Daily market update: Domino’s Pizza, Hilton Foods and Treatt, Kingfisher

UK stocks are shaking off a dicey end to last week as increased hopes of a pre-Christmas interest rate cut from the Federal Reserve give stocks on both sides of the Atlantic a boost.

Tech stocks powered the recovery on Wall Street yesterday and fostered hope of a Santa Rally as we approach the beginning of December. Google-owner Alphabet is closing in on a $4 trillion valuation as enthusiasm builds around its Gemini 3 AI model and its custom chips.

Commentary from Fed officials has hinted investors might get the festive gift of a rate cut after all, despite hopes for such a move having started to evaporate in recent weeks.

Asian stocks largely took their cue from the optimistic vibes in the US, with sentiment also supported by positive noises around a discussion between President Trump and Chinese President Xi Jinping on trade.

Reports that UK banks might get a reprieve in this week’s Budget from previously floated new tax measures helped give the likes of Lloyds, Barclays and NatWest a lift and underpinned the FTSE 100’s rise on Tuesday.

It suggests that some intense lobbying by the industry has paid off, although U-turns have been a theme in UK politics for some time so banking boardrooms may not breathe a full sigh of relief until Rachel Reeves has sat down tomorrow afternoon.

Domino’s Pizza

It says a lot when a veteran of the Domino’s Pizza empire is deemed not good enough to run the UK version of the company. This looks like a situation where the board are sending a message to the market that something radical must change.

Andrew Rennie took the top job two years ago, bringing oodles of experience from running the pizza group in various parts of the world. One could call him a pizza lifer, having opened his first franchise Domino’s store in his mid-twenties. The board of the UK operations and Rennie have mutually decided he should no longer have a slice of the action.

The clue lies in the miserable share price performance since he took the reins. Behind closed doors, it’s possible the board was coming under pressure from shareholders asking why strategic actions aren’t resonating with the market. Ultimately, investors hold the shares to make money, and over the past year their wealth in the company has melted away faster than an ice cream on a hot day.

Rennie helped to smooth relations with disgruntled franchisees, and drive efforts to make lunchtimes less quiet through broadening the product range to include wraps. More recently, he has capitalised on existing supply chain relations to broaden out into baked chicken. On paper, this is about doing more with what the business already has. However, the market doesn’t seem to think it is the right thing to do, given the two-year slide in the share price.

Domino’s is trying to adapt with the times as competition for fast food is intense, and consumer tastes are evolving. Healthier eating habits, as well as appetites being diminished by weight-loss drugs, means Domino’s is in a precarious position. Greasy pizzas might be everyone’s dream after a few pints in the pub, but they’re increasingly off the menu for many other people.

Hilton Foods / Treatt

The revolving doors are spinning fast with small and mid-cap companies. In addition to Domino’s Pizza parting ways with its CEO, there are also leadership changes at Hilton Foods and Treatt.

Steve Murrells has left Hilton Food following a profit warning linked to weak fish demand and ongoing problems with a smoked salmon business. While demand issues were arguably out of Murrells’ control, the board might have felt the lacklustre share price progression since 2024 was indicative of a company whose earnings growth has gone stale.

There are also leadership changes at Treatt. Having seen shareholders vote down a takeover, the ingredients specialist will have taken a hard look at what the business should do next. Boss David Shannon hasn’t been in the role that long but might feel under the circumstances that someone else is better suited to taking Treatt to the next level.

Kingfisher

Upgraded profit guidance has given a boost to Kingfisher’s shares. Normally, guidance for softening market conditions in two of its key territories would be enough to spook the market. However, investors have focused on the upgraded earning expectations which have been driven by strategic projects and a tight control of costs.

Kingfisher has been pushing hard on physical sales to tradesmen and online sales to consumers. The roll-out of a marketplace service means it can offer greater choice to customers and that appears to be resonating with DIY fans.

The big unknown is whether the Budget hampers Kingfisher’s comeback efforts. Any unfavourable policy decisions could cause consumers to think twice about spending, putting off home renovation projects until they’re more confident about their personal finances.

EasyJet

EasyJet may have beaten expectations with its full-year results but limited visibility on the outlook and warnings of cost inflation mean the shares struggled to gain much altitude.

An acknowledgement that profit in the airline business is not improving as fast as originally anticipated was always likely to be poorly received.

One bright spot is the performance of the package holidays division – with EasyJet’s foray into this area looking increasingly smart. These operations are typically less volatile and higher margin than flights and therefore provide some useful ballast and diversification for EasyJet.

As a well-established brand, EasyJet had a head start when it launched the holidays arm in November 2019. The pandemic interrupted progress but the company has been in catch-up mode ever since and, impressively, has hit its medium-term profit target of £250 million early. For context, in 2022 this part of the group made a profit of £38 million.

This lends credibility to a goal of achieving £450 million in profit from holidays by 2030 and also underpins its goal of getting to £1 billion in annual profit for the business as a whole.

This remains a challenging sector to operate in thanks to geopolitical tensions, volatile fuel costs and uneven consumer sentiment and there could be further turbulence to come. However, EasyJet looks in decent shape to navigate these challenges thanks to its buoyant holidays business and robust balance sheet.

Next

Next’s peers must look on with increasing envy at the sector star, which is as dominant in the UK retail space as Paris St-Germain is in the French football league.

Even Next’s accidents seem to be happy ones. Having purchased land for a distribution centre in Waltham Abbey a few years back and then faced significant local opposition to the plans, Next has changed tack and offloaded the land.

This has resulted in a healthy cash injection which will boost the company’s special dividend, leaving shareholders feeling happy about life heading into the key festive trading period.