UK WINNERS & LOSERS SUMMARY: Just Group Surges On Income Sales Climb

Thu, 14th Jan 2021 10:35

(Alliance News) - The following stocks are the leading risers and fallers within the main London indices on Thursday.

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FTSE 100 - WINNERS

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Whitbread, up 3.5%. The Premier Inn chain owner said its third-quarter performance reflected the damage inflicted by the ongoing Covid-19 government restrictions in the UK and Germany, where it operates hotels. For the third quarter to November 26, total like-for-like sales growth was down 56% and year-to-date was down 70%. Premier Inn UK total sales were 55% down in the third quarter reflecting the ongoing UK government restrictions on the operation of hotels and restaurants, which forced closures of non-essential businesses. As a result, total UK accommodation sales were down 55% with occupancy at 49%. Whitbread said with the increased restrictions, total UK accommodation sales were down 66% for the 5 weeks to December 31, with occupancy at 31%. "Lockdowns drive the short term narrative but we argue that Whitbread will be the quickest company in our hotel coverage to recover given domestic exposure economy/midscale. We also see a material market share opportunity in the UK and Germany," said Jefferies analyst Becky Lane.

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FTSE 100 - LOSERS

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B&M European Value Retail, down 4.3%, Sage Group down 2.5%, SSE, down 2.3%. The stocks went ex-dividend meaning new buyers no longer qualify for the latest payout.

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Tesco, down 1.5%. The UK's largest supermarket chain said a strong UK sales performance was sustained in the third quarter as shoppers splurged on the grocer's premium 'Finest' food products range over the Christmas holiday period. For the third quarter to November 28, Tesco reported group like-for-like sales growth of 5.7%, while Christmas trading in the six weeks to January 9, like-for-like sales growth was 5.4%. Looking ahead, Tesco said guidance for the 2021 financial year is unchanged, and it remains confident that retail operating profit is likely to be at least at the same level as in 2020, excluding the repayment of business rates relief. In financial 2020, Tesco posted retail operating profit of GBP2.81 billion. However, Tesco increased the estimate of its incremental costs of dealing with the Covid-19 pandemic in financial 2021, such as increased staff absence, to GBP810 million from GBP725 million. "Investors will be happy with the announcement however, going forward they will be keeping a close eye on costs associated with the virus as well as further improvements on the online experience and delivery processes as the UK national lockdown continues," said Edison's Neil Shah.

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FTSE 250 - WINNERS

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Just Group, up 16%. The retirement products firm hailed its "pleasing" 2020 performance, shaking off Covid-19 worries. Retirement income sales rose 12% to GBP2.15 billion from GBP1.92 billion in 2020, helped by a 22% surge in defined benefit de-risking premiums to GBP1.51 billion. "The defined benefit market remains buoyant - this has been the second highest year for market transaction volumes and the industry pipeline is very strong. During the year we have written 23 transactions. DB De-risking sales in the second half of the year were over GBP1 billion, a record six months for the group," Just Group explained. "The market for guaranteed income for life solutions has continued to recover following the Covid-19 related sales disruption in the first half of the year. Sales in the second half were similar to the second half of 2019." Broker Numis commented that Just Group's retirement income sales accelerated by more than expected in the second half of 2020, driven by strong defined-benefit transaction volumes.

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Hilton Food Group, up 6.5%. The food packing company said its annual performance topped board expectations, benefiting from Covid-19 lockdowns putting a stop to out-of-home dining. In the 53 weeks ended January 3, Hilton Food saw "strong year-on-year sales and volume growth". This was helped by its "own expansion as well as the shift to home consumption arising from the Covid-19 pandemic". Revenue growth continued in both Sweden and Denmark, where Hilton Food is now packaging chicken. In the Netherlands, it benefited from higher red meat volumes and increases in vegetarian and vegan products.

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FTSE 250 - LOSERS

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Dunelm Group, down 7.5%. The home furnishings retailer posted a healthy second-quarter sales rise, though like-for-like growth slowed from the first-quarter's 36% surge. The Leicester-based retailer added that not being classed an essential retailer during UK lockdown measures means the outlook for the rest of its financial year is uncertain. In the second quarter ended December 26, Dunelm's sales rose 12% year-on-year to GBP360.4 million from GBP322.4 million. Digital accounted for 40% of sales during the period, compared to 21% a year earlier. Digital sales include Dunelm's home delivery and click & collect services. On a like-for-like basis, second quarter sales rose 11%, slowed from the first quarter's 36% growth. For the first half, Dunelm expects to report pretax profit of roughly GBP112 million, a 34% hike from GBP83.6 million a year earlier.

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By Arvind Bhunjun; arvindbhunjun@alliancenews.com