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A host of retail and consumer goods giants are due to post results in the week ahead.
On Tuesday it’s the turn of Irn Bru-maker AG Barr (BAG). Whether the fizz has gone flat at the drinks maker since lockdown remains to be seen. But it looks that way. Back in July the company estimated that revenue would be down by between 12% and 15% for the year, as long as we don’t see another nationwide lockdown.
On a more positive note though, a fall in half-yearly sales was accompanied by news of a slow recovery in hospitality and 'on the go' consumption segments as lockdown measures had eased.
For the 26 weeks to 25 July 2020, revenue was expected to be down 8% to £113 million year-on-year, with the complete closure of the hospitality sector and a material reduction in the 'out of home' consumption of soft drinks weighing heavily on performance. But as lockdown measures had recently started to ease, the company said it was seeing sales in the hospitality and 'on the go' consumption segments beginning to recover, albeit slowly.
There have been no broker updates since Spring, when Liberum Capital upgraded its investment rating to buy from hold and raised its price target from 580p to 625p, Berenberg reiterated its hold rating but cut its price target to 450p, from 550p, and HSBC repeated its reduce rating and cut its price target from 520p to 430p. Barr’s shares are currently trading around 375p.
We also get half-year results from DIY giant Kingfisher (KGF) on Tuesday, which has seen a raft of positive broker recommendations in the run-up to those.
With a nation in lockdown and ample time on their hands to tick-off all those put off ‘must do’ DIY tasks, sales boomed and the group said it expects half-year adjusted pre-tax profits to be ahead of last year.
Like-for-like sales were up 21.6% for the second quarter to 18 July, though for the year to 18 July they were down 3.7%.
Expect a full date on Tuesday.
In the meantime, broker RBC Capital Markets recently reiterated its outperform rating on Kingfisher and raised its price target to 335p, from 325p. Morgan Stanley remains overweight on the stock and has raised its price target from 290p to 320p. While Credit Suisse has upgraded its investment rating to outperform and raised its price target to 290p, from 255p.
With people forced to stay at home and little to do except binge boxsets and beautify their homes, furniture retailer DFS Furniture (DFS) also said recent trading had been stronger than expected.
The company said that since a previous update on 14 July, it had continued to trade 'strongly' both online and in its showrooms. Year-on-year order intake growth over the past six weeks was equivalent to about £70m of revenues.
In a statement it said: “This trading is significantly ahead of our initial expectations and is in addition to our previously announced strong opening order book that will generate a further in year revenue benefit of about £100 million.”
Expect more of the same when DFS posts full-year results on Thursday.
Finally, on Friday we get full-year results from Imperial Leather to Carex-maker PZ Cussons (PZC).
Somewhat disappointingly for a company that makes soap and hand sanitisers, 2020 has not seen a marked turnaround in fortunes. Since the pandemic took hold, not even ample sales of soap and other Covid-beating essentials like hand sanitiser, are likely to have been high enough to see the group end the year back on track.
First-half profits at the global consumer goods group were already down on the previous year, predominantly on the back of tough trading conditions in Nigeria and tightened consumer spending in Australia and the UK.
Having already been suffering from “consumer fragility”, long before the pandemic took hold, as consumers tightened their belts, the double whammy of that plus Covid appears to have continued to hold it back.
Cussons says the impact of Covid-19 continues to be significant and varies depending on business unit and market. In Europe and the Americas, its Carex brand has benefitted from a significant increase in demand towards the end of the quarter driven by the Covid-19 pandemic. But overall revenue has fallen during the third quarter of 2020 when compared to last year.
The company said its full-year profit guidance is still within consensus range, albeit at the lower end, while its balance sheet remains strong.
New chief executive Jonathan Myers, who joined from Avon Products, has a tough job on his hands in a decidedly uncertain economic climate worldwide.
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