Three things you need to know in the financial markets today from investment writer, Tony Cross.
#1. TUI: strong momentum in evidence
There’s a Q4 pre-close trading update out from travel agency TUI [LON:TUI]. Current booking trends remain upbeat and forward reservations stand at 96% of pre-pandemic levels. Average selling prices achieved for the summer were up by 8% YoY and 27% from 2019. Expectations for EBIT remain that significant advances will be seen both on the quarter and for the full year. Mid-term ambitions are for further growth on this metric, for leverage to fall below 3x and credit ratings to return to pre-pandemic levels.
- FTSE 100 at the close: Hargreaves Lansdown, Ocado, Kingfisher
- Companies Reporting: ASOS, Ocado, TUI, Next
- Hedge funds increase shorts on ITM Power in July
#2. Naked Wines sees slow start to FY24 as customer activity slides
Naked Wines [LON:WINE] published full year numbers to 3rd April. Sales are up 1% year on year, but this reflected a 53 week accounting period. The company continues to unwind an over-extended inventory position but this should result in significant cash generation from H2 ’24 and into the following year. However, FY 24 has started slower than had been expected with sales to new customers down 41% and existing customer sales down by 15%. The challenge is whether the destocking plan sees profitable existing customers move elsewhere.
#3. Kingfisher FY profit forecast downgraded marginally
Retailer Kingfisher [LON:KGF] has half year numbers out. Sales are fractionally higher and margins have been eroded but by a mere 40 bps, but the bigger challenge is a 30% hit on profitability. The interim dividend is being maintained but full year PBT guidance has been revised down from c. £634m to c. £590m. The launch of a £300m share buyback may however sweeten this to an extent with shareholders.