Our regular look at the FTSE 350 and a selection of other companies reporting from 29 May – 2 June.
- Can B&M strike the right balance between value and profit?
- Dr Martens stomps on expectations
- Pennon hoping to hit full-year guidance despite regulatory run-ins
- Road ahead looks promising for Auto Trader
B&M European Value Retail, Q4 Results, Wednesday 31 May
Derren Nathan, head of equity research, Hargreaves Lansdown: “The strong momentum seen in B&M’s [LON:BME] ‘Golden’ third quarter prompted the Company to narrow its guidance range for the full year results to be reported next week. Underlying cash profits are now expected to land somewhere between £560m to £580m. With inflation continuing to bite, investors aren’t surprised to see B&Ms value focussed stores doing well. B&M stores in the UK make up the majority of Group revenues, and these have seen solid trading of late, but the Heron Foods convenience stores, and B&M France have been enjoying even greater growth.
It’s a fine balance between keeping prices competitive and leaving a reasonable slice of revenues for the bottom line. Analysts are expecting some operating margin pressure, with forecasts suggesting a fall from 12.9% to 11.0%. At the half year point, debt levels didn’t look too worrying, but investors would like to see continued strength in cash generation so as to support ongoing dividend payments and store openings.”
Dr Martens, Full Year Results, Thursday 1 June
Susannah Streeter, head of money and markets, Hargreaves Lansdown: ‘’Dr Martens [LON:DOCS] has stomped on investors’ expectations, downgrading profit forecasts twice in three months. Operational problems at its Los Angeles distribution centre booted away hopes that the brand could kick off a rebound in sales after unseasonal weather put off shoppers in the Autumn. The bottlenecks in the supply chain have disrupted operations in the US, which is its largest market, and investors will want to see more signs that these issues have finally been ironed out. Shares have fallen by 56% compared to the IPO price when it launched onto the London market in January 2021. There were already concerns about the long-term growth for the brand, given the fashion world’s fickle tastes and these operational difficulties have booted in fresh problems for the company.’’
Pennon, Full Year Results, Thursday 1 June
Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “Pennon’s [LON:PNN] on track to deliver full-year results in line with management’s expectations, guiding for lower revenues and higher costs across the second half. Analysts expect full-year revenues of around £806m and operating profit of around £157m.
It’s worth remembering that water utility companies have recently been in the news for the wrong reasons. Consistently pumping untreated sewage back into rivers has stoked anger among the public. That’s not gone unnoticed by regulators, who have already issued fines of over £2m to South West Water, which Pennon owns. If the group doesn’t clean up its act, the regulator could come down even more harshly on them, potentially imposing unlimited fines. Analysts will keep an eye out for any steer on how the group intends to improve its pollution performance and help avoid future run-ins with the regulator.”
- Three Quick Facts: Robert Walters, Hays, B&M
- Three Quick Facts: Pennon, Kingfisher, Virgin Wines
- Companies Reporting: Kingfisher, Ocado, Carnival, FeverTree
Auto Trader Group, Full Year Results, Thursday 1 June
Matt Britzman, equity analyst, Hargreaves Lansdown: “The consensus amongst analysts is for second-half performance to be broadly in line with the first, with revenue at or around £500m and operating profit of £275m. This would mark continued strong performance, which is a function of Auto Trader’s [LON:AUTO] enviable recurring revenue, strong pricing power, and highly profitable model.
The Autorama acquisition is a drag on Group performance for now, but operating margin in the core business remains strong – expected to be north of 70%. Expanding a foothold in the online leasing market looks like a decent play, supply challenges have held back performance this year – but it’s a market with scope to grow. Expansion is a trend investors expect to see more of, as Auto Trader looks for growth levers and ways to further digitise the car buying journey.”
This article has been brought to you in association with Hargreaves Lansdown. All opinions expressed in this article are from the analysts and do not necessarily represent the opinions of The Armchair Trader.
| 29-May | |
| No FTSE 350 Reporters | |
| 30-May | |
| No FTSE 350 Reporters | |
| 31-May | |
| B&M European Value Retail | Q4 Results |
| 01-Jun | |
| Dr Martens | Full Year Results |
| Pennon Group | Full Year Results |
| Auto Trader Group | Full Year Results |
| 02-Jun | |
| No FTSE 350 Reporters | |
