Spoons bracing for budget impact

 

Adam Vettese, market analyst for eToro says: “Wetherspoons has reported resilient first quarter sales, which grew 3.4%, outperforming the broader industry for 37 consecutive months. Total sales increased 4.2% driven by strong bar and gaming revenues showing that despite the increased cost of living it seems Britain is still showing up at the pub for a pint.

“However, the company adopts a more cautious tone ahead of the UK budget announcement, as significant cost inflation pressures remain a concern. Management expects an additional burden from wages and national insurance hikes, alongside rising energy expenses which will challenge margin stability despite sales momentum.

“With the budget coming up, any tax hike in alcohol duty could also sway punters to stay at home with some cheaper supermarket tipple than venture out to their local Wetherspoons. The company maintains expansion plans and shows resilience despite the headwinds it faces. Shares have been declining sharply since the summer, and investors may want to take stock after the upcoming budget before deciding to bet on any turnaround.”

 

 

Momentum lost as M&S counts the cost of cyberattack 

 

 

Mark Crouch, market analyst for eToro says: “It had all been going so well at Marks & Spencer. But as chief executive Stuart Machin put it, the first half of this year was “an extraordinary moment in time for M&S”, and that’s putting it mildly. The retailer’s underlying profit slumped 55%, laid low by the fallout from April’s cyberattack that crippled its website and halted online clothing orders for seven weeks. Click-and-collect services were down for nearly four, and food operations weren’t spared either.

“The damage shows most starkly in fashion and home, where profits collapsed by more than 80% to £46.1 million, and sales tumbled 16.4% to just under £1.7 billion. It’s a bitter blow for a brand that had been flying high, finally shaking off its dowdy image and delivering the kind of retail renaissance investors had only dreamed of. That the share price has held up so resiliently is testament to the strength of the turnaround before the hack, but 2025 now looks like a year of what-ifs.

“Rival Next has raced ahead this year, and in another universe, M&S might have been right alongside it. Christmas offers a chance to get back on track, but the momentum has gone, and this festive season, more than ever, M&S can’t afford to put a foot wrong.”

 

 

Improvement at BP, but still more work needed
Chris Beauchamp, Chief Market Analyst at IG: “BP’s latest quarter was a solid if unremarkable affair. Underlying replacement cost profit came in at $2.2 billion, with strong cash flow helping to offset a higher tax bill and weaker trading performance. Refining margins have improved and production is moving in the right direction, but this is steady progress rather than anything spectacular. For investors, the consistency will be welcome, but the question is whether there’s much upside left in the shares without a meaningful rebound in energy prices or a return to stronger trading.”
ABF considers Primark spin-off as sugar struggles

 

Adam Vettese, market analyst for eToro says: “Associated British Foods full year results reflect a mixed performance amid challenging conditions. Primark showed resilience with 1% sales growth and slight margin improvement, driven by ongoing store rollouts in Europe and the US, alongside investment in digital and brand initiatives. However, like for like sales declined, reflecting the current cautious consumer sentiment. The ingredients division also delivered solid profit growth, benefiting from cost control and productivity gains.

“Conversely, the sugar business remains a major drag, swinging to an operating loss due to low European prices and high costs, significantly weighing on group profits which fell by 12%. Grocery and agriculture faced pressures with restructuring underway, and overall cash flow deteriorated as net debt rose.

“A notable strategic highlight is ABF’s board consideration of a potential spin-off separating Primark from its food businesses. This move aims to unlock shareholder value by distinguishing the higher growth retail brand from the more complex food operations, potentially enhancing market understanding and investment appeal for both.

“The share price reacted negatively to the previous trading update and whilst recovering since, has been volatile this year. Yet, ABF’s long term case remains supported by Primark’s expansion potential, ingredients’ steady performance, and the strategic review. Investors will watch closely for margin stabilisation and progress on restructuring as key catalysts for further gains.”

 

 

Barratt shares escape selloff despite disappointing update
Chris Beauchamp, Chief Market Analyst at IG: “Whisper it quietly, but maybe UK housebuilder shares are finally pricing in enough bad news. There wasn’t much joy in today’s update from Barratt Redrow, but the calm reaction amid a broader tech selloff suggests maybe investors are prepared to give the sector the benefit of the doubt for now. Having only gained 10% from the 2022 lows, perhaps the market is hoping the Budget, likely to be tough for everyone, will at least provide some clarity and let homebuilders focus on the future.”


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