Wetherspoons bring back dividends, Watches of Switzerland goes shopping and Spirit Airlines’ shares dive

“All eyes are on US jobs numbers later today as the data could provide an important clue as to the Federal Reserve’s next steps with interest rates,” says Russ Mould, investment director at AJ Bell.

“The consensus forecast is for 140,000 jobs to have been added during September, roughly in line with the previous month. If that proves correct, it will signal to the Fed that the labour market isn’t in the danger zone and another half percentage point rate cut at the next meeting might not be needed. However, the Fed would still be keeping a close eye on the jobs market in that situation because the loss of momentum might be a precursor to weaker data next time round.

“Oil prices continued their ascent, rising another 0.8% to $78.21 per barrel and putting the commodity at its highest value since August. This is good news for oil producers but bad news for millions of companies and consumers as they face higher energy and transport costs.

“Shares in Spirit Airlines dived 35% in pre-market trading on reports of a possible bankruptcy filing. It looks like a classic case of an airline in a highly competitive market not making any money and being saddled with debt that is struggling to be serviced.”

JD Wetherspoons

“In some respects, the big increase in profit announced by pub chain Wetherspoons is a red herring, as part of it related to pub disposals.

“However, the company did achieve resilient trading and has brought back dividends for the first time since before the pandemic. While the amount might be fairly nominal, investors will still be pleased by the signal it sends, offering reassurance despite what is a sizeable debt pile.

“Wetherspoons deserves credit for navigating a tricky period of weak consumer demand as well as the poor weather and rioting which blighted the summer.

“The company thinks it can sustain 1,000 pubs and this kind of transparency is welcome, making it easy for the market to assess the scope for expansion from the current estate of 800 sites. Another lever the business can pull is to upgrade existing premises by adding garden spaces and expanding into adjacent buildings. 

“An interesting area in which Wetherspoons has only dipped its toe in the water thus far is franchises in sites like student unions or holiday parks. This could allow it to grow without expending lots of capital, but it will be mindful of the risks of cannibalising its existing sales.

“Robust trading has continued into the current financial year albeit with skinny guidance on the outlook. For now, Wetherspoons’ status as one of the great survivors of the hospitality space remains intact.”

Watches of Switzerland

“Retailers can no longer rely on simply stocking products on a shelf or selling them through a website. They need to find additional ways to attract, engage and persuade the shopper to part with their cash. That’s why Watches of Switzerland has bought a media company which acts as a gateway for luxury watch fans.

“The more people read about a topic, the greater the likelihood they will want to spend money on a relevant product or service – or so the theory goes. This technique is used in a wide range of industries, from computing to betting, and people’s addiction to smartphones means there is growing desire to consume digital content.

“Watches of Switzerland buying Hodinkee makes perfect sense. It obtains another channel by which to capture interest from people who like posh watches, and that becomes a platform to get them to transact and buy insurance as well.”

These articles are for information purposes only and are not a personal recommendation or advice.