Daily market update: FTSE 100, luxury brands, Halfords, B&M

“The FTSE 100 made a strong start to proceedings on Tuesday after comments from US Vice President JD Vance that there’s a ‘good chance’ of a UK-US trade deal,” says AJ Bell Investment Director Russ Mould.

“Suggestions there might also be a softening of tariffs on the motoring sector also helped lift the mood – with names which have sold off most heavily on US trade policy like Rolls-Royce bouncing back. Housebuilders were in demand as slowing UK wage growth raised hopes for a cut to interest rates, which would in turn boost the affordability of mortgages.

“Shares in British luxury brand Burberry were lower after French counterpart Louis Vuitton Moet Hennessy reported lower than expected revenue overnight. Significantly the company saw weakness in two of the largest markets for luxury goods – the US and China.”

Halfords

“Changes are underway at motoring and cycling services and products specialist Halfords and the market is lapping them up.

“The company is yielding particularly strong benefits from its ‘Fusion’ strategy – creating a more joined-up approach between its retail outlets and its car repair Autocentres.

“Impressively the company has managed to find ways to mitigate the impact of higher costs associated with changes in last year’s Budget.

“Given that keeping your car in working order is not an optional extra but a necessity for most people, these link ups could make revenues across the business more resilient. They also create a solid platform for incoming CEO Henry Birch who is replacing incumbent Graham Stapleton after a seven-year stint.

“A 61% fall in the share price over Stapleton’s tenure does not make for the best report card but the disruption associated with Covid-19 and the inflationary period coming out of the pandemic haven’t helped. In time the strategic progress in shifting the focus away from a largely cyclical retail operation may see him get some credit.

“Birch’s previous role at online retailer The Very Group may see him press the accelerator on Halfords’ digital operation.”

B&M

“Value retail chain B&M has singularly failed to take advantage of what should have been supportive trading conditions in an environment where shoppers are still having to watch every penny.

“Today’s update helps extend a recent relief rally in the shares as the company narrows the guidance given in a recent profit warning.

“However, a new CEO and a clear direction for the business are needed before it can really get back on track, with current boss Alex Russo having fallen on his sword in the wake of the poor performance.

“Significantly the company needs to arrest the continuing decline in UK like-for-like sales if it is to rebuild confidence and credibility with the market.

“This trend suggests B&M’s competitive position remains quite vulnerable amid pressure from other discount specialists and the supermarket sector. The company continues to target an ambitious roll-out of new stores but unless it is able to grow organically then scepticism is likely to linger among investors.

“The business is performing quite well in France but remains a modest contributor to the group as a whole. B&M needs to get the basics of retail spot on, having the right products in the right place and at the right price point.

“One factor which plays in the favour of whoever takes charge is, thanks to its disappointing recent performance, upcoming trading may be flattered by comparison.”

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