Dunelm profits expand in tough market

 

Adam Vettese, Market Analyst at investment platform eToro, says: “Dunelm has managed to grow its profits against a backdrop of inflationary pressure and freight issues affecting the retail sector. Despite inflation easing to some degree the market was softer than last year with competition heating up for retailers to scoop up consumers’ discretionary spend.

“The firm has also been expanding its network of stores which is evident in the level of debt creeping up as this is not a cheap endeavour, but does suggest growing profits for the long term which is what investors will want to see.

“Dunelm will look to keep up this momentum and continue to grow market share in spite of the challenges market conditions provide. Shares are not far off their 2023 high and investors will want to see them to push on towards their post-Covid record.”

 

WHSmith announce £50m share buyback as strong travel demand boasts retailers financial position

 

Mark Crouch, Market Analyst at investment platform eToro, says: “It’s no secret amongst WHSmith shareholders that following the pandemic the retailer’s travel arm has more or less dominated the company’s earnings. The post-Covid travel boom encouraged WHSmith to double down on the sector, investing in more stores in airports, train stations and service stations across the UK, the US and around the globe.

“This morning’s trading update reaffirms that case, as once again WHSmith’s travel business has played a dominant role for the company as peak summer travel demand boasted the retailers’ revenues and overall financial position, leading management to announce a $50m share buyback this morning.

“While inflationary pressures still pose a threat to retailers, high street retailers are particularly vulnerable. With most WHSmith high street stores larger than the company’s travel sector counterparts, and now experiencing noticeably less foot traffic, the cost of operation is becoming skewed, leading the retailer to speed up the transition toward a travel-focused business. And given the prolonged success of WHSmith’s travel business, shareholders will likely be in full support of it.”

 

Manchester United achieves revenue win, but takes an L for earnings

 

 

Mark Crouch, Market Analyst at investment platform eToro, says: “The message when co-owner Sir Jim Ratcliffe arrived at Manchester United Football Club earlier this year was that his investment was about success on the field and nothing to do with return on investment. While that may have been music to the ears of supporters of the club, it’s not a particularly encouraging message for shareholders.

“It may then come as some reassurance for investors that the company has reported such a buoyant topline, with records achieved for full-year commercial and matchday revenues, despite significantly fewer home fixtures played than the previous year.

“Many metrics of demand for brand Man U are booming, including the length of the waiting list for season tickets and the number of global paid memberships. By these measures, the club is more popular than ever, but there remain some reasons for concern, not least of which is the size of the loss for its fiscal fourth quarter.

“Although the club put into place efficiency drives in 2024, it seems unlikely the cost savings will positively impact the bottom line, as they are ‘anticipated to contribute towards investments in football and other club projects’. One reading of this is that what savings have been made from reducing headcount throughout the non-playing operations club will be swallowed up by servicing wage packets for the playing staff.

“Furthermore, revenue will take a hit next fiscal year from the failure to qualify for the Champions League, while looming on the horizon is the thorny problem of what to do about the aging Old Trafford. Whether this results in a new stadium or a redevelopment of the existing one, the costs will be significant either way.”





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