This week’s market movers - AB Foods, Renault, Walgreens & Delta Airlines

THE company earnings spotlight was fixed firmly on the retail sector this week. And, as expected, the smart money was on the companies serving the budget end of the retail scale. First up was Primark-owner Associated British Foods (ABF), which contrary to its April sales growth warning, turned in a 13% rise in sales.

No surprise in the current economic climate perhaps, but cost-conscious consumers, who are, after all, Primark’s bread and butter, are keeping the tills ringing. The no-frills fashion retailer, which has still only the most basic of online presences, saw sales rise 13% in the third quarter to £1.99bn for the 12 weeks to 27 May 2023. Like-for-like sales were up 7%, which it credited to “higher average selling prices”.

Primark’s global expansion into Slovakia and with the signing of its first lease on a store in Texas, means the Primark brand is now in 16 countries - all predominantly reliant on good old, in-store shoppers. ABF’s shares are up 21% on the year.

Discount retailer B&M (BME) also came up trumps, reporting a 13.5% increase in quarterly revenue, on the back of ‘strong profitable trading momentum’ as it attracted an increasing number of squeezed consumers with its bargain prices. Earnings for the current financial year are now expected to top the £573m it made last year. Profit-taking saw its shares fall though this week, but they’re still more than 40% up on this time last year, so not the bargain they once were.

It was a very different results story at Mulberry (MUL) though. The luxury goods maker, that had been due to post its annual results a week earlier, furtively pulled a drop in profits out of the bag. It blamed rising costs on underlying profits falling from £14.6m to just £2.5m in the year to April. That was after UK sales slipped to £87.7m from £88.5m. Pre-tax profits came in 38% lower at £13.2m. This leather goods maker, which closed its flagship Bond Street store in February after 27 years, is looking a little battered and beaten right now. As had been anticipated, the international business was the outperformer with sales up 12% to £46.5m.

Shares in Renault (RNO) had a bit more va va voom this week after the French carmaker upgraded its full year guidance and said it had managed to lower costs.

One stock that didn’t though was US-traded Walgreens Boots Alliance (WBA), owner of Boots the chemist. The group slashed its full-year profit forecast and announced plans to close 450 stores - 300 of them in the UK - which sent the share price plunging.

Citing a "more cautious macroeconomic forward view," Walgreens cut its full-year adjusted earnings per share guidance to between $4.00-$4.05 from a previous forecast of $4.45-$4.65. Walgreens shares are currently trading around $28.

Staying in the US, the prospect of a strong summer season for the travel sector as a whole, after Delta Airlines (DAL) gave a positive update for the year, saw shares in fellow airlines United Airlines (UAL) and American Airlines (AAL) take off too.

Five-year performance

^{Source: FE, total returns in GBP from 29.6.18 to 29.6.23.}

Past performance is not a reliable indicator of future returns.

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