A number of FTSE 250 companies have seen sharp share price movements after their latest updates.
The standout performer so far is JD Sports Fashion, up 27p to 435p after it said it would report full year results at the top end of expectations, following a doubling of half year profits to £20m. First half sales in the core sports business rose by 13%, with the outdoor retail chains including Millets and Blacks seeing sales up 12% and breaking even. The fashion division however continued to disappoint, with increased losses. Retail analyst Nick Bubb said:
Mike Ashley of Sports Direct famously wants to grind his rival JD Sports into the dust*, but they seem to be in pretty good shape, judging by the interims, with even the ailing outdoor division starting to make some progress at last.
[The results] tell a familiar story, with the core Sports Division powering ahead and the two other divisions still losing money, but overall pretax profit pre-exceptionals has doubled from £10m to £20m and, although there is no detailed current trading update, the City will be pleased to hear that "the group is well positioned to deliver results towards the upper end of current market expectations". The operating loss in the struggling fashion division increased from £6.8m to £8.2m, albeit that includes £0.7m of pre-opening costs for the new 'Open' fascia. But at least the operating loss in the outdoor division has reduced from £8.9m to £5.6m "with considerable progress made in Blacks and Millets". The sports division, however, had an excellent first half with operating profits increased to £34.8m, from an already healthy £26.1m last year.
In a buy note Kate Calvert at Investec said:
[We have raised our] 2015 pretax profit forecast...by 3% to £83.5m – This is not as great an increase as the first half beat as we are conscious that the sports fascia is up against very tough second half comparables and Christmas is a very important trading period. Our forecast assumes a small fall in sports profits second half on second half. In addition, we expect fashion losses to be £3.2m higher after the first half and the interest charge £0.6m higher.
We see untapped UK growth potential and JD has positioned itself well to join in the European consolidation game that we believe is likely to play out. We forecast £14.7m of outdoor and fashion loss in 2015, which if eliminated would enhance earnings by 18%.
Elsewhere recycled packaging group DS Smith has risen 14.7p to 287.7p after an upbeat trading statement and positive outlook for the rest of the year.
But IG has dropped 28.5p to 575p after the online trading group said first quarter revenue had fallen 9%, hit by lower client numbers amid quiet market trading conditions. Liberum said:
First quarter revenues of £85.6m, missed our estimates by 7%...Revenue across the geographies were weak: UK revenue fell by 3%, Australia by 10% and in Europe by 9%. To meet full year consensus net revenue of £395m, IG would need to deliver £103m of revenue per quarter for the rest of 2015, which looks unlikely. Hence we are expecting full year consensus downgrade of up to 5%.
More positively, increased market volatility in September (Scottish referendum, Ukraine, ECB QE) should be relatively supportive for second quarter 2015 revenues.
* Ashley reportedly said in 2011: "I'll finish off JJB first, then I'll move on to JD."
