Quiz Clothing caution | Wood and THG in focus
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The main talking points were in the FTSE 250 which was buoyed by talk around takeover targets THG and Wood Group.
Both are being pursued by Apollo Global Management, with today’s approach to THG sending its shares up 32%. Wood, meanwhile, was up 6.6% to 225.80p as a deal looked more likely. Full story here
“There are deals a plenty to be done if the price is right but there are still big questions about exactly who the price is right for,” said Danni Hewson, head of financial analysis at AJ Bell.
“UK equities are a tempting target for private equity looking to bag a bargain, but the trick for intended targets is to make sure they play the game well enough to ensure British jewels aren’t being sold on the cheap.”
Fashion chain Quiz Clothing said revenue increased by 17% to £91.7 million in the year ended 31 March. In a trading update it said the revenue performance reflects increased consumer demand across its channels, but there was a cautious response from analysts.
Shares slumped 20% as it warned on a tough outlook for consumer demand going forward.
The board said it is pleased with the positive performance during the year and that FY23 profit before tax is anticipated to be at least in line with current market expectations.
Tarak Ramzan, CEO, said: “The group delivered a good performance in FY23 achieving revenue growth across each of its channels reflecting the strength of QUIZ’s trademark dressy and occasion wear product offering.
“Whilst the external trading environment is expected to remain challenging in the near term, we remain highly confident in the group’s long-term prospects.”
Tony Shiret at Panmure Gordon said February and March have been “difficult” with the company seeing delayed purchases and casual wear being bought more than its signature dressy fashion.
“We are reducing our FY1/24 estimates from £3.9m PBT to £2.8m as we believe that would still represent decent progress given the uncertainties of the current year and the difficult conditions currently being faced,” he said. The firm is also reducing its target price from 20p to the current level of 15.5p and retaining a hold recommendation.
The FTSE 100 drifted during the day to manage a small gain, closing at 7,879.51, up 7.60 points.
More earnings figures are due from US banks this week, with Goldman Sachs and Bank of America reporting on Tuesday.
The dollar was firmer, given the increased expectation of further interest rate hikes from the Federal Reserve.
Sterling was quoted at $1.2412 early today, from $1.2427 at the London equities close on Friday.
This morning in Asia, equity markets have put in a mixed performance. Chinese equities have outperformed, with the Shanghai Composite (+0.98%) leading gains. Elsewhere in Asia, the Nikkei (-0.03%) and the KOSPI (-0.12%) are trading slightly lower.