Warnings from BP and JD Sports, gilt yields and the pound steady, Ocado food venture with Marks & Spencer showing progress, activist circles YouGov and festive joy for Card Factory

“The FTSE 100 held firm despite headwinds from BP warning of lower production and weak refining markets and Reinet Investments selling an approximate 2% stake in cigarette-to-vaping group British American Tobacco,” says Russ Mould, Investment Director at AJ Bell.

“The warning from BP sours the recent recovery in its share price after a prolonged weak spell. Concern about the global economy puts a cloud over oil demand this year and BP’s latest update continues its bad run for news, having suffered impairments and warned of weak refining margins last year.

“Investors often think BP and its peers are well-oiled machines, pumping out oil and gas with ease and doling out endless dividends and share buybacks. In reality, they operate in a high-risk environment with unpredictable earnings.

“The gilt market took a moment to catch its breath with 10-year yields holding steady at 4.865%. The pound also firmed at $1.2217, a welcome sign following the recent drama on the markets as investors fretted about Rachel Reeves’ spending and borrowing plans and the outlook for the UK economy.”

JD Sports

“JD Sports was once a collector’s favourite, a place to snap up the latest trainers and keep them pristine in the hope their value would rocket. The company has now become a collector of profit warnings. Having already guided down full-year expectations in November, JD now says profit will be even lower thanks to weak trading in the UK and US.

“That’s triggered another sell-off in the share price and taken the stock close the lows seen in the midst of the global market sell-off when the Covid pandemic gripped the world in 2020.

“Chief executive Régis Schultz joined as the cool cat boss in 2022 and a year later unveiled his plans for JD to be a ‘leading global sports-fashion powerhouse’. His nine lives are nearly up as the business has spluttered under his leadership and the goal of achieving £1 billion profit has been kicked further down the road. The share price has fallen by a third since he become CEO and investors will be losing patience fast.

“The board must be seriously thinking about a replacement leader. If a different CEO isn’t on the cards and the share price continues to weaken, the company could be a prime takeover target for either a retail rival looking to strengthen its position in North America and Europe or for a private equity company flush with cash and looking for a turnaround situation on the cheap.”

Ocado

“Ocado’s retail joint venture with Marks & Spencer finally seems to have cracked the recipe for success. There are significantly more customers and they’re shopping more frequently. This performance should settle some nerves at Marks & Spencer given relationships have been fragile between the two partners. The key challenge is to sustain this momentum.

“Now the ship has been steadied, the big question is what happens to the joint venture longer-term. Marks & Spencer is on a roll with its whole business and might take the view that it would prefer to have full control over its online food delivery service. If that happens, Marks & Spencer would still be reliant on Ocado technology and would have to pay royalties. Longer-term, it could potentially look to develop systems in-house or use another partner as an alternative.

“The big unknown is whether Marks & Spencer feels the venture is sufficiently robust enough to take the leap into the unknown and go solo.”

YouGov

“Activist investor Gatemore has called for YouGov’s CEO Steve Hatch to be replaced, citing ‘numerous missteps’ under his leadership that has led to ‘poor operating performance’.

“Calling Hatch’s 18-month tenure a ‘disaster’, Gatemore wants former boss Stephan Shakespeare to return to his old job and steady the ship to make the company ripe for a takeover. Gatemore believes the company could fetch more than 700p per share, more than 80% above the current share price.

“The activist investor is certainly not mincing its words. What’s interesting is how such a small shareholder, owning just 1.3%, has managed to create such a big noise. Importantly, Gatemore implies it has the support of other shareholders, which means this activist campaign is one to watch with interest.

“By going public with its naming and shaming, Gatemore is hoping YouGov’s board will have no choice but to take its recommendations seriously.”

Card Factory

“Card Factory delivered a reassuring Christmas update, helping to calm some nerves around whether cash-strapped consumers would pull back from sending Christmas cards given the high cost of a stamp these days.

“Card Factory’s cheap prices mean shoppers often walk out with much more than they originally intended to buy, loading up on items as they walk along the aisles. Like all UK retailers, costs are going up for the business but Card Factory remains upbeat about its earnings expectations in 2025.”

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