SuperGroup
Margin guidance flat year-on-year
It was entirely predictable that the unusually warm conditions in the autumn, which floored several of the general retailers and had investors heading for the exits, would be followed by a colder spell. This happens all the time; it is called weather.
So Debenhams noted on Tuesday an improving performance as the winter progressed. SuperGroup, which put out its own weather-related profits warning in October, just after Euan Sutherland joined as chief executive, rushed out its Christmas trading statement early to allow analysts to upgrade their numbers.
SuperGroup announced a 4.1 per cent fall in like-for-like sales in the half-year to the end of October. Since then, like-for-likes have risen by 12.4 per cent. Part of this is because the halfway numbers were up against some tough comparators a year before. SuperGroup, though, is especially exposed to the weather because of its concentration on coats, hoodies and woollens. Sales grew as the cold weather kicked in, and it also had the advantage of pre-Christmas gift-buying.
This suggests some further good news from the high street as other updates trickle in. For the company, the damage was limited, with not too much price-cutting needed to shift excess stock. SuperGroup’s strategy is not to discount in its stores proper, but to use outlets to shift unwanted stock. There was little impact from the collapse of Bank, one of its biggest wholesale customers, which went into administration this month. SuperGroup is not owed anything, but some stock is tied up in the liquidation process and it will need to find new buyers for the spring and summer ranges that would have gone to Bank.
The shares have been an erratic market. There have always been concerns about the high multiple they have commanded and any negative news has been taken badly.
The SuperGroup story is all about growth in Europe and Scandinavia and into new markets such as the United States, where it may use its cash pile to buy back licensing rights to the Superdry brand, and one day China. The shares, up 84½p at 896p, still sell on 15 times earnings. Under new management and with those growth prospects, they look like worth tucking away.
My advice Buy long term
Why Shares have fallen a long way, to a point when profts multiple looks reasonable. Prospects for growth are strong, especially outside UK
Fenner
£9m expected annual cost savings
It takes some doing, in yesterday’s difficult markets, for a company with exposure to oil and gas and commodities to put out a warning over future prospects and actually see its share price rise. Indeed, Fenner shares were off in early trading, as the company indicated that the lower oil price would have an impact on its advanced engineering products division. Its conveyor belts business has been hit by the general malaise in mining and pressure from Australian customers to cut prices.
Yet the shares ended up 12¼p at 213p after the company indicated that it was responding to these pressures by battening down the hatches, cutting annual costs by £9 million and hauling back on any capital spending that is not already committed. Nevertheless, Fenner shares have come back from almost £5 at the start of last year.
The main reassurance was on prospects for the dividend, which, given that effort to preserve cash, looks safe. This means that the shares yield almost 6 per cent on last year’s expected payment, which suggests further downside is limited. I am not sure I would be in a hurry to buy, given the slow rate of recovery in those core markets.
My advice avoid
Why Core markets will take a long time to recover
Jupiter Fund Management
Assets under managment £31.9bn
Jupiter’s fourth-quarter numbers make little sense, bearing in mind the changes that are taking place at the fund manager, which explains why the focus is on the full-year picture.
The company is moving away from low-margin institutional mandates and toward selling mutual funds through intermediaries to the likes of you and me. These are relatively simple products, so growth can come at little extra cost by finding more intermediaries to sell them through and more markets, such as Europe and the Far East, to sell them into. Meanwhile, the company has exited its wealth management businesss by selling it to Rathbones, lost a big institutional mandate (where the client was seeking an unprofitable fee structure) and closed an investment trust.
The Rathbones numbers are not in the total, but the last two left behind a £626 million net outflow in the fourth quarter. This included
£309 million of new business won by those mutual funds, or £1.4 billion across the year as a whole.
The shares have had a difficult few months, falling back from well above £4 in the summer. This is despite a move towards higher dividends now that the debt from the buyout from Commerzbank in 2007 is paid off, including a 4½p extra payment from the Rathbones sale.
Jupiter is paying out about half of profits in dividends for last year, rising to 80 to 90 per cent in 2015, because of that low-cost expansion model. The shares, off 2¾p at 342½p, now yield 6.4 per cent on this year’s projected payment. That looks like a good enough reason to buy.
My advice Buy
Why Both yield and low-cost growth model are attractive
And finally ...
Shares in Ashtead Group have been falling, along with other equipment rental providers, on the assumption that the collapsing oil price would affect large oil and gas projects and hit revenues.
Not so, according to a note from Jefferies. Cheap oil should boost industrial production and so capital spending. Transport costs will fall and, in addition, Ashtead is gaining market share and should do well from the strong dollar and translation of its US earnings. Not that the shares could do much in yesterday’s dire market.
