Miners jump on metal price strength, Burberry sales fall less than expected, Severn Trent to boost dividends, Bloomsbury makes up with Amazon and The Works holds steady

“Miners were the talk of the town as base metal prices strengthened. Antofagasta, Glencore, Rio Tinto and Anglo American enjoyed decent share price gains, helping to prop up the resource-heavy FTSE 100 index,” says Russ Mould, Investment Director at AJ Bell.

“Copper, aluminium, lead, zinc and tin all saw higher prices amid a weaker dollar. Metals are typically priced in dollars and a decline in the US currency makes the commodities cheaper for buyers holding other currencies.

“Also putting a shine on metals prices was speculation that Donald Trump might not take the nuclear option regarding tariffs on China, potentially imposing a lower rate than has previously been suggested.”

Burberry

“Burberry’s latest update wouldn’t be cause for celebration in normal times but given rock-bottom expectations, the fact sales fell less than anticipated and the company might now dodge a full-year loss is something for investors to embrace. It provides some confidence that new CEO Joshua Schulman will be able to turn around the company’s fortunes.

“The Asia Pacific region which has been central to Burberry’s success over the last decade or more continues to struggle thanks to China’s economic woes. North America has come to the rescue with sales increasing over the third quarter.

“Burberry needs to reignite and define its brand in a way which will appeal to the kind of shopper with money to spend on high ticket price items.

“Discounting might help lift sales in the short term but in the long run this does harm to the integrity of the brand. At the same time, the premiumisation strategy has had a negative impact by alienating aspirational younger customers which are key to its future growth. Schulman now needs to find a Goldilocks solution where the brand is neither seen as too cheap nor unattainably expensive.”

Severn Trent

“Severn Trent has to tread carefully if it is to avoid a flood of negative publicity given the reputation of water utility firms is in the mud with the British public.

“At the same time, it needs to keep shareholders on side and that explains the promised increase in dividends. The reference to retail shareholders in justifying the increase is notable. Not unfairly, Severn Trent wants to make the case that it’s not just big institutions which benefit from its payouts.

“Reading between the lines, it’s clear that Severn Trent is pleased about the price increases Ofwat has agreed to let it push through – although the company will be keen to avoid any hint of smugness.

“It makes it clear that increased charges will also support investment in its infrastructure to reduce spills and pollution. The company needs to ensure it delivers if it is to avoid renewed pressure from regulators and politicians.”

Bloomsbury Publishing

“Bloomsbury getting into a fight with the world’s biggest bookseller over contract terms was a risky move and one that could have backfired dramatically. Refusing to let Amazon sell its titles could have resulted in a decline in earnings, given how so many people buy their reading material from this retail giant.

“A spat had emerged at the eleventh hour ahead of a contract expiring at midnight on 23 January, meaning that if the two didn’t come to an agreement, Bloomsbury’s print titles would have disappeared from the retail platform in the UK, Europe and Australia and on Kindle worldwide. Those titles included big hits from blockbuster authors Sarah J Maas and JK Rowling which continue to sell in their droves.

“The fact Bloomsbury felt capable of going head-to-head with Amazon just goes to show the strong position it now commands in the publishing world. It certainly sends a message to other retailers that Bloomsbury is not a pushover.

“It appears that a compromise was reached overnight as Bloomsbury now says a new deal has been signed, albeit not disclosing any details.”

The Works

“Shares in The Works have moved higher because its Christmas trading update wasn’t catastrophic. The market has taken minimal sales growth as a win given how the business has been going through difficult times.

“Last financial year it unveiled a new corporate strategy aimed at boosting profitability, to be achieved by growing product margins, getting costs under control and scaling back non-essential investments. The retailer has now added new layers to the strategy to boost its brand awareness, improve customer convenience and be a lean, efficient operator.

“On paper this strategy makes sense, but the proof will be in the pudding. Seeing results will take time, and the task is made even harder by extra wage costs related to Rachel Reeves’ Budget and a more challenging economic backdrop. Just as The Works thought it had found its footing, there are plenty of obstacles in its path that could destabilise the recovery story.”

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