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Morrisons Surprises Yet Again
Morrisons W MRW has never lost our Ken’s ability to spring surprises and the new management team is doing just that with a 5.3% rise in the interim dividend and underlying profit before tax for the half year to 31st July up by 11%. Whilst total turnover did fall by 4%, first half like for like sales increased by 1.4% and the improving trend continued into quarter 2 where like for like rose by 2%. Cost savings for 2016 – 17 will exceed £1bn. Morrisons claims that its new team is making a real difference with lower prices, better service and improving quality.
NEXT NXT Total brand sales for the half year to the end f July rose by 3% but this was only achieved by discounting, with full price sales down by 4%. Profit before tax is down by 1.5% on a weekly comparable basis, last year having 53 trading weeks, compared to this years 52 weeks. Despite this being the age of the internet, it is perhas surprising that Next is bringing forward new store openings due next year, into the current financial year and will increase net trading space by 350,000 sq.ft. Next direct sales rose by 3%.
John Lewis Partnership BB90 saw small rises in sales for the half year to 30th July translated into whopping falls in operating profit and profit before tax which slumped by 74.5%. The company claims this is due to far reaching changes in society and deep structural changes in the retail market. Gross sales rose by 3.1% and John Lewis showed a like for like rise in sales of 3.1% compared to a 1% fall at Waitrose but the bad news is that the unwanted pressure are expected to continue throughout the rest of this year and next.
Ricardo plc RCDO The year end order book stands at a record high at £231m, up from last year’s£140m The fully year dividend for the year to 30th June is being increased by 90% after a strong performance from the two acquisitions which the company made. revenue rose by 29%, underlying profit before tax by 41% and basic earnings per share by 30%. The company sees the outlook as positive with potential for good further growth.
Crawshaw Group CRAW is disappointed with current trading. The suppressed footfall from which it began to suffer in June has continued to the end of the half year and since then conditions have remained difficult. The company is taking remedial action, it says.
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Churchill China Leads Todays Bunch
NEXT (NXT) claims to have had a solid year with total group sales up by an unexciting 3%. Retail sales are the worry with a meagre rise of only 1.1% compared to 8% in online and catalogue. What is even more worrying is that NEXT brand is not doing well. In the UK NEXT brand sales rose by only 2.3% but LABEL (ie. third party brands ) surged by 21.2%
Profit before tax rose by 5% which has enabled full year dividends to to be increased by 5.3%, matching underlying earnings per share which were up by 5.4%.
As one would expect from one of our world beating industries, happier news comes from Churchill China (CHH) which is raising its final dividend by 15% after a 16% jump in profit before tax, thanks CHH says to its excellence in design, quality and customer service. Not many companies even try to claim that.
Adnams (ADB) is raising its final dividend by 5.9% after a good second half helped to make up for the first half’s 3% fall in turnoverand leaving the full year down by just 0.5%. Operating profit rose by 7.3%. Adnams does not envisage selling any more of its pubs, after six last year, 1 this year and one more still to comer.
The beer market is still not good with competition from computer games and in home entertainment plus fast food and casual dining. In fact the take home market is now the strongest part of the beer market and Adnams is trying to take full advantage of this with its own shops and outlets.
Renishaw (RSW) announces that it is unlikely to repeat last years trading levels contrary to what was expected at the time of the half year’s results.
Mitie (MTO) continues the sombre note with news that revenue in the second half will be below current expectations
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The Xmas Trading Period – Now Its Counted in Days, Not weeks.
Gone are the days, it seems, when the country’s stores raked it in all during December and the January sales.
Next (NXT) is counting its best Xmas trading days on the fingers of one hand and has been reduced to blaming warm weather in November and December for its disappointing fourth quarter figures. In fact so desperate is it to shift the blame away from management that today’s trading update actually includes pages dedicated to a comparison of 2014 and 2015’s weather.
Gone are those happy days before the age of computer controlled stock, when, if it rained, stores immediately brought out wellies, brollies and macintoshes. Now they are all stored in some distant central depot in the Outer Hebrides, head office is in London where it is bright and sunny but its pouring down in Leeds and Manchester. By the time the brollies and wellies have arrived in Manchester it has brightened up there but its pouring down in London. The logistics industry was created to make sure that goods were in stock where they were needed and when they were needed but the big retailers do not seem to have quite got their corporate act together on this. Solution – remember, the United Kingdom does not have a climate, it has weather and stock your shop accordingly and like good boy scouts, be prepared.
Next does have the decency to admit that poor stock availability from October onwards was a big factor in its weak results, so presumably there may be a sacrificial lamb or two selected from stock control which will allow the rest of management to get away scot free. End of season sale stock was down by 7%. but there is no explanation as to why.
Full price sales growth for the Christmas period was 0.4% but for the year as a whole it was a much higher 3.7%, a sign of how wrong Next got its Christmas.
John Lewis Partnership showed growth of 4.1% over the 6 week Christmas trading period to the 2nd January and claims trading was strong but like for like sales at Waitrose actually fell by 1.4%, hardly a creditable performance, except in the eyes of the company. What puts that figure into perspective is that its record trading days were limited to two only, the 23rd and 24th December when Waitrose sales rose by 6% and 5.5% respectively.
Further evidence of the change in shopping habits is provided by the clearance sale in the week to 2nd January, which saved the day for Lewis’s with sales rising by 23% over the week and no doubt helping the six week total to climb to 4.1%. but at what cost, may one ask, to profits.
The New Year sales were always an event. Now they are just something else to do on Boxing Day, if you don’t fancy Wetherby races.
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