Daily market update: Marks & Spencer, DCC, On The Beach, Revolution Beauty

“The party didn’t last long,” says Russ Mould, Investment Director at AJ Bell. “Having seen a strong start to the week on global markets following trade talks between the US and China, the rally has petered out. European markets were generally flat on Tuesday, big chunks of Asia pulled back, while futures prices imply a soggy start to trading on Wall Street later on.

“Markets had risen on the prospect of tariffs not being as harsh as previously indicated. Now comes the reality that tariffs will still exist in some form, which means it’s not completely back to life before Trump for many businesses around the world.

“Interestingly, the FTSE 250 bucked the negative trend on European markets with a 0.5% gain to 20,737. The UK mid-cap index was propelled by a mixture of industrials, retail and financials.

“Burberry was among the top risers ahead of its full-year results tomorrow. Its third quarter update in January got the thumbs-up from the market as it wasn’t as bad as feared. Burberry needs to build on that momentum with its fourth quarter figures and it also needs to show that Chinese consumers are still willing to buy its wares despite a gloomy economic backdrop caused by Trump’s trade war.

“In mainland Europe, shares in Vestas Wind Systems were powered up by two contract wins in Germany while pharma group Bayer surged after first quarter earnings beat expectations.”

Marks & Spencer

“Marks & Spencer has finally updated customers and investors about the gruelling cyber incident that’s knocked the business for six. It’s not good news – customer data has been stolen and there is no sign of when it will resume online orders.

“While the retailer says customers’ payment details weren’t taken by the hackers, the fact some personal data has been taken means M&S has a big mountain climb to win back shoppers’ trust.

“M&S is one of the UK’s most loved retailers. Shoppers have faith in the company to provide high quality products and to deliver service with a smile. Now, shoppers might be questioning if M&S is still such a great place to visit. So many people worry about the safety of their information that they might vote with their feet and go elsewhere if there are lingering concerns about the robustness of M&S’s systems.

“The shares have understandably been beaten up since the cyber-attack was revealed in April. Today’s small rebound is the market’s way of showing relief that we’ve finally had an update from management. The big unknown is the hit to earnings from all the disruption and that information – once it comes – could have a major influence on the share price.”

DCC

“Irish conglomerate DCC is among the many companies following the ‘shrink to greatness’ strategy, offloading parts of its business to focus on what it does best. This process is still ongoing and it’s a disappointment to see full-year earnings come in below expectations.

“DCC’s future is in the energy sector and it’s fortunate that part of its business was the strongest. In a way, it justifies the decision to slim down.

“The problem child was the technology division, which is a concern given that DCC is on a mission to improve performance before selling the business. It needs to work fast to whip the tech arm into shape.”

On The Beach

“The news might be awash with worries about the economy, tariffs, geopolitical tensions and concerns about the jobs market, yet it seems nothing is going to get in the way of a summer holiday.

“On The Beach’s trading update shows a business riding high thanks to strong demand to get away from the daily grind.

“People might be under financial pressure, but they’re happy to cut back on everyday treats if it means squirreling enough away for a week in a foreign land.”

Revolution Beauty

“The lipstick effect that thrived during the pandemic has gone out of fashion. Beauty products were ‘pick me up’ treats during the gloom of Covid-19 and sales went bananas.

“Faced with a different kind of uncertain backdrop, one might have thought we’d see a repeat of this sales bonanza, yet Revolution Beauty’s trading update suggests otherwise.

“US sales have been miserable and it is in the firing line for tariffs as 60% of products sold Stateside are made in China.

“Boohoo’s investment in Revolution Beauty is going up in a puff of smoke as the shares hit a new all-time low. Revolution Beauty is now down 97% from its 2021 IPO price – no amount of concealer will disguise that ugly performance.”

Wickes

“The latest update from Wickes was just the job for the market as the warm weather helped underpin a sunny trading update from the company.

“There are certainly clouds on the horizon – with Wickes acknowledging the cost pressures it is facing and the uncertain outlook for consumer sentiment – but investors were prepared to set these aside.

“A positive for the business is a resilient UK property market, supported by favourable supply and demand dynamics. Renovation work is often associated with people doing up their homes to sell or adapting newly bought properties to a purchasers’ tastes and requirements.

“Wickes is seeing a strong showing in DIY and its TradePro loyalty scheme is reaping real benefits as the company gets repeat revenue.

“Design and installation work is also recovering after a difficult period, suggesting the action the company has taken to improve its offering is paying off.

“It’s understandable and laudable that management are wary of the risks they face but, for now, they seem to be mitigating them and laying the foundations for future growth.”

Marston’s

“The recent sunshine looks like it is allowing pubs group Marston’s to build on a strong showing in the first half of its financial year and it is doing better than the wider market too.

“Like lots of hospitality businesses, Marston’s came out of the pandemic with substantial borrowings as it was forced to withstand long periods when it was unable to trade.

“A key priority for the company is bringing debt levels down and the latest results reveal tangible progress. This is only possible thanks to improved trading and the company managing to keep a tight rein on costs.

“The company may find it harder to boost profitability going forwards given the increased costs associated with changes in last year’s Budget.

“As well as reducing leverage the company is investing in its estate which is crucial if its pubs are to remain go-to destinations for punters.”

Honda

“Despite a hit from the tariffs introduced by the Trump administration – which will cut full-year profits in half – Honda shares spluttered into life. The carmaker has suggested it can mitigate a decent chunk of the impact.

“Apart from the chaos created by tariffs, a big challenge for the wider industry is the uncertain path from traditional to electric vehicles and this is reflected in Honda’s decision to delay a major investment in EV and battery facilities in Canada.

“This pragmatism is likely to be welcomed by investors as Honda looks to apply the jump leads after failing to get a merger with rival Nissan across the line. Further consolidation in the industry seems likely given the scale of the challenges it is facing.

“Managing supply chain issues, the problems of dealing with shifting consumer tastes and regulatory pressures could be made easier by increasing scale and diversification.”

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