The strength of the US economy, and subsequently the dollar, are raising concerns about emerging markets, prompting a sell off in London today. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Shares in Ted Baker (TED) took a tumble in early trading on the release of interim numbers. Softer sales, exposure to the recent House of Fraser collapse and warnings of tough conditions on the British high street have put the market on edge, even though analysts at Liberum describe the business as “resilient and agile” as well as “well-placed in tough markets”. However, even the broker believes gross margin improvement from last year will reverse in the second half, despite easier comparative figures. The interim dividend rose 7.8 per cent to 17.9p. Our recommendation is under review.
Passenger numbers at easyJet (EZJ) were up 14.2 per cent during September to 8.8m, though load factor fell 0.8 percentage points to 92.8 per cent. These passenger numbers include the new operations from Berlin Tegel airport. Over the rolling 12 months the budget airline has carried 88.5m passengers, a 10.2 per cent increase on the year before, with load factor up 0.3 percentage points to 92.9 per cent. Shares fell 1 per cent in early trading. Buy.
KEY STORIES:
Distribution group Electrocomponents (ECM) said that it expects its pre-tax profits to rise by 27 per cent in the first half of its financial year. Underlying sales growth has been maintained, while RS Pro, the own-brand electric and automation tools business, outperformed the group with like-for-like revenue growth of 12 per cent.
Optical components maker Gooch & Housego (GHH) has entered its new financial year with a record order book of £96.1m, a 33 per cent increase compared with its 2017 year-end. In August, the group acquired medical device maker VITL and Gould Fiber Optics, enabling it to expand its life sciences business and boost its presence in North America.
Shares in DFS Furniture (DFS) are down 2 per cent this morning, in line with a drop in pre-acquisition sales at the retailer. Underlying cash profits were down 7.6 per cent to £76.1m in the year and lower profitability along with costs from the recent acquisition of Sofology pushed up net debt as a proportion of cash profits. The retail sales environment has been weak thanks to the World Cup and the hot summer, but the group has seen like-for-like growth in the nine-weeks since the end of July.
OTHER COMPANY NEWS:
In a pre-close update for the first half to September, Redcentric (RCN) said performance has been in line with management’s expectations. Cash flows “remained strong” and net debt declined from £27.7m as at March 2018 to £22.6m.
