FTSE 100 ticks higher, Siemens impresses, Burberry unveils makeover, Aviva upbeat, WH Smith full-year results disappoint and B&M continues ambitious store roll-out

“The FTSE 100 ticked higher in early trading on Thursday despite weakness in the US and Asia overnight as American inflation edged higher,” says AJ Bell Investment Director Russ Mould.

“While the consumer prices reading wasn’t alarmingly high, it helped to stoke strong performance for the dollar again.

“Though amid some of the gloom around European companies engendered by the election of a potentially protectionist new Trump administration, German electricals giant Siemens gave investors reason to smile with quarterly results ahead of expectations on orders, profit and free cash flow.”

Burberry

“Burberry was in need of a reset after a very difficult time for the business and the market seems to like the strategy update delivered today by new CEO Joshua Schulman.

“Amid conflicting reporting about the possibility of a bid from Italian luxury outfit Moncler, Burberry had to demonstrate it could thrive as an independent business.

“Unsurprisingly Schulman is pulling the cost cutting lever but he has also made new hires in marketing and merchandising and it looks like there will be a greater emphasis on outerwear – an area of traditional strength which presumably could yield higher margin sales. Time is clearly of the essence to help stabilise a business which is bleeding cash and racking up material losses.

“The one thing out of Schulman’s control is Chinese consumer sentiment, with the weak backdrop in China extremely unhelpful to Burberry given its reliance on this market in recent years.”

Aviva

“Insurance giant Aviva sounded pretty confident alongside third-quarter numbers and the details contained within them mean it has every right to be.

“The company is seeing strong performance across all of its business lines. Insurance is doing well thanks to disciplined pricing over the last 12 months while the company continues to see growth in its wealth management arm.

“Encouragingly, Aviva’s growing customer base now often has more than one policy per household. Increasing the proportion which do is an obvious growth opportunity for the business.

“Aviva is also tapping into a growing market in bulk annuities, where employers effectively transfer the risks associated with their defined benefit schemes to an insurer.”

WH Smith

“Relatively modest growth in the key North American market and underlying earnings per share, as well as revenue a smidge below consensus expectations from WH Smith seems to have disappointed investors.

“The full-year results were also a tad messy with fairly significant non-recurring costs, including impairments linked to software and supply chain upgrades and provisions for loss-making contracts, affecting the headline figures.

“Performance followed the same trend of the last decade, with the travel arm the engine of growth and the high street operation running to a standstill. There continues to be a focus on making efficiencies.

“Selling travel essentials to captive audiences at airports and rail stations has been a highly lucrative activity for WH Smith, except during the pandemic, but today’s numbers are a reminder the company is not immune to a bit of turbulence along the way.”

B&M European Value Retail

“Discount chain B&M has had a rough year and while these latest first-half results didn’t exactly knock it out of the park there was enough encouragement for investors to latch on to.

“Like-for-like sales still fell, albeit at a slower rate in the second quarter than the first, but the company is continuing to progress its roll-out of new stores and is seeing growth in the volume of sales. The long-term target of 1,200 stores compared with 764 today gives investors a clear view of the expansion potential.

“B&M has big ambitions for the less heralded French business and evidence of progress here would likely be well received by the market.

“There may be a touch of disquiet at a lack of guidance on third-quarter trading and the ‘Golden Quarter’ could be a moment of truth for B&M. It faces a tough competitive environment, with pressure not only from direct rivals like Home Bargains but also the supermarkets.”

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