What’s Going On Here?Shoppers loading up on workout gear and bicycles during the coronavirus pandemic helped British retailers JD Sports and Halfords sound surprisingly upbeat on Tuesday. What Does This Mean?With gyms closed, you’d perhaps think sportswear would fall out of fashion. But JD Sports revealed that – despite coronavirus disruptions in the last three months – it’s hoping to see sales growth return now its stores have reopened. Even so, it wouldn’t be drawn into making predictions about this year’s earnings as a whole.
Car and bike equipment retailer Halfords, meanwhile, said sales of bicycles last quarter were 57% higher than the same time last year – thanks to cycling remaining one of the few permitted activities during Britain’s lockdown. Although people stormed Halfords’ stores to buy bikes, fewer car journeys contributed to an almost 50% drop in its auto parts revenue. Why Should I Care?For markets: Don’t get ahead of yourselves.
Parts of both companies’ updates may have been encouraging to investors but they didn’t exactly buy up either’s shares on Tuesday. Perhaps they were heeding advice from investment bank Citi that stocks globally probably won’t rise much further in the next 12 months. That echoes BlackRock’s strategists saying they favor European stocks over US ones at the moment, with the world’s largest investment manager arguing the Stateside rally can’t go on forever. That mightn’t help UK stocks, though: analysts at Man Group noted leading British stocks haven’t bounced back like others.
Zooming out: The gadget show.
Over in South Korea, electronics giant Samsung also reported a positive second-quarter update. Its profit was 23% higher than a year ago, thanks to rising global internet traffic fueling demand for its microchips. After all, when not riding our bikes from Halfords, we’ve all been stuck indoors, glued to our connected devices. It wasn’t all infrastructure sales, mind you: the company saw gadget sales on the rise too – a potentially encouraging sign for future discretionary spending globally. | 