Yahoo Finance Trending tickers: AO World | Legal & General | Sig | Topps Tiles
The latest investor updates on stocks that are trending on Wednesday
AO World (AO.L)
AO World has swung to an annual profit on the back of a cost-cutting drive, with the retailer forecasting a return to sales growth in the year ahead.
The group posted pre-tax profits of £7.6m ($9.65m) for the year to 31 March against losses of £10.5m the previous year.
However, revenues slumped 17% to £1.4m over the year after stripping out loss-making sales and as weak shopper confidence impacted demand amid the cost of living crisis.
AO World said it is “confident” of returning to sales growth by the end of the financial year to next March and that it will start “prudently” investing in the business again.
The online electrical goods firm has just implemented a restructure at the business which included ending the trial of a “store-in-store” format with Tesco (TSCO.L) and shutting down its business focusing on the housebuilding sector.
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The company, which said it was forced to introduce delivery charges for all online orders to cover rising costs, said the job cuts had particularly focused on senior and middle management roles.
Russ Mould, investment director at AJ Bell, said: “AO’s decision to streamline its business has so far paid off, given the shift back to profit. It has closed operations in Germany, ended a trial with Tesco and ceased working with housebuilders, effectively saying it wasn’t worth the time and effort.
“An internal rejig of teams and a simplified product range are some of the other initiatives undertaken to right-size AO into a more profitable entity.
“It’s a good start, but the proof in the pudding will be sustained profit growth, and the market won’t be able to judge its success until well into next year.”
Legal & General (LGEN.L)
Legal & General (L&G) fell in early trading despite citing “confidence” in achieving its five-year ambitions.
The financial services and asset management company said a transition to a new accounting method will not hurt its “strategy, solvency or dividends”. The IFRS 17 accounting standard for insurers was ushered in at the start of 2023.
“It only impacts the reporting of our annuity and protection businesses, changing the timing of recognition of earnings from these products but not the quantum,” Legal & General said.
The FTSE 100 (^FTSE) company added it is on track to generate £8bn to £9bn of capital for the period between 2020 to 2024. L&G has transacted £6.bn worth of pension risk transfer transactions year-to-date.
"There has been a step-up in the number of pension schemes approaching the insurance market, alongside an increase in £1bn+ transactions, with several more such pension schemes intending to complete transactions this year,” L&G said.
SIG (SHI.L)
Shares in SIG fell sharply in early trading after the building materials specialist warned that full-year profits would come in at the lower end of expectations.
"We expect weak and uncertain demand conditions throughout the rest of the year, along with a continued, but further moderating, revenue tailwind from input price inflation," the company said in a statement.
The Sheffield-based firm saw flat like-for-like revenue at £1.4bn in the six months to the end of June as fewer sales were partly offset by price inflation. Amid a turnaround plan, the London Stock Exchange-listed specialist in insulation products said demand was notably softer in the last two months, particularly in France and Germany.
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SIG said: "Whilst trading in recent weeks leads us to be more cautious as to the timing of any broad-based improvement in demand conditions, the second half will benefit from ongoing productivity initiatives as well as an expected profit on one specific property move."
Analysts currently expect the company's full-year earnings before interest and tax to come in between £65.3m and £84m.
Topps Tiles (TPT.L)
Topps Tiles shares were higher after the company said it was on track to deliver profit in line with expectations, aided by strong sales in the third quarter and an easing of supply pressures.
Topps Tiles, which has over 300 stores across the UK, said like-for-like sales were up 2.5% in the third quarter, helped by reduction in inflationary pressures on cost of goods and shipping costs.
Victoria Scholar, head of investment at Interactive Investor, said: “Topps Tiles reported third quarter sales growth of 4.4% with like-for-like sales up 2.5% year-on-year. It expects first half adjusted profit before tax to be materially higher than the first half and kept its full-year outlook unchanged.
“Topps Tiles was a COVID stay-at-home stock market winner thanks to the boom in DIY and home refurbishments while restaurants, bars and travel were out of reach. However, shares struggled during the economic reopening period and after the onset of war in Ukraine when cost inflation began to ramp up, putting pressure on margins and demand.”
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