WPP and Halfords

“The FTSE 100 was just about consolidating yesterday’s gains in early trading as speculation continues over whether Bank of England Governor Mark Carney is likely to stay in post beyond 2019,” says AJ Bell Investment Director Russ Mould.

WPP

“Advertising giant WPP answered one key question this week as it promoted internal candidate Mark Read to the top job following the acrimonious departure of its founder Martin Sorrell earlier this year.

“Now attention will turn to how Read is going to put the business back on track. Today’s first half results on just his second day in the role suggest it will be a tough task.

“Reported revenue is down more than 2%, though this reflects significant currency headwinds, margins are under pressure and, in what essentially amounts to a profit warning, profitability is expected to dip for the year as a whole while a longer term 20% margin target has been abandoned.

“An update on strategy is expected by the end of the year, when Read may face some clamor to sell underperforming market research assets.

“The recent struggles WPP has endured have wider implications for investors. Advertisers are seen as good bellwethers for the economy because companies will increase spending on ads when they are feeling positive and scale back during tougher times.

“WPP can offer particular insights due to its scale, breadth and geographic reach.”

Halfords

“A positive update from bike and car accessories retailer Halfords bucks the negative trend seen on the high street in recent months.

“Like-for-like sales are up nearly 3% in the 20 weeks to 17 August and full year guidance remains intact.

“While the robust trading is encouraging, it is important not to get carried away given Halfords served up a profit warning as recently as May.

“However, it does provide some evidence that new CEO Graham Stapleton’s spending on customer service, staff training and marketing, while initially undermining profitability, may be beginning to have some impact on the performance of its stores.

“The market will get a further opportunity to judge Stapleton’s strategy at an investor day on 27 September.”

These articles are for information purposes only and are not a personal recommendation or advice.