JUST when it looked like spring was in the air, Jack Frost made a return appearance this week to send a chill down the spine of any clothing retailers who have already cleared their shelves of woolly scarves and gloves.
But Mr Frost’s impact on stunting the growth of Dobbies Garden Centres’ blooming profits is likely to be muted as a strategy of product expansion has made sales of plants less critical.
With like-for-like plant sales falling by three per cent las
t year, that might be just as well, though that downturn was more than made up for by a 19 per cent rise in like-for-like turnover from outdoor living during the year and an impressive 169 per cent growth spurt in its restaurants operation.
The opening of a new store in Ayr helped keep growth on track too, and Dobbies intends to add more new stores, at the rate of two or three a year, at a cost of around £6 million a time. Next in line is the new 20-acre development at Stirling.
Whilst Dobbies’ shares might have scaled an all-time high, at 565p, this expansion strategy should deliver growth sufficient to generate further rises in share values.
Shares in Forth Ports have been making some decent gains too, having risen around ten per cent over the last month to around 1453p, and there is ample scope for more growth, particularly in the light of its recent planning application to Edinburgh City Council for 18,000 residential units. Investors could well benefit from Forth’s shift in focus from sea to land.
Meanwhile, what with falling equity markets and poor sales, life assurance companies have not had their troubles to seek of late. However, there are some encouraging signs to suggest that every cloud has a silver lining and that there is some life in the life assurance market yet.
The life assurance sector has risen 18 per cent in the past six months, with much of that growth prompted by several of last month’s trading statements reporting double-digit rises in new business as consumer confidence returned.
Friends Provident has now reported that sales of new protection products, many linked to mortgages, rose 11 per cent to £77m last year, despite the slowdown in the housing market. New investment business, meanwhile, rose by 13 per cent to £129m with investment sales in the UK up 22 per cent to £59m. With Friends anticipating strong market conditions to persist, this performance could well continue throughout 2005.
Last October Friends paid £183m for Lombard International Assurance, which has been growing rapidly, with compound annual new business growth of 25 per cent over the past ten years. With Friends due to report full-years results in March, there is scope for optimism and further share price gains from their current price at about 165.5p.
Meanwhile, shareholders are hoping for more good news from HBoS when it announces its full-year results on March 2. The bank released an upbeat trading statement last December which included news that its net interest margin had been better than expected, that asset growth had reached around ten per cent and that cost increases would be less than the targeted five per cent rise for the year as a whole.
Nevertheless, with a 25 per cent slice of the UK’s mortgage market, a slowing housing market may make some investors nervous. Such qualms might be at least partly pacified by low levels of unemployment, low interest rates and decent economic growth, ideal conditions for credit quality and loan demand. That’s why HBoS shares look attractive at around the 873p level.
British Airways, meanwhile, has reported a 34 per cent rise in operating profits in its nine-month results for 2004-05. The airline also issued encouraging January traffic statistics revealing that passenger traffic was up eight per cent. Whether or not it can live up to its claim to be the world’s favourite airline might be a moot point, but BA shares now stand around 279.5p and what is not debatable is that its fundamentals remain strong. But whilst BA shares are below their 52-week high of 332p, after a recent rally, shares are unlikely to soar much higher in the short term.
Drew Johnston is a business writer and MD of Blueprint Media.
The full article contains 748 words and appears in Edinburgh Evening News newspaper.
