“Markets are scenting recovery as a bumper crop of results out this morning demonstrates resilience and, in some cases, a full-on return to pre-Covid trading,” comments Danni Hewson, AJ Bell financial analyst.
Optimistic outlook – French Connection
“Shares in fashion retailer French Connection have risen despite revenue falls of more than 40 per cent. Lockdowns have been brutal but the business that has fought its way through is now leaner and early sales figures from this reopening are positive. Its ecommerce business has burgeoned, bricks and mortar rents have been renegotiated on more favourable terms and it’s become a desirable commodity once again with a number of interested parties considering making a bid.
“Survival was clearly the first concern, but French Connection’s management team have steered this ship through choppy waters which have sunk other retailers. It’s listened to the market and diversified its offer to capitalise on sales of leisure and home wear.”
Cutting losses – Dixons Carphone
“Dixons Carphone is making a clean break from its beleaguered travel businesses. Quick and brutal, 35 stores based at UK airports will close. Markets are weighing up this decision; the business was a profitable one, but the firm believes passenger numbers will take time to recover even after holidays resume and says that, coupled with the loss of VAT-free shopping, has forced their hand.
“Elsewhere the business is booming. Government support has been repaid and sales have continued to grow both in and out of lockdown. Cutting the chaff comes at a cost but with employees being offered alternate positions within the business it’s a cost that will be dealt with quickly.”
Boom time - Persimmon
“Whether it’s a dangerous bubble or a solid indicator of economic growth the housing market has hurtled into 2021. Housebuilder Persimmon has reported sales up a whopping 23 percent this year and 11 percent above the same period in 2019. And with average prices reflecting the national surge, the business is making more too.
“People are grabbing onto their “new normal” and for many that could involve a move, particularly if their working patterns have changed. Though new builds are excluded from some government backed mortgages, demand is so prodigious firms like Persimmon will have to work fast to keep up. A building boom is inevitable and this housebuilder is already salting the ground.
Markets
“London markets have had a quiet couple of days despite some good shows from three tech giants. Images coming out of India will make investors think long and hard about the potential for new variants to knock recovery off the tracks but across all sectors losses have been weighed and adjustments made for the future. Lockdowns have taken a toll but the businesses that have survived will be leaner and meaner and ready to fight.”
