Good day for European indices, Elon Musk pay deal fails again, UK retail sales disappointment, On The Beach outlines ambitious growth targets and Marston’s posts big profit growth

“European equity markets got off to a solid start with gains across all the major indices. This included a 0.5% rise in the FTSE 100 to 8,353, led by commodity producers and banks,” says Dan Coatsworth, Investment Analyst at AJ Bell.

“Among UK mid-caps, Currys took a beating after Deutsche Bank downgraded its rating on the stock from ‘buy’ to ‘hold’ and cut its price target from 95p to 85p. The shares have already had a good run this year and the broker is worried about costs and product pricing, triggering a bout of profit taking in the market on the stock.”

Elon Musk Pay

“Elon Musk is already the world’s richest man so losing out on a $56 billion pay award from Tesla doesn’t leave him searching down the back of the sofa for loose change. However, it’s the principal of the matter that’s frustrated the entrepreneur. He argues that shareholders should decide if he gets the money, not judges.

“Fundamentally, it is difficult to justify anyone deserving $56 billion for a corporate pay package. It’s an obscene amount of money and will be seen as insulting to the tens of thousands of workers at Tesla who probably earn a tiny fraction of that amount.

“The key issue lies with Musk’s power over decision-making and a lack of independence in the boardroom. The board may have approved the proposed pay deal but the judge ruled they were under too much influence from Musk.

“It’s somewhat ironic that Musk now has an influential role with government efficiency. He’s looking for ways to save money and stop unnecessary spending, yet he continues to think that Tesla should line his pockets with $56 billion.”

Retail Sales

“The BRC-KPMG Retail Sales Monitor made for unpleasant reading, with UK sales down 3.3% year-on-year in the four weeks to 23 November, against 2.6% growth last November.

“Black Friday falling later in the calendar is partly to blame, although doom and gloom around the Budget will almost certainly have depressed consumer appetite for spending.

“Rising energy bills and interest rates not falling as fast as previously hoped are additional negative factors. Retailers will be keeping their fingers crossed for a last-minute shopping spree in the run-up to the Christmas period.

“Discounts are prevalent which indicates retailers have accepted they can’t be aggressive on pricing in the current economic environment. They will have focus on quantity of goods sold, not quality of profits. The last thing they want is to be left with mountains of unsold stock so shoppers might find there are bargains to be had in the weeks to come as they fill their festive baskets.”

On The Beach

“Shareholders will be popping out the cocktail umbrellas as specialist holiday provider On The Beach demonstrated the benefits of a Ryanair partnership as it enjoyed a record summer and reinstated dividends alongside a share buyback.

“On The Beach sells beach holidays online and earns a commission on these sales. It has no physical sites and doesn’t own planes, which means it does not need to employ lots of capital to grow. Its main costs lie in marketing. The company also sells holidays offline through third-party travel agents.

“What’s put the market in a sunny mood are the company’s ambitious medium-term targets for sales, earnings and margins. The company has experienced slowing demand at the more budget end of the market, showing that pressures on household spending are having a negative impact, although this represents a decreasing share of the company’s overall business.

“On The Beach is looking to boost its exposure to long haul beach holidays and has begun serving customers in the Republic of Ireland. Targeting city breaks is also seen as an opportunity.”

Marston's

“The first set of numbers since Marston’s completed the sale of its brewing business offer an early endorsement of its pubs-only strategy.

“Encouragingly, the group has seen strong bookings ahead of Christmas despite an uneven consumer backdrop. While the full-year results showed profit and revenue gains with improved margins, the company has signalled a path to substantially increased cash flow.

“The sale of the brewing assets has helped bring down borrowings and a refinancing of its remaining liabilities could provide the group with greater flexibility.

“Marston’s notes an impact from the changes in the Budget to employers’ National Insurance contributions and the living wage but seems to feel these are manageable.

“The company has benefited from having a bias towards boozers which are community-centred and located in suburban and rural areas rather than city centres. This chimes well with socialising trends in the wake of the pandemic.

“All-in-all, shareholders are likely to be raising a glass to CEO Justin Platt as he approaches the end of his first year in charge, with the shares up more than a quarter year-to-date despite a challenging market environment.”

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