FTSE steady as gas prices surge, Frasers profits up and On The Beach founder & CEO to exit

“The FTSE 100 failed to hold on to early strength and was 0.2% lower after the first hour of trading,” says AJ Bell Investment Director Russ Mould.

“Gas prices have hit their highest levels in two months as wintry temperatures hit Europe. In reality the respite provided by a mild autumn was set up to be short-lived. Relatively limited European storage capacity meant there was always a risk of the continent moving from feast to famine when it comes to gas supplies.

“With relatively few economic announcements today, attention is likely to turn to producer prices and consumer sentiment data from the US tomorrow.

“These should help set the scene ahead of next week’s decision from the US Federal Reserve. It is widely expected, though not guaranteed, to reduce the pace of rate hikes from 75 basis points to 50 basis points.”

Frasers

“Frasers loves an acquisition or three and the purchase of various companies has helped to drive sales over the past year.

“Much more interesting is how profit has shot up, which shows the company is able to make good money from its expanding empire and offer the type of products that consumers are still eager to buy.

“It puts Michael Murray off to a good start as chief executive and shows to the market that the business is still capable of thriving without Mike Ashley at the wheel.

“Frasers is often misunderstood, with many people thinking it is just about Sports Direct and the pile ‘em high, sell ‘em cheap mentality. In fact, Frasers has a growing premium retail offering in the form of Flannels which sells luxury designer fashion for adults and children.

“The roll-out of new Flannels stores, and success with the online channel, were behind 22.2% organic revenue growth from that part of the business in the period.

“Weak retailers are going to struggle in the current environment and so Frasers may be ready to pounce on any opportunities to buy known brands on the cheap.

“The company’s game plan is to acquire brands or businesses that will help to expand its skillset and customer reach, whether that’s a posh menswear outfit to support Flannels, a credit offering to cater for a certain type of customer or a business that brings with it social media expertise. Frasers is certainly not afraid to try new opportunities.

“Innovating and moving with the times has enabled the group to thrive, and that’s something which many retailers are too afraid to do when times are tough.”

On The Beach

“The latest numbers and outlook from online holidays platform On The Beach should have been cause for celebration. Instead of getting the pina coladas out, however, the mood in the market has been dampened by news of CEO and founder Simon Cooper stepping down.

“The succession plan looks straightforward, which suggests there won’t be too many changes to what has been up until now a highly successful strategy, particularly before the pandemic intervened.

“A very good online platform enabled On The Beach to rapidly take share in the beach holiday market, offering holidaymakers better flexibility than they could get with the big tour operators at a more attractive price.

“On The Beach has benefited from being a purely internet-based business without the extra costs associated with running its own resorts or travel shops.

“However, Morton will have to work hard to ensure the brand remains relevant and affordable for people struggling with highly pressured household finances.”

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