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News & Tips: JD Sports, Robert Walters, Majestic & more

Retail shares weigh on FTSE
April 11, 2017

The latest British Retail Consortium survey reports that in March like-for-like retail sales slumped by 1 per cent on an annualised basis - the biggest drop since July 2016. Here's the view from The Trader's desk.

IC TIP UPDATES:

JD Sports (JD.) - or “just delightful” as City analysts have dubbed it this morning - has released a record set of annual numbers. Revenues of £2.4bn came in ahead of forecasts, leading to an astonishing 81 per cent improvement in pre-tax profits to £238m. The group has benefited from the growing trend for “athleisure” wear, although chairman Peter Cowgill admits the group’s performance - like many of its rivals - will still be subject to “external” pressures this year, notably an inflated cost base as a result of the devaluation in sterling. We remain buyers.

Sirius Real Estate (SRE) completed €103m (£88m) of acquisitions in the year to 31 March 2017, which helped to boost annualised rental income to over €70m. To generate funds for making acquisitions, Sirius successfully recycled €103m of disposals at values materially above book value. Occupancy of the group’s business parks space edged up to 81 per cent, with Germany proving to be a particularly resilient market. Buy.

Recruiter Robert Walters (RWA) has bucked the trend of companies struggling in the wake of the EU referendum with 27 per cent growth in net fee income for its UK business. The group said a “notable upturn” in financial services recruitment in London helped this, which will come as a surprise to many as finance jobs are widely expected to leave the city following Brexit. Net fee income for the group as a whole was up 20 per cent in constant currency to £78.3m. Buy.

Those who heeded of our long-beleaguered tip Rockhopper Exploration (RKH) will have been reassured this morning by full-year financials which revealed $81m (£65m) in cash and term deposits at the end of the year. Another positive came in the fair value over cost in the FOGL acquisition, which pushed net profit to $98m. This year, capital expenditure is expected to exceed revenues, though corporate activity looks to be slightly thinner. Our buy call is under review. Buy.

KEY STORIES:

John Colley, managing director of Majestic Retail - a division within Majestic Wine (MJW) - has decided to step down for personal reasons. He will leave the group at the end of May this year, but analysts have urged the market not to see it as a blow to the company’s recovery plan this year. In fact, brokerage Liberum has credited Mr Colley with much of the “heavy lifting” which in their eyes, has been done. Sales growth has improved as have other key performance indicators. Chief executive Rowan Gormley is expected to oversee the division following Mr Colley’s departure.

Shares in De La Rue (DLAR) were up more than 6 per cent in early trading following release of its latest trading update. The banknote and passport specialist expects full year operating profit to be at the top end of market expectations, in the region of £66.4m, driven by growth in the identity systems and product authentication business. On a separate note, chief operating officer will be leaving the company following the AGM on July 20th 2017.

Draper Esprit (GROW) has reported around £5m gross growth in its primary investment portfolio since September, standing at £112m at the end of March.This constitutes a 41 per cent increase, excluding new investments, since the company was admitted to the Alternative Investment Market in June.