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Sales at WH Smith (SMWH) were 1% up on a like-for-like basis in the 13 weeks to 30 May as its travel business continues to show strong growth.
Overall travel sales were up 8% in the period, representing like-for-like growth of 4%. WH Smith said its food to go range, which completed its rollout last summer, was a strong driver of growth. Gross margins also improved and its new store opening programme in the UK and internationally is “progressing well”.
The picture is less rosey on the high street, with total sales down 4% and like-for-like sales also down 4%. The decline was in line with management expectations and gross margin has improved despite the sales fall due to continued cost savings.
“We will continue to focus on profitable growth and cash generation while investing in new opportunities in both travel and high street that position us well for the future,” the company stated. “We remain confident in the outcome for the full year.”
The solid sales boost saw WH Smith’s shares jump 2.9% in early trading to 1,583p
Morning update
Just breaking at the time of publication is news that Nomad Foods has confirmed it is in talks to buy Findus Group as it continues its efforts to create a global food group. The acquisition vehicle founded by entrepreneurs Martin E. Franklin and Noam Gottesman said in a statement to the London Stock Exchange it was in early stage discussions with the frozen food producer to buy its continental Europe business and the Findus brand. It follows the completion earlier this week of Nomad’s anchor €2.6bn (£1.84bn) investment to purchase Birds Eye owner Iglo Group. Click here for the full story.
This morning also brings the BRC-Nielsen Shop Price Index for May, which has found that shop prices saw deflation of 1.9% in May unchanged from April.
Food reported annual deflation of 0.9% in April for the third consecutive month, while non-food deflation remained at 2.5% in May. On a 12-month average basis, the Shop Price Index reported deflation of 1.8%.
Overall food inflation has averaged -0.6% over the last six months having dipped into inflationary territory just once during the same period. Deflation in the Fresh food category accelerated to 1.9% in May from 1.4% in April, a new record low. Downward pressure was exerted by the meat, milk, cheese and eggs and oils and fats sub categories, all of which reported annual deflation, along with vegetables albeit to a lesser extent than in April. Convenience Food and Fish remained inflationary. Ambient food reported annual inflation of 0.5% in May after falling into negative territory in April.
The FTSE 100 has opened a touch lower at 6,921.2pts, but Morrisons (MRW) is continuing its surge this morning. The shares are up another 1.8% to 175.6p after yesterday’s strong trading thanks to positive Kantar figures (see below).
Elsewhere, it’s a mixed bag this morning – Sainsbury’s (SBRY) is up 1.3% to 248.2 and the tobacco companies are starting to recover, but Associated British Foods (ABF), SABMiller (SAB) and Coca-Cola HBC (CCH) are all in the red.
Yesterday in the City
The major grocery news yesterday was Morrisons return to growth in the monthly Kantar Worldpanel market share figures.
In the 12 weeks to 24 May, Morrisons sales were up 0.1% according to Kantar – it’s first growth since December 2013. The supermarket was 1.8% higher to 172.5p after the welcome boost, though it is still set to fall out of the FTSE 100 this week.
The other two listed supermarkets recorded a sales decline, though not as much as Asda. Subsequently Tesco (TSCO) fell 1.1% to 207.5p after its sales were 1.3% down, while Sainsbury’s was down 1.2% to 245.1p after its own 0.3% fall during the period.
Meanwhile, British American Tobacco (BATS) was 2.4% down to 3,506p after a Canadian court ordered the country’s three largest tobacco companies to pay C$15.5bn (£8bn) to smokers. Imperial Tobacco (IMT), which was also involved in the case, fell 2.9% to 3,210p during the day.
Other heavy fallers included Diageo (DGE), down 2% to 1,782.5, Reckitt Benckiser (RB), down 1.7% at 5,779p and Unilever (ULVR), down 1.4% at 2,833p.
All this, together with further concerns over the Greek economy, meant the FTSE 100 hit a three week closing low of 6,928.3pts – down 0.4% yesterday.
One of the few bright spots yesterday was the continued growth of PayPoint’s (PAY) share price, which shot up another 7.1% to 1,050p.
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