Comment: Swann’s unlikely to be on the sidelines for long
KATE Swann’s decision to step down from WH Smith is a bit of a setback for those campaigning to get more women in Britain’s boardrooms, although it looks like she will be back running a venture of some sort.
Swann says she does not intend to retire and we can expect her to be in demand when she decides to return to the corporate treadmill.
It’s not been easy running Britain’s best-known stationer at a time when sales of its core businesses have been under pressure. But the company, once an ugly duckling, has indeed become a swan. As one analyst stated, the chief executive has created a more focused business with good growth prospects, having rescued what was seen as a directionless, stumbling conglomerate that could easily have become another high street casualty. Her successor, Steve Clarke, is handed a company in better shape than she inherited nine years ago and analysts are now more likely to support the shares. Some were providing “buy” recommendations after she made her announcement yesterday. This has been helped by a full-year dividend up by 20 per cent and impressive cash flow of £91 million. There are growth opportunities in the travel business.
There is no escaping the fact that management expect trading to remain challenging, though Swann will be around until next June to oversee the next half-year trading period which should continue at a similar rate of progress.
The shares have outperformed the market by 7 per cent over the past month and by 17 per cent on a three-year view and analysts are confident enough to expect more upside.
Asian shadow hangs over luxury brands
LUXURY brands have been enjoying the recession, making hay from cash-rich customers picking up a bargain or wanting to cheer themselves up, and, of course, benefiting from the recession-free emerging markets.
But there have been a few stumbles along the way and Burberry gave its investors a fright last month when it issued a profits warning.
Yesterday it eased their concerns with an 8 per cent rise in first-half revenue, despite a fall in footfall. It seems the high-rollers were out in force to give the label a pick-me-up.
The worry overhanging Burberry, and probably others like it, is a bit of a slowdown in China.
These latest results should provide investors with some confidence, but a number of challenges await, not least the impact of a wider slowdown on its growth plans.
Europe is also still in intensive care and if the emerging markets, particularly in Asia, do slip into a prolonged downturn it will undoubtedly start to hurt those who have so far managed to ride out the recession relatively unscathed. That progress has given shares in Burberry a boost in recent years but investors need to remain vigilant.
Direct Line shares jump welcomed by RBS
DIRECT Line was sold for considerably less than it might have got at its peak but Royal Bank of Scotland will be pleased to have seen the shares jump to an immediate premium on their debut yesterday.
There are regulatory and competitive concerns ahead that might yet weigh on future growth, but the market hopes the relative success of the biggest float of a UK company since Standard Life six years ago will prompt others such as Santander UK to re-ignite their own plans for a listing.
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Weather for Edinburgh
Sunday 26 May 2013
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