Must read: FTSE 100, Inditex, oil, B&M, WH Smith

EUROPEAN MARKETS

After commodity linked stocks punished the FTSE 100 on Tuesday, European indices are in the green today with the UK blue chip-index rebounding. But B&M European Value Retail SA (LSE:BME) is dragging on the FTSE 100, leading the losses after reporting full-year results and a new chairman and energy companies National Grid (LSE:NG.) and Centrica (LSE:CNA) are also among the top losers. In Spain, shares in Zara’s parent company Industria De Diseno Textil SA Share From Split (XMAD:ITX), or Inditex, are rallying sharply after it reported strong sales growth of 12% between May and June. 

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Oil prices are hovering around four-month lows after a challenging start to the week for price action. Bitcoin is enjoying a strong week, rallying by over 5% across the past five trading sessions, fuelled by hopes that the US SEC will approve exchange-traded funds (ETFs) investing directly in Ether.

B&M EUROPEAN VALUE RETAIL 

B&M reported a 9.7% rise in full-year profit – adjusted EBITDA hit £629 million, meeting analysts’ expectations. Group revenues increased by 10.1% to £5.5 billion. It is accelerating its opening programme with plans to open no less than 45 new stores in the UK in FY25. Meanwhile, B&M has appointed Tiffany Hall as non-executive chairman succeeding Peter Bamford who will retire from the board after six years in the role.  

The company proved itself to be resilient to the macroeconomic twists and turns and cost of living pressures in recent years given its competitive low price point that helped support demand even among the most cash strapped consumers. And now the economic clouds are showing signs of parting, with the UK emerging from last year’s short, shallow recession, inflation coming down, interest rates set to be cut and retail spending rebounding last month. There are growing reasons to be more optimistic towards the retail sector which could play well into the hands of B&M. 

After a rocky start to the year for B&M, shares have been regaining ground since the April lows but the stock is under pressure once again today. The analysts remain largely upbeat when it comes to this stock with 13 buy recommendations, 4 holds and just one sell.

WH SMITH 

WH Smith (LSE:SMWH) reported 13-week like-for-like revenue up 4% year-on-year for the period ending 1 June. However, that represents a significant slowdown from the 14% sales growth achieved in the same period last year. The UK division was a bright spot with total revenue up 9% thanks to a strong recovery in passenger numbers whereas North America performed less well. WH Smith insists it is on track to deliver full-year results which will match expectations and says it is well positioned for the peak summer trading period. 

Performance on UK high streets was week with total revenue down by 4%, amid a period of weakness for UK retail spending as the wet weather dampened spending appetite across the sector. However, within air travel, rail and hospitals, WH Smith still managed to generate strong sales growth. It has been focusing on expanding its food-to-go offering to drive greater spending among travellers. Over the school summer holidays, WH Smith is hoping to make the most of the increased passenger traffic and boost sales over the seasonally peak trading period. 

Investors are enjoying a 3% bounce in WH Smith’s shares today. However, taking a step back, it continues to be a tough time for its investors with shares down year-to-date, underperforming the UK market. Longer-term, performance has been equally painful – WH Smith has struggled to appeal to investors with shares still languishing more than 50% below their pre-pandemic highs.