Markets static ahead of Powell testimony, Premier Foods has exceedingly good time, In The Style goes in the bin and Greggs’ sales soar

“Investors are waiting with bated breath for Federal Reserve chair Jay Powell to appear before the Senate Banking Committee today, eager for any new thoughts on the central bank’s monetary policy and how it will tame inflation,” says Russ Mould, Investment Director at AJ Bell.

“Many people believe the Fed will continue to lift rates as the US economy is so far proving to be more resilient than expected under the circumstances. The next rate decision comes on 22 March and the big unknown is whether the Fed will go for a 25 or 50 basis-point hike. The latter would show the central bank is prepared to keep fighting aggressively and may trigger some investors to reconsider their appetite for risk.

“Mr Kipling cakes maker Premier Foods continues to have an exceedingly good time with trading. The company has shown recent success wasn’t simply down to people being stuck indoors during the pandemic and feasting on sweet treats. Instead, the company is enjoying the benefits of sorting out of its debt problems and being able to reinvest spare cash back into the business to make it more competitive and innovative.

“The same joy cannot be shared with logistics group Wincanton after it lost a contract with HMRC. Making matters worse is a gloomy trading environment, triggering one almighty profit warning from the company. The timing is bad given that a lot of companies have been talking about supply chain problems easing, which indicated a company like Wincanton should find life easier to get goods from A to B.

“In The Style becomes the latest flop IPO in the UK, with the operating business set to be sold for a mere £1.2 million and the shares to delist from AIM. Trading has been awful and its finances as robust as a soggy Weetabix. The fashion retailer floated on the UK stock market almost two years ago to the day, valued at £105 million. It didn’t take long for the problems to appear and the departure of the chief executive at the end of 2022 effectively marked the captain jumping off board before the whole ship sank.”

Greggs

“With the best will in the world and even when household budgets are under real pressure sometimes people are just too busy to make sandwiches. There is always going to be a place for food-on-the-go venues and Greggs’ offering is perfectly pitched in the current environment.

“Cheap, hot, filling food is just what people are looking for and as the company continues to roll out new stores, there are a growing number of outlets where people can snap up these products.

“By introducing a range of plant-based items, like its vegan sausage roll, Greggs has demonstrated an ability to stay on top of shifting attitudes and appetites and win new customers over to the brand. Later openings for a large chunk of its stores should help growth, as will delivery and click and collect orders.

“Even with these advantages the near-20% like-for-like sales increase in the first nine weeks of 2023 is striking. The under-heated response to the numbers reflects the fact that a strong recent run on the stock market has seen a lot of good news already baked into the share price.

“There is no lack of ambition on Greggs’ part, with plans to get to more than 3,000 shops from the current number of just more than 2,300.

“While this is to be applauded, Greggs needs to be careful ambition does not tip over into hubris. Will the brand still be as popular, for example, when economic conditions have improved and people have a bit more money in their pocket?

“However, the company’s record over a long period provides confidence they know what they’re doing and Greggs can lay claim to being one of Britain’s best-run businesses.”

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