Fuller’s faces setbacks amid tax hikes but remains on track for full year goals

 

 

Mark Crouch, market analyst at investment platform eToro, says: “After what was shaping up to be a strong 2024 for Fuller, Smith & Turner, the pub and hotel operator has since suffered setbacks, many of which were beyond their control. Labour’s tax rises sent heads spinning in the hospitality sector and any momentum generated has since fallen flat, which in turn sent Fuller’s share price tumbling 25% since August.

“The good news is Fuller’s remain on track to meet market expectations for the year. This was helped by a relatively successful Christmas period which delivered like-for-like sales growth of over ten percent. However, investors were left feeling punch drunk after the Labour budget, which, from an outsider looking in, seemed more like a growth stopper rather than a growth stimulator given the negative impact on investor confidence.

“In spite of the challenging economic landscape, Fuller’s has stayed focused on prioritising shareholder returns. Having recently paid a dividend, the company continues to push ahead with its share buyback scheme, which, given the recent sell-off, is now being executed at a more attractive price for investors.

“The hospitality sector remains a challenging arena as companies are facing multiple headwinds from rising costs to falling footfall, a trend that all concerned will hope is temporary.”

 
 

Currys Christmas sales boost sees dividend return

 

 

Adam Vettese, market analyst at investment platform eToro, says: “After a strong finish to the year, Currys has raised its profit target as the Black Friday and Christmas appetite for all things tech saw revenue tick up across the board. Whilst profit is now expected to be above management estimates, there are still headwinds into the year ahead with effects of the Budget related cost increases. Despite this the firm has been able to reinstate a dividend which will please shareholders after a one-year hiatus.

“Shares flipped their trajectory in 2024, having an exceptionally strong year after struggling during the prior two. Investors will hope that this turnaround will continue to chase historic higher levels above the 100p mark.”

 

 

Dunelm sales grow but cost pressures ahead

 

Adam Vettese, market analyst at investment platform eToro, says: “Dunelm has performed well against a challenging backdrop for retailers. Sales numbers are creeping up and the company is diversifying its more recognised edge-of-town retail park model via an inner London store at Westfield as well as acquisitions in Ireland.

“There will be challenges ahead as pressures resulting from the Budget loom, with increased national insurance contributions for their 11,500-strong work force. Dunelm will have to find ways to cut costs or increase efficiency elsewhere if they do not want this eating into their bottom line.

“Shares have been rangebound for the last 2 years which they currently trade near the bottom end of. Investors will hope that continued sales growth as well as success from some of the newer methods the company is trying will propel them back up towards the top end of the recent range some 25% away.”

 

 

Disappointing update for Whitbread, but growth prospects remain strong

 

Mark Crouch, market analyst at investment platform eToro, says: “Whitbread investors have awoken to a disappointing trading update from the Premier Inn owner. Rising costs and labour shortages have piled pressure on the hospitality giant squeezing its margins to uncomfortable levels. This has not been helped by Labour’s budget which has cast uncertainty over the sector, and placed upward pressure on costs. Given the surge in business activity during the festive period it was hoped that would provide a boost to what had, up until that point, been a disappointing year for Whitbread, with shares falling 20% in 2024. However the gains made were modest at best.

“There are signs emerging however, of a new dawn breaking for Whitbread, making significant strides on the continent, where accommodation sales rose by 37% in Germany. Despite the economic headwinds, the company has further cemented its dominance in the UK, with plans to add a further 3500 rooms to the Premier Inn portfolio well underway. These investments underscore management’s confidence in Whitbread’s long-term outlook.

“More good news is that UK inflation is falling, opening the door for the Bank of England to cut interest rates, which to the hospitality sector is a most welcome development.”

 
 

UnitedHealth Group Dips After Revenue Miss

 

Adam Vettese, analyst at investment platform eToro, says: “It’s a fourth-quarter earnings beat for insurance and healthcare multinational UnitedHealth Group, but the focus of investors is likely to be on how revenue came in short of expectations.

“UnitedHealth, one of the largest companies in the world in terms of revenue, has been at the centre of a heated debate about how the healthcare industry deals with medical claims since the shocking murder in New York last month of Brian Thompson, CEO of the group’s insurance arm. A key detail in this area is the company’s full year medical cost ratio, which reflects the percentage of healthcare premiums actually going into medical care, and it’s notable that this climbed not only well above the value for the previous fiscal year, but also above where analysts had expected to see it. While perhaps providing something of a defence against suggestions of penny pinching, it is not an encouraging metric for shareholders.

“The initial take from the market has been negative, with shares in UNH sliding more than 4% in pre-market trading and, alongside the revenue miss and climbing costs, investors are likely to be left underwhelmed by the unchanged performance outlook for the year.”

 



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