MoPh Markets

Morning Roundup: Tesco, ASOS, Marks & Spencer, Halfords

Investors were hit with a heavy morning of earnings on Thursday, with several trading statements from key retailers. Although food was able to produce robust performance, less essential or high-ticket firms such as ASOS and Halfords saw declines in key areas.

Tesco

  • Tesco’s reported a solid Q3 and Christmas trading statement on Thursday, with Q3 LFL sales up 5.7% and Christmas sales gaining 7.9%.
  • The largest supermarket was able to maintain a strong market share of 27.5% and was the only full-line grocer to increase market share vs pre-pandemic.
  • The group reconfirmed its operating profit of between £2.4bn and £2.5bn after its robust performance in an inflationary environment.

ASOS

  • ASOS announced its trading statement on Thursday, which saw revenue down 3%, which was broadly in line with expectations, reflecting the challenging trading conditions.
  • Sales in Britain, ASOS’s biggest market fell 8%, harmed by Christmas delivery problems and a tough pandemic favoured comparison of last year.
  • ASOS stated that it has found profit optimisation and cost saving measures which could benefit its current financial year by more than £300m, through removing of unprofitable brands and winding down storage facilities.
  • As a result, ASOS shares are up 15%.

Marks & Spencer

  • Marks & Spencer’s Christmas trading came in better-than-anticipated.
  • The group reported total sales rose 9.9%, with food leading the way growing 10.2% in Q3 and achieving its highest ever recorded market share.
  • Its clothing & home segment was also strong, up 8.8%, which M&S stated was thanks to its quality, innovation and growing style credentials.
  • However, Marks & Spencer’s share price fell 2% this morning.

Halfords

  • In Halfords Q3 results, its Autocentres remained the standout performer, with like-for-like sales up 14.6%.
  • However, a shortage of skilled labour impacted its gross margins ahead of its Q4 MOT peak.
  • Additionally, weaker cycling sales and reduced spending on high-ticket items led to the firm reducing its profit before tax guidance to £50m to £60m.
  • Halfords shares tumbled 22% following the report.

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