Update on PZ Cussons and Ted Baker
City Index June 13, 2014 9:28 PM
<p>PZ Cussons released a trading update yesterday (12th June), and, the impact of adverse currency movements was there to be seen. For its year ended […]</p>
PZ Cussons released a trading update yesterday (12th June), and, the impact of adverse currency movements was there to be seen.
For its year ended 31st May, PZ Cussons, whose portfolio includes brands such as Imperial Leather, Carex and St Tropez, expects its pre-tax profit to increase around 6% over last year’s figure of some £108m.
That growth, according to the company, was achieved despite weakening currencies, which dented figures by some £12m. Excluding that impact, the rise in pre-tax profit would’ve been 17%.
Certainly, PZ Cussons’ emerging market woes aren’t unique.
Other players, including global rival, Unilever, whose difficulties were highlighted here recently, have also been feeling the heat of weaker emerging market currencies.
The culprits, in PZ Cussons’ case, were the weaker Australian dollar, Indonesian rupiah and Ghanaian cedi. Meanwhile, the social unrest in the north of Nigeria hasn’t helped the company.
That said, PZ Cussons has an eye on other initiatives to help offset its current challenges: that includes the company’s on-going cost-cutting efforts, as well as its palm oil joint venture with Singapore-based, Wilmar International.
Nonetheless, the company’s shares – which are currently down some 13% from this year’s peak in January – seem likely to remain under pressure as headwinds persist in the interim.
Expectations leading up to Ted Baker’s market update on Tuesday were that decent momentum would continue, and, that looked to be the case.
For the nineteen weeks from 26th January through 7th June, Ted Baker posted around an 18% increase in group revenue.
By segment, sales at Ted Baker’s core retail business rose some 16% over the same period last year. The company’s wholesale business enjoyed particularly strong performance in the period, with around a 25% increase in sales over the same period the prior year.
Meanwhile, the company’s efforts to ramp up its online presence have continued to gain traction –e-commerce now represents around 48% of Ted Baker’s sales.
The company did, however, put a downer on things by announcing that it expects “low double-digit” growth in its wholesale business for the full year.
Ted Baker’s shares…
The company’s shares closed down around 4% on the day and have been trending downwards since – they’re down around 17% from this year’s peak in March. The decline on the day was despite the fact that Ted Baker’s update shows that the company continues to enjoy decent momentum, albeit having slowed somewhat.
Not to mention that the company isn’t resting on its laurels – Ted Baker’s ploughing ahead with its international expansion efforts, and, diversifying its portfolio (its recent move into portable audio equipment, such as headphones, for instance).
Indeed, the company looks to be positioning well to capture further growth.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.