Spreadex Market Update
Burberry bleak after China-hit, but WH Smith sees full year happy ending
The FTSE re-crossed the 6300 mark it had given up yesterday, seeing a 45 point gain as its commodity stocks rebounded from their start of the week losses. The UK index’s growth could have been much stronger, however, if it wasn’t for the less-than-luxurious release from Burberry. The ‘increasingly challenging environment’ in China claimed another victim this morning, as the fashion house posted a mere 1% increase in half year group sales, well below the 5% expected and, in a sign of just how bad things were in the second quarter, a sharp drop from the 6% jump seen in Q1. Given that Hong Kong comprises a tenth of the company’s sales a fall was to be expected; the extent of the fall, however, was an unpleasant surprise for investors, causing Burberry to plunge nearly 12% to £12.55 after the bell, a price not seen since April 2013.
It wasn’t all doom and gloom for UK retailers; train station and airport mainstay WH Smith announced a better than expected 8% increase in full year pre-tax profit to £121 million this Thursday, lifted by a 4% rise in sales at its travel stores and a slowed-down slowdown in its high street store sales due to the successes of ‘Grey’, ‘Go Set a Watchman’ and, interestingly, the adult colouring book craze. This helped push WH Smith up by nearly 3.5%, just shy of £16 and only around 40p away from its all-time highs.
The Eurozone indices had the same nascent green air as the UK index this morning, with the DAX jumping 50 points (and only 20 away from 10000) and the CAC climbing a slightly less robust 13 points.
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