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FTSE 250 movers: 4imprint slumps; M&S back in fashion

By Frank Prenesti

Date: Wednesday 24 May 2023

(Sharecast News) - FTSE 250: 18,960.12 , -1.29%.
Promotional products marketer 4imprint Group said trading was in line with expectations, but warned rises in order activity would moderate over the rest of the year.

In a trading update, the company said the first four months of 2023 saw "very strong" demand, with year-to-date total order intake up 22% over the same period in 2022.

"This result was anticipated in our operational planning, which was set firmly in the context of relatively weak, pandemic-affected prior year comparatives in the first quarter of 2022."

"Following a record year for 4imprint in 2022, the business has made substantial further progress in 2023, with the group's operating and financial performance running in line with the Board's expectations.

However, it added that with more challenging prior year comparatives from April onwards, "we expect the percentage increases in total order activity seen in the first quarter to moderate for the rest of 2023".

UK retailer Marks & Spencer delivered a forecast-busting annual profit driven by a major improvement in its food division and said it would reinstate a "modest" dividend in November.

Adjusted pre-tax profit came in at £482m, down from £522m last year, but better than expectations of £431m as labour and staff costs along with an exit from Russia after the start of the Ukraine war. The prior year's figure was also boosted by almost £60m in business rate relief. Revenues rose 9.6% to £12bn.

"While the economic outlook for consumer spending is uncertain, cost inflation remains high, and market conditions are expected to become more challenging, the strategy is beginning to deliver improved performance and there remains much within the group's control," the company said on Wednesday.

"In full-year 2024, modest growth is expected in revenues, driven by omni-channel as well as from the benefits of the accelerating store rotation plan. Further investment in quality and trusted value will be partly offset by actions to mitigate sourcing cost pressures and to reduce waste and stock loss."

The group said cost headwinds in 2023/24 included more than £150m in extra energy and staff costs. It expects to offset these with targeted savings of the same amount.

M&S has not paid a dividend since its 2019/20 year as part of a move to protect its balance sheet during the Covid pandemic and would restart payments in November.

AJ Bell investment director Russ Mould said a push "athleisure" clothing had helped to bring in a younger crowd, "while a greater focus on mainstream items such as casual dresses and denim have made the company more appealing to the general shopper".

"A 25% jump in chino sales might be driven by more people going back to work in the office but not needing to wear a suit, but in reality it's more to do with them coming back into fashion. No longer confined to dads trying to look cool by pairing them with a polo shirt (tucked in, of course) and their running shoes, they're now more socially accepted among broader age ranges," he said.

"It's not all good news, however. The online joint venture with Ocado is undergoing a 'reset' as growth hasn't matched expectations. It is trying new things, but the jury is out on how fast it can achieve success. The Sparks card remains one of the more confusing membership/loyalty schemes on the market and there is certainly more it can do to strike a better chord with customers."

LondonMetric Property reported a robust operational performance in its annual results on Tuesday, leading to growth in EPRA earnings and dividends.

The FTSE 250 company said net rental income for the 12 months ended 31 March totalled £146.8m, up from £133.1m in the previous year.

EPRA earnings reached £101.1m, compared to £93.5m in 2022, and earnings per share rose to 10.33p, up from 10.04p in the prior year.

The dividend per share also saw an increase, reaching 9.5p compared to 9.25p in 2022.

However, LondonMetric said its EPRA net tangible assets decreased to £1.96bn at year-end, from £2.56bn at the end of the 2022 period.

The net tangible assets per share also declined to 198.9p, from 261.1p a year earlier.

"The last year has seen a weaker economic backdrop, elevated inflation and a significantly higher interest rate environment," said chief executive officer Andrew Jones.

"Not surprisingly, this has led to a recalibration of real estate values and conditions that have undoubtedly impacted our approach to leverage and interest rate exposure."

Jones said that while risks and uncertainty remained, the outlook was improving and some confidence was returning.

"Looking forward, we have a strong conviction that our portfolio is firmly positioned on the right side of the long term structural shifts and that it will continue to generate reliable, repetitive and growing income to deliver on our progressive dividend policy."

In a separate development, LondonMetric said it had entered into an agreement to acquire the entire issued and to-be-issued share capital of CT Property Trust.

The board said the acquisition would take place via an all-share offer, under which CTPT shareholders would receive 0.455 new LondonMetric shares for each CTPT share they held.

Based on the closing price of LondonMetric shares on 23 May, the acquisition valued each CTPT share at 85.5p, and the total share capital of CTPT at around £198.6m.

The offer represented a premium of 34.3% to CTPT's closing price per share on the same date.

LondonMetric said the acquisition would result in its existing shareholders holding 90.3% of the enlarged issued share capital, with CTPT shareholders owning 9.7%.

"We believe the acquisition is compelling for both CTPT and LondonMetric shareholders," said chairman Patrick Vaughan.

"The CTPT management team has assembled a high quality platform of complementary assets, diversified by tenant base and geography and with significant reversionary potential.

"The acquisition grows the combined group's exposure to the winning sectors of urban logistics and long income, underpinned by evolving consumer demand and delivering strong rental growth."

Vaughan said that in the current interest rate environment, LondonMetric believed resilient cash flows, scale and liquidity would be the "defining characteristics" differentiating winners and losers.

"The income and income growth characteristics of the CTPT portfolio, combined with select asset management opportunities, should enhance our total return focus, whilst enabling us to drive earnings optimisation and maintain our progressive dividend policy."

In a final, third announcement, LondonMetric said it had finalised the sale of a DHL logistics warehouse in Solihull for £20.5m.

The sale, which reflected a net initial yield of 4.15%, was executed at a slight premium to the book value as of 31 March.

It said the warehouse spanned an area of 142,000 square feet, and was originally acquired as part of a portfolio in 2017 for £15.7m.

Following a lease extension to 10 years, with a break option after five, the property now had six years remaining on the lease.

The sale yielded an ungeared internal rate of return of 9%.

"With the recent strengthening in the investment market, we have reacted to an opportunistic off-market approach to sell this warehouse," Andrew Jones commented.

"The proceeds of the disposal will be used to further reduce our floating rate debt and loan-to-value."

FTSE 250 - Risers

Marks & Spencer Group (MKS) 185.70p 13.51%
Network International Holdings (NETW) 368.60p 2.11%
Tullow Oil (TLW) 25.50p 2.00%
Bakkavor Group (BAKK) 94.00p 1.73%
Molten Ventures (GROW) 272.80p 1.56%
Premier Foods (PFD) 132.60p 1.38%
Close Brothers Group (CBG) 952.00p 1.33%
Syncona Limited NPV (SYNC) 161.00p 1.26%
PureTech Health (PRTC) 221.00p 1.14%
Wood Group (John) (WG.) 141.60p 0.93%

FTSE 250 - Fallers

4imprint Group (FOUR) 4,445.00p -9.38%
LondonMetric Property (LMP) 178.50p -5.05%
Redrow (RDW) 499.60p -4.93%
Carnival (CCL) 760.40p -4.78%
Crest Nicholson Holdings (CRST) 245.60p -4.58%
Marshalls (MSLH) 300.60p -4.39%
Vistry Group (VTY) 757.50p -4.11%
ASOS (ASC) 437.00p -3.91%
Travis Perkins (TPK) 885.40p -3.89%
SSP Group (SSPG) 262.00p -3.82%


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