite jumped 0.63%.



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