Philip O'Sullivan's Market Musings

Financial analysis from Dublin, Ireland

Posts Tagged ‘Argos

Market Musings 21/11/11

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Origin Enterprises issued a solid trading update earlier this morning. Management said the “performance [is] in line with the group’s expectations in the seasonally quiet first quarter of the 2012 financial year”, adding that it “remains comfortable with consensus market estimates for the full year”, helped by the positive outlook for primary food producers. Of course, much hinges on the performance in the second half of Origin’s financial year, which accounts for 85% of the full-year profitability of the group, but given indications of a further loosening of monetary policies in many of the world’s leading economies, I think the outlook for soft commodities will remain positive, which will translate into clear benefits for Origin, which supplies many key inputs into the farming sector. Given this macro backdrop, and the excellent job management has done in repositioning the group through securing strategic alliances for its food and fishmeal operations and concentrating on its core agri-services and agri-inputs operations, Origin Enterprises is a stock I like.

 

(Disclaimer: I am a shareholder in Total Produce plc) Staying with the food sector, I uncovered this piece of information regarding Total Produce – in its recent H1 results the group referred to having increased its shareholding in the leading South African fresh produce company, Capespan, without stating by how much it has increased its shareholding. I note that some six weeks or so after this announcement Capespan disclosed that Total Produce has in fact nearly doubled its shareholding in the company to 20%. This helps cement Total Produce’s partnership with its leading provider of citrus, deciduous and stonefruit categories to the European market.

 

A troubling indicator of the health of Ireland’s retail sector – on Saturday morning I went into the Argos store in the Stephen’s Green shopping centre in central Dublin. Despite Christmas being just over a month away, it had no cashiers on duty at 11.15am, with customer service staff taking payments. If a mass-market chain like Argos needs no cashiers at that hour on a Saturday morning during what is meant to be a seasonally busy time, you’d wonder about how grim things must be for a lot of retailers at this time. Which makes plans to raise the VAT rate by 2% all the more ridiculous. The government should instead be taking a chainsaw to public spending, much of which, as multiple reports from the Comptroller and Auditor General show, disappears into a black hole.

 

Staying with troubling indicators – how’s this for a statistic around the UK housing sector: The average age of a first time home buyer in England is now nearly 43.

 

If you’ve any plans to travel to Moscow, you should check this place out.

 

Finally, on a lighter note, one of my readers flagged this tweet by Martin Geddes:

 

With the Euro, Germany thought it was getting everyone to adopt the Deutschmark. What has happened instead is that Germany got the Lira.

Written by Philip O'Sullivan

November 21, 2011 at 9:43 am

Market Musings 8/9/11

with 2 comments

I was pleased to see a snap-back in equity markets yesterday, with strong performances on both sides of the Atlantic. I haven’t been too surprised by the recent market gyrations – regular readers of this blog know that I’ve been cautioning about extreme volatility in share prices for some time. Hence all of my trades this year have been ‘for cash’, with none on margin.

 

So what has been grabbing my attention of late? The main items of note are an interesting follow up on Switzerland’s interventions in the FX market, speculation around the Obama jobs announcement, Aer Lingus’ traffic stats and share register, the UK retail sector and assorted macro indicators.

 

ZeroHedge had an interesting chart following the SNB intervention – “Here is how Switzerland caught up to the rest of the world in devaluing paper currencies against gold“.

 

President Obama will announce his jobs package later today. Reports suggest that it will cost in the region of $300bn, which works out at over $20,000 for every unemployed American. This is, of course, like many of his administration’s other economic policies, completely unsustainable. I was amused to see a number of Irish commentators praise this sort of Keynesian intervention. Ireland had some similar ‘stimulus programmes’ in the late 1970s that nearly bankrupted the country, so clearly having a poor memory is no obstacle to building a profile in this part of the world.

 

In terms of what the US should be doing, I can not better the always-excellent Jill Kerby, who writes:

 

“America’s jobs crisis will solve itself when debts are cleared, budgets balanced & competitiveness restored. A long haul…”

 

(Disclaimer: I am a shareholder in Ryanair plc) Elsewhere, Aer Lingus reported its latest traffic statistics yesterday. While I am a huge admirer of the carrier’s CEO Christoph Mueller, I was a little disappointed by Aer Lingus’ year-to-date performance. On this measure, passengers carried are down 1.4% relative to year-earlier levels, while load factors have declined by 2.4ppt. This is despite the absence of last year’s volcano-related disruption and a huge increase in traffic at its Aer Lingus Regional partnership, which acts as a feeder into AERL’s other services. Transport Minister Leo Varadkar indicated that the government could sell its stake in the airline yesterday. Here’s the response of its biggest shareholder, Ryanair. Here’s Davy on it.

 

It appears that rioters are the only ones frequenting Britain’s High Street these daysDixons reported a 10% drop in like-for-like sales in the 12 weeks ending July 23. And for more retail woe – Both Argos and Homebase recorded big drops in like-for-like sales in the 13 weeks ending August 27.

 

The IMF cut its Irish growth forecasts yesterday due to a deterioration in the economies of our major trading partners. This mirrors something I wrote earlier this week.

 

Speaking of matters macro related, Greece’s 1-year bond yield hit 97% yesterday.

Written by Philip O'Sullivan

September 8, 2011 at 7:25 am

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