Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
They say old habits die hard. And a year into the pandemic and all those home-brewed - or most likely sachet coffees, as noted by the ONS in its latest ‘basket of goods’ survey - and takeaways may prove to be very hard habits to kick.
That though would be very good news at least for Nestlé, which has seen sales boom as locked-down Brits have snapped up its Nespresso pods, Nescafé instant coffee and Starbucks-branded products.
Such is the surge in home coffee drinking that sales at Nestlé increased faster than expected in the three months to March, helping the world’s largest foodmaker see sales rise 7.7%, beating last year’s 4.3% and easily topping the 3.3% analysts had forecast.
As for takeaways, well Domino’s, the UK pizza group, has just posted its biggest rise in like-for-like sales since the pandemic began. A trading update released today (Thursday) saw revenues jump 18.7% year-on-year to £371.3 million, after “exceptional” sales in the first three months of 2021.
It seems pretty obvious that with most of us being forced to stay at home, hospitality shut for months on end and eating and drinking preoccupying much of our waking hours, these would be obvious beneficiaries of the pandemic.
It’s not all treats and pick-me-ups though that have seen trade booming during the pandemic. Pest control and hygiene company Rentokil has seen first quarter revenues jump more than a third in North America, on the back of demand for one-time disinfection services.
In today’s trading update the company said its overall revenue rose to £714 million in the first three months of the year, up 13% on the same period last year.
And, of course, as we know, not all businesses have boomed either. Although with hindsight, some of the casualties are more obvious than others. Informa, the world’s largest exhibitions business, lost £1.1 billion before tax last year, with the pandemic leaving it with no option but to cancel events.
Event cancellations saw revenue drop 43% to £1.66 billion in the year to December, leaving adjusted pre-tax profits, so excluding Covid-related charges and costs, at just £170 million, compared to £821 million the previous year.
The FTSE 100 company said it had taken a £593 million impairment charge on several of its brands due to the “impact of Covid-19 on the long-term trading outlook for our physical events”.
Informa has labelled 2021 a “transition year” with it expecting - or hoping at least - that physical events will make a come-back as customer confidence is rebuilt. Its revenue forecast is equally lacking in confidence, suggesting £1.7 billion, or thereabouts, will be what it makes in the next financial year.
And then of course there is Netflix. The pandemic is still far from over, yet already Netflix has seen a sharp slowdown in subscriber numbers. Only 4 million signed-up in the first quarter. At the end of March it had 208 million customers globally, lower than the 210 million it had expected to have on its books.
That is a big turnaround from the pandemic stay-at-home wave that Netflix had been riding at the start of all this, when staying home and binge-watching was the nation’s second-best thing to do, other than eat and drink.
Worryingly too for Netflix and its investors, things don’t look set to improve in the second quarter either. It said it only expects to get a million new subscribers and for the customer base in North America, its largest market, to remain “roughly flat”. It will have to hope this forecast, unlike the Q1 figures, doesn’t look overly-optimistic with hindsight.
Not all of this is pandemic related though in the case of Netflix. There is also the issue that competitors are going to be increasingly nipping at its heels and that ultimately has to take a bite out of its market share.
That has also been the case at Renault, where first-quarter sales were hit by a global chip shortage but currency fluctuations also had a negative impact.
Revenues at the French carmaker fell 1.1% to €10 billion as the company said its policy of raising prices tempered the decline caused by the coronavirus pandemic. But it is perhaps the currency changes that have had the most impact. Renault said sales would have risen by 4.4% had it not been for currency fluctuations.
Picking a winner seems easy, especially with hindsight. We now know what we were spending our time and money on during lockdown. But it hasn’t always been so easy to get right. Domino’s Pizza even shut down all its outlets at the start, as there were concerns about whether food could even be safely made and sold to customers at all during a pandemic.
Much has been learned over the past 12 months and there is constantly something to learn in these changing times. Primark-owner, Associated British Foods, must have questioned whether its absolute refusal to jump on the online fashion bandwagon was really the right decision when its shops had been shuttered nationwide for another four months or so and its lost sales hit the £1 billion mark. Yet, how the situation can change and a week after reopening, customers are back and cannot get enough.
Netflix has seen how things can change and the likes of Domino’s, Nestlé and indeed Rentokil will inevitably all see shifts in trading patterns as the pandemic works through.
As investors, being an active stock picker as well as investing in a broad range of shares and indeed asset classes, will be the best way to play the recovery. Drip-feeding money into the market and staying invested too will help ensure you benefit from any upswings in the market, while minimising losses from the inevitable lessons we will learn along the way on this journey out of the pandemic and into whatever new world lies ahead.
Important information: Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to a Fidelity adviser or an authorised financial adviser of your choice.
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