Card Factory profits boom amid rivals’ struggles
Card Factory took advantage of the collapse of Paperchase in the six months to the end of July, as stationery and soft toys helped profits soar in the six months to 31 July.
The retailer’s profits jumped from £14.3 million to £24.7 million, as sales grew by 11.5% to £220 million. Sales of stationery and soft toys, commonly sold at rival card retailer Paperchase before it went bust earlier this year, drove much of the growth. Clintons Cards has also struggled of late, closing 38 stores in order to stay afloat.
The shares lost 5.6% this morning to 105p, which AJ Bell investment director Russ Mould put down to profit-taking after they more than doubled in value over the last year.
Christmas is a key period for the card retailer Card Factory (Barrington Coombs/PA)
/ PA Archive“The numbers themselves are impressive and show there is still a place for keenly priced greetings cards and gifts in the market,” he said.
Acquisitions boost sales at AG Barr
Irn Bru maker AG Barr today recorded another jump in sales as a string of acquisitions help strengthen its bottom line.
Revenues for the six months to the end of July rose 33.2% to £210 million, led by a near 40% jump in soft drink sales, while pre-tax profits climbed 12.6% to £27.8 million.
But sales of its Funkin cocktails brand held flat amid a real-terms contraction in the size of the cocktails market.
Departing chief executive Roger White said of cocktail sales: “Last year was a strong period, post-lockdown there were lots of young folk in bars and clubs.”
“But a combination of the cost of living crisis and poorer weather means the market is now more subdued. But I think it’s just a moment in time.”
The firm, which acquired energy drink company Boost and oat milk brand Moma in December last year, said it was continuing its search for opportunities to expand its portfolio.
AG Barr upped its dividend 6% to 2.65p per share. Its stock rose 2.1% to 495p in early trade.
FTSE 100 struggles, Burberry and Smiths lower
The FTSE 100 index has fallen 25.35 points to 7598.64, with Burberry, Marks & Spencer and Whitbread among the blue-chip stocks down 1% or more.
Barclays led the risers board, improving 3.2p to 156.2p after analysts at Morgan Stanley upgraded the bank to “overweight” with a price target of 230p.
Industrial conglomerate Smiths Group opened 8.5p lower at 1658p, despite a big jump in 2023 profits and its confidence in delivering revenues growth of 4%-6% for the current year.
Results by consumer-focused AG Barr and PZ Cussons helped their shares rally by more than 2% in a session when the FTSE 250 index came under pressure.
In the FTSE All-Share, ASOS fell 3.9p to 382.9p after forecasting annual earnings towards the bottom of its expected range.
Thames Water hit hardest as regulators force the sector to return £114 million to customers
Thames Water has been hit hardest as industry regulators force utility firms to return £114 million in total to customers next year.
The rebate will come in the form of lower bills and follows an assessment at Ofwat of targets for water companies for 2022/23.
The watchdog found that the performance of London’s water provider was “lagging behind” its targets. It will take the hardest financial hit, reducing bills by around £100 million.
David Black, Ofwat CEO said: “The targets we set for companies were designed to be stretching – to drive improvements for customers and the environment. However, our latest report shows they are falling short, leading to £114m being returned to customers through bill reductions. While that may be welcome to billpayers, it is very disappointing news for all who want to see the sector do better.”
Thames Water has 15 million customers in the capital and around the south east and is the biggest supplier in the country.
A company spokesperson said: “Our customers expect a great service from us every time, and we’re sorry when we fail to deliver at the first opportunity. In 2022-2023 , we met 55% of our annual performance commitments. While it is our job to deliver our services whatever the weather, our performance last year was severely affected by the summer drought and December freeze/thaw event.”
Six other companies were put by Oftwat in the “lagging” category: Anglian Water, Dŵr Cymru, Southern Water, , Yorkshire Water, Bristol Water and South East Water.
ASOS profits at bottom of expected range as wet summer weather hits sales
ASOS said profits are likely to come in at the bottom of its expected range, after the wet summer weather contributed to a 15% sales decline at the fast fashion brand.
The business had already anticipated a sales decline as it attempts to restore margins following a tough start to 2023, but it said the wet weather led to “a deterioration in the UK clothing market”.
The group now expects profit for the year to be at the bottom of its £40 million to £60 million range. It has taken a number of steps to improve future profitability, with its profit per order now 35% higher thanks to steps to “improve the behaviour of our least profitable customers”, who tend to use buy-now-pay-later services and return clothes at high rates.
The bottom-of-guidance profits may be cheered by short sellers, who have made ASOS by far the City’s most bet-against stock in recent months.
Poor run for Asia markets continues, sterling and Brent Crude lower
US markets closed in positive territory for the first time in five sessions yesterday, led by a rise of 0.45% for the technology-based Nasdaq Composite.
The improvement came despite the 10 year US Treasury yield ending the day at a post-2007 high of 4.53% as traders reacted to last week’s message from the Federal Reserve that interest rates are likely to stay in restrictive territory.
The FTSE 100 index yesterday fell 0.8%, driven by a combination of rising bond yields and weakness for mining stocks after China’s Evergrande said its debt restructuring plan had run into difficulty.
CMC Markets today expects London’s top flight to open broadly unchanged at 7622 after Asia markets failed to benefit from the stronger Wall Street session.
Hong Kong’s Hang Seng index is down another 0.9% today and on course close at its lowest level since November.
Meanwhile, the strengthening of the dollar has continued to leave the pound below $1.22 at its lowest level since March. Brent Crude stood at $92.50, a decline of 0.8% on fears that high interest rates will curb economic demand.
Recap: Yesterday’s top stories
Good morning. Here’s a summary of our top headlines from yesterday:
