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Three things you need to know in the financial markets this morning from investment writer, Tony Cross.

Tesco

There’s a slew of trading updates out this morning so today’s column will only be scratching the surface. Tesco [LON:TSCO] has however issued numbers covering Q3 and the Christmas period too, so the 13 weeks to November 28th plus a further 6 weeks to January 9th. The company notes that it was a record Christmas across all channels, leaving headline group sales for the 19 weeks up by 7%. As Ross Hindle, Analyst at Third Bridge, included in a note: “Pricing has been strong through the pandemic, with the percentage of goods on discount dropping from c.40% to c.20%.” That increase is helping the business offset rising COVID-related costs, which are now expected to come in at £810m for the full year, some £75m higher than previously expected. Guidance for the full year is unchanged with operating profits likely to match those seen in 2019/20.

Whitbread

Whitbread [LON:WTB], the owners of Premier Inn, have published Q3 numbers covering the 13 weeks to November 26th. UK accommodation sales were down 55.2% with occupancy at 49.3%, although by keeping many properties open, the chain has been able to grow market share. The company is however keen to stress that the balance sheet remains strong and is backed up by over £2bn of liquidity headroom if needed. There’s little visibility available when it comes to trading outlook as the market will need to respond to the fast-changing restrictions and to illustrate the impact, total sales for the last five weeks of the year were down 73%.


Dunelm Group

A stalwart of the column, Dunelm Group [LON:DNLM], to round things off today and it’s another set of solid results for the retailer. The Q2 numbers cover the 13 weeks to December 26th and show sales up 11.8%. The reading is especially impressive given the company’s stores are classed as non-essential so most were closed for a four week period. Gross margins are marginally higher and the company’s balance sheet position is significantly improved from where it was a year ago. H1 pre-tax profits are now expected to be around £112m, well up from the £83m posted for the same period last year. If there’s a company that timed its move into digital correctly, this is it.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Tony Cross

Tony Cross

Tony Cross is a market commentator with over 15 years of experience, producing compelling, insightful copy for journalists and investors alike. Focusing on macroeconomics, UK blue chip equities and inter market analysis, Cross's commentary is well regarded for its clarity and ability to cut through the waffle. He has been quoted in publications as diverse as The Financial Times, The Times, The Guardian and The Sun. He has also been a regular guest on both Share Radio and TipTV.

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