Interest rates back in the spotlight, Kellogg’s strikes balance for shoppers, Warner Bros. Discovery misses estimates and Under Armour impresses

“After the huge events of the past week it felt almost pedestrian to get back to the cut and thrust of rate cut expectations,” says AJ Bell Head of Financial Analysis Danni Hewson.

“The Bank of England proved reliable with its quarter of a percentage point cut though the single voice that called for a hold is likely to find more company in the months to come as inflation is once more expected to rear its ugly head.

“How hot things could get will depend on how far businesses feel able to push additional wage costs onto their customers and there is no shortage of companies already sounding the warning bell. Sainsbury’s chief Simon Roberts has today claimed that the increase in employers’ National Insurance contributions could cost the company £140 million, according to some reports.

“With the Fed expected to follow up its last bumper cut with a smaller quarter percentage point dip later today, the actions of central bankers which have loomed so large for so long have almost got lost in the rest of the news cycle.

“Investors are still trying to process what a Trump presidency is likely to mean for the global economy but at the moment Wall Street is primarily focusing on the potential upside, with markets enjoying another record-breaking day.”

Kellogg's

“Even with price hikes Rice Krispies maker Kellogg’s has managed to keep shoppers on side.

“That dance has been attempted by a whole host of businesses over the past couple of years and many have found they’re stuck with two left feet.

“So far, the lure of a favourite breakfast cereal has been enough to keep consumers reaching for their favourite brand rather than trading down. But sales growth for the full year is expected to be at the lower end of previous forecasts, something which is being mitigated by lower costs thanks to some serious reorganisation in the supply chain.

“Shoppers have demonstrated that they are prepared to stretch their budgets and for many parents being able to do an end run around table tantrums is more than enough incentive to splurge on their children’s favourite snacks.

“Though there does come a point when costs go too far or pack sizes become too small and consumers start to balk, something Kellogg’s bosses will be hyper aware of.”

Warner Bros. Discovery

“There was quite a bit for investors to appreciate in Warner Bros. Discovery’s latest earnings update.

“The performance of its streaming service was a real high point, bolstered by a summer of sport, extra subscribers and the falling cost of content. But the company’s studio really missed the Barbie-factor over the summer and its revenue slump meant the company missed estimates.

“On any other day shares might have taken a tumble even with the chunky subscriber growth, but this is the world of Trump 2.0 and investors are betting the president-elect will be more amenable to some serious sector consolidation, something the company’s boss David Zaslav was more than happy to talk about as he said the current landscape isn’t sustainable.”

Under Armour

“Under Armour’s had a tough battle to fight. Its consumer has been battered by inflation and disposable income has been at a premium.

“Newer competitors have flooded the market with must have items, forcing Under Armour to resort to some mega discounting to try and tempt shoppers to choose them first. The brand used to be a must buy but it rather lost that USP when its founder took a step back.

“Now back in the CEO role, Kevin Plank’s cost cutting plan is begging to bear fruit and a strategic use of offers rather than constant discounting has helped drive up margins.

“Yes, input costs have been coming down, but it takes more than the right pricing strategy to succeed in the athleisure market. Creating products that consumers are willing to pay top dollar for and swerving the need for sales stickers is the best way to impress investors.

“Looking at the share price reaction to this set of results, investors have been impressed and this sportswear brand might just have battled its way back to form.”

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