Interactive Investor

Must read: Japan, oil, Apple, Superdry, De La Rue

Our head of investment rounds up the morning's big news.

19th December 2023 08:58

Victoria Scholar from interactive investor

GLOBAL MARKETS

European markets have opened higher with the FTSE 100 trading above 7,600. After a rally for Vodafone Group (LSE:VOD) on Monday on the back of a proposal from Iliad in Italy to create a joint venture, the London-listed telecoms giant is giving back some gains today, hitting the bottom of the UK index. Meanwhile, the typically volatile Ocado Group (LSE:OCDO) is the top gainer on the FTSE 100 this morning.  

In Asia, the Bank of Japan has kept interest rates at -0.1% and stuck to its yield curve policy. The yen is under pressure against the US dollar.  

Oil prices are in focus after BP (LSE:BP.), Maersk and others suspended shipping through the Red Sea following recent attacks on vessels by Houthi rebels. There are concerns that the attacks could lead to higher oil prices, which in turn could add to inflationary pressures.

Apple Inc (NASDAQ:AAPL) has been forced to halt some watch sales in the US over violated patent rights relating to a feature on the device which measures users’ blood oxygen levels. Engineers are understood to be looking for ways to work around the issue to prevent the ban, which is due to kick in on 26 December.

SUPERDRY

Superdry (LSE:SDRY) said full-year profitability is expected to be impacted by the well-documented challenging trading environment. Retail was down 13.1% year-on-year, while wholesale plunged 41.1%, partly due to the exit of its US wholesale operation. Since the half-year, sales in the six weeks are still down around 7% on a like-for-like basis.

Shares have plunged to a record low today. They are currently down by around 20% as alarm bells ring among traders and investors following its annual profit warning. Analysts at Peel Hunt have also pessimistically slashed their price target from 130p to 40p and have cut the stock to a hold from a buy.  

Superdry has had a very tough time lately with the stock down over 75% year-to-date. It has suffered amid the weak consumer backdrop and from unseasonable warm weather in autumn. Plus its shares were recently suspended after it missed a deadline for reporting its annual accounts, which wasn’t a great look in terms of instilling confidence.

Pressures facing retail such as the cost-of-living crisis, rising interest rates and inflationary cost pressures seem to have separated the winners from the losers in the sector. While some like Marks & Spencer Group (LSE:MKS) and Next (LSE:NXT) have fared very well, others like Superdry have not. Once a highly successful streetwear brand loved by celebrities and fashionistas alike, Superdry has struggled to maintain its allure even with the return of Julian Dunkerton as CEO. Its price point is stuck somewhere in no man’s land, above the online fast fashion super-low price point offering but below the luxurious splash out territory. 

DE LA RUE

De La Rue (LSE:DLAR) said it is expecting full-year adjusted operating profit in the low £20 million range and reported half-year profit of £7.9 million, in line with expectations. However, shares are trading sharply lower down by over 5% with investors struggling to get excited by these results.

The currency market has been recovering since the pandemic when contactless payments were extremely popular. In fact, according to the BRC, cash use grew this year for the first time in a decade, partly thanks to its use as a budgeting tool amid the tough economic backdrop. Plus there has been demand for the new King Charles banknotes this year.

However, De La Rue is battling with a structural decline in the use of cash which has quickly been overtaken in most transactions by card and contactless payments. This has been reflected by De La Rue’s disappointing long-term share price performance with the stock down 80% in the past five years.

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