Gloomy Tuesday sees profit warnings galore, Kingfisher lowers guidance, Ocado’s joint venture with M&S showing signs of improvement

“Further cracks are appearing in the corporate world. Gloomy Tuesday saw multiple UK companies issue profit warnings, led by Kingfisher which downgraded its earnings forecasts after a poor show from its Polish operations and a lacklustre turn in France,” says Russ Mould, Investment Director at AJ Bell.

“Fashion retailer Quiz has been having a terrible time, with management blaming inflation for dampening consumer confidence and demand for its products, prompting a near-40% sell-off in its shares.

“Doors and windows group Safestyle says its market slumped in August and September versus last year, and news that it is gaining market share wasn’t enough to prevent a 41% decline in its share price.

“Northcoders, a specialist in training for software coding, saw its share price crash 38% after implying that clients are much more reluctant to commit to training due to budget constraints, job cuts and recruitment freezes.

“Even alcohol seller Naked Wines couldn’t escape the doom and gloom, saying that its new financial year had started off slower than expected, causing its shares to crash 10%.

“These profit warnings suggest investors need to be on their guard for the next earnings season.

'“Further interest rate hikes from the Bank of England and Federal Reserve this week could add to pressures on consumers and businesses, so brace yourself for more market volatility.”

Ocado

“Things are looking up for Ocado’s joint venture with Marks & Spencer. It is seeing a higher number of average orders per week, there is a bigger pool of active users, and the average basket value has improved.

“However, the average basket size is still shrinking, which means it is not a full house for Ocado in terms of progress. While the overall gains are not enough to move the dial for group earnings, with guidance unchanged, the market has focused on the positives and the share price was up 2% this morning.

“Ocado has been singing the same song for a while – promising to make operations more efficient, offer better value for money products and more choice.

“The M&S joint venture was never broken; it was simply stuck in the mud. Nonetheless, this retail business is effectively its shop window for prospective grocery clients.

“If Ocado wants to convince more grocers to use its logistics platform and systems, its JV with M&S needs to be operating flawlessly. So, the more trading updates it can issue such as the latest one, the better it looks in future client negotiations.”

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