Daily market update: Nestlé, Pod Point, Unilever, ASOS, Kering

“Markets paused for breath after the recent rally as investors were treated to a barrage of corporate news to get their heads around,” says Russ Mould, Investment Director at AJ Bell.

“As always, the outlook statement was more important to investors than the backward-looking numbers. Comments about tariffs from business leaders are omnipresent and investors want to know how companies plan to deal with potential cost pressures.

“While markets have been fired up in recent days amid expectations for Donald Trump to backtrack on more tariffs, investors know what he says and what he does aren’t always the same thing. It now feels like markets want solid evidence of Trump taking a more softly-softly approach before shares can rally further.

“The FTSE 100 was flat despite higher oil prices lifting Shell and BP, and a solid but unspectacular set of numbers from Unilever. The index was held back by Legal & General falling 5% as it traded without the rights to its next dividend, and there was a general pullback in banking and mining shares.

“Nestlé has faced considerable headwinds over the past year as the price of two of its key ingredients went through the roof. Soaring costs for cocoa to make KitKats and coffee beans to make Nescafé left Nestlé with no choice but to jack up prices. Customers have stomached the extra costs but Nestlé’s sales volumes have noticeably lagged price hikes.

“Pod Point’s days as a listed company look numbered as major shareholder EDF Energy has proposed to take it over. Pod Point has suffered from slower than expected take-up of electric vehicles in the UK and that’s negatively affected demand for its chargers. It feels as if Pod Point has exhausted all avenues to try and win over the market and get more people interested in its story from an investment perspective. Therefore, being gobbled up by the utility company would make sense and allow it to continue to progress its plans out of the market spotlight.”

Unilever

“For years, Unilever has followed the theory that slow and steady wins the race and it has once again delivered another pedestrian performance. First-quarter underlying sales growth was better than expected, giving some support to its share price, but it hardly shot the lights out.

“The recent change in leadership for the group suggested the board and/or shareholders felt that Unilever could move faster, and chairman Ian Meakins said at the time there was more to do. It’s interesting to see new boss Fernando Fernandez now say that Unilever is ‘moving at pace’ given the Q1 numbers do not support that statement.

“Patience is required and at least the current performance shows the business is moving forwards rather than backwards.

“The seller of deodorants to dishwasher tablets operates in highly competitive markets. Its goal is to grab shoppers’ attention when they browse the aisles looking for things to fill their basket. Unilever benefits from having a portfolio of strong brands and non-stop marketing means they stay front of mind for the public.

“Performance is judged on Unilever’s ability to drive growth through a mixture of higher prices and greater sales volumes. On this front, the company managed to tick all the boxes apart from weaker volumes with its food division.

“Importantly, the ice cream arm turned in a good performance, and that sets a positive tone ahead of its demerger later this year. There has been plenty of product innovation to excite shoppers and a lot of work has been done to improve operations before the division is set free from its parent.”

ASOS

“ASOS may as well have prefaced its latest results with the question, ‘Do you want the good news or the bad news?’. Having lots of sales is not much good if they aren’t profitable, so indications the fast fashion retailer’s new commercial model is beginning to work is encouraging.

“ASOS is trying to lift the quality as it aims for full-price sales rather than selling lots of discounted goods and the company is looking to recapture its historic reputation for getting the latest styles and trends onto its website quickly.

“While improvements in underlying earnings are all well and good, ASOS will ultimately be judged on the hard currency of cash and much will rest on CEO José Antonio Ramos Calamonte’s pledge to generate meaningful free cash flow in 2026. Deliver this and investors may start to see a viable future for ASOS but, after a string of disappointments, any failure to live up to this promise would be received very poorly by the market.”

Kering

“Gucci-owner Kering offered further evidence of the luxury sector’s woes as its core brand struggles to recover against a difficult backdrop.

“There is a large degree of scepticism about recently appointed Gucci creative director Demna Gvasalia’s ability to revive the brand, based on his CV.

“After a string of profit warnings in 2024, Kering has very little credit in the bank with investors and new Gucci boss Stefano Cantino is already on the back foot, having been appointed at the start of this year.

“Luxury is supposed to be immune to the vagaries of the economy as its customer base are relatively untouched in a downturn. However, the Chinese market, which has been a source of significant growth for the industry, has been depressed since Covid-19 and what’s now apparent is not all luxury brands are created equal.

“Hopes North America could help drive Kering’s sales have been undermined by the recent tariff drama and Gucci will hope its ability to weather previous storms and come out the other side holds true this time around.

“Given the durability of the brand it could ultimately become a takeover target in a sector which is beginning to see consolidation.”

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