FTSE 250 movers: Debenhams solid Christmas trading spurs on market

The FTSE 250 was in the black by mid-afternoon Tuesday, rising 124.94 points (0.75%) to 16,783.26.

Debenhams led the charge after the retailer reported solid Christmas trading, beating analysts’ expectations.

For the 19 weeks to 9 January, like-for-like sales were up 1.9%, comfortably beating expectations for a 0.1% drop and better than last year’s 0.8% decline. Group transaction value rose by 2.5% and online sales were up 12.1%. Debenhams said the growth in Online reflects increasing customer confidence in its service as well as later cut-off times and more competitive premium delivery charges.

The company said further progress on its strategic priorities supported its performance, delivering "a good Black Friday" and full price sales growth across the period of 5%. International sales in the period grew in line with expectations, with Magasin du Nord continuing to deliver good growth and record Christmas trading helped by a recovering Danish economy.

Morrison's also delivered an unexpectedly solid Christmas trading update in a welcome turnaround under new chief executive David Potts. Like-for-like (LFL) sales were up 0.2% in the nine weeks to 3 January, miles better than the 2% decline predicted by analysts, with LFL sales including fuel down 0.6% over the period. Revenues were helped by LFL transaction numbers in core supermarkets up 1.3% on the same period last year and online grocery sales nearly doubling. With deflation of 3.2% recorded, this implied same-store volume growth of nearly 3.5%, with the feeling that the stories are beginning to attract customers back.

Interestingly, industry data from Kantar Worldpanel on Tuesday showed the effect on group sales of store closures, with a 2.6% decline in sales over a 12-week period to 3 January. Morrison's said it now expected full year 2015/16 underlying profit before tax to be in the range of £295m-£310m before the £60m restructuring and store closure costs.

However investors weren’t entirely happy with news from Greggs of a healthy 5.2% rise in sales for the 52 weeks to 2 January 2015. The bakery chain said it expected full year results to be in line with expectations, with statutory total sales for the 52 weeks of 2015 up 3.7% against a 53 week year in 2014. Greggs said a growing demand for “on the go” breakfasts was becoming a key sales point with early-morning coffee also becoming more popular, and plans to add “flat white” and an improved “mocha” coffee to its beverage offerings.

But Shore Capital’s Darren Shirley wasn’t warmed by the news, downgrading the company from ‘buy’ to ‘hold’. He noted the company’s warning about the National Living Wage which comes into effect this year, and downgraded the stock on valuation grounds. “with the forecast FY2015 EBIT margin of 8.7% back close to historic highs (9.1% in 2004), we believe we have come to the end of the recent upgrade cycle and following a +50% share price appreciation over the past 12 months expect a more sedate stock price performance in 2016.”

Michael Page’s mixed bag of numbers also didn’t give investors much confidence, reporting record full year gross profits but stating that currency fluctuations had hit fourth quarter results.

The company said exchange rate movements hit full year gross profits of £555.9m by £26m. Group fourth quarter gross profits fell by 0.5% to £135.6m on a reported basis, but were up by 5.3% at constant currency levels.

Page said fourth quarter gross profit growth in constant currencies was delivered “despite trading conditions deteriorating”, notably in its UK and Asia Pacific regions, as well as in Brazil and the Middle East. “However, our businesses in Continental Europe, the US and Latin America, excluding Brazil, continued to grow strongly,” the company said. It added that there was strong growth in Europe, but political uncertainty and the weakness in the oil and gas sector saw a decline of 32% in the Middle East.

FTSE 250 - Risers

Debenhams (DEB) 76.35p 15.68%
Vedanta Resources (VED) 234.20p 12.81%
Morrison (Wm) Supermarkets (MRW) 167.30p 9.85%
Jimmy Choo (CHOO) 132.10p 7.66%
Evraz (EVR) 66.40p 6.24%
Galliford Try (GFRD) 1,541.00p 5.26%
Jupiter Fund Management (JUP) 439.70p 4.82%
Drax Group (DRX) 222.10p 4.47%
B&M European Value Retail S.A. (DI) (BME) 257.00p 3.75%
Amec Foster Wheeler (AMFW) 385.80p 3.71%

FTSE 250 - Fallers

Greggs (GRG) 1,069.00p -12.73%
Michael Page International (MPI) 407.00p -8.87%
Indivior (INDV) 170.80p -4.79%
Hays (HAS) 123.70p -4.77%
Cineworld Group (CINE) 519.00p -3.44%
Just Eat (JE.) 460.50p -3.32%
Home Retail Group (HOME) 139.90p -3.32%
Domino's Pizza Group (DOM) 1,006.00p -3.27%
Acacia Mining (ACA) 176.70p -3.02%
TalkTalk Telecom Group (TALK) 195.80p -2.88%