|Bid||2,337.00 x 0|
|Ask||2,340.00 x 0|
|Day's Range||2,335.00 - 2,367.00|
|52 Week Range||2,011.00 - 2,659.00|
|Beta (3Y Monthly)||1.13|
|PE Ratio (TTM)||20.24|
|Forward Dividend & Yield||0.45 (1.94%)|
|1y Target Est||2,786.87|
How far off is Associated British Foods plc (LON:ABF) from its intrinsic value? Using the most recent financial data...
(Bloomberg Opinion) -- A $69.90 polka dot dress from Zara has become the fashion hit of the summer. Despite little email or social media promotion from the chain, the flowy, universally flattering mid-length frock has become so ubiquitous that someone has created an Instagram account to collect sightings of it out in the fashion wilds – including several that appear to show multiple women wearing it to the same event.The frenzy around the garment epitomizes the ability of the brand’s parent, Inditex SA, to ride a sartorial wave.But the company, founded by Spain’s richest man, Amancio Ortega, is coming under intensified pressure. Rivals in the U.S. and Europe are catching up to its short production lead times. Meanwhile, cheaper upstarts such as Associated British Foods Plc’s Primark and Boohoo Group Plc, are burnishing their fashion credentials.There is no doubt that Inditex’s business model has served it handsomely for more than four decades. But its approach must prove its mettle now more than ever. Otherwise, its advantages risk being gradually whittled away, along with the group’s industry-leading profitability.The retailer, of course, is famous for its fast supply chain. Many competitors order from factories at least six months in advance. But Inditex’s brands, led by Zara, which accounts for about 70% of group sales, produce most of their garments within the current fashion season. About 57% of products are made close to its headquarters in Arteixo, northern Spain, including at facilities in Portugal, Morocco and Turkey. This means Zara clothes can go from design to shop floor within a matter of weeks.Just as important as the tempo is its unique process of developing ideas.It starts with Zara’s army of store managers, who communicate what’s selling and what trends are emerging to the commercial team within Inditex’s sprawling head office. This is not some complex exercise in big data; it’s a conversational approach to absorbing what shoppers want. Designers, who sit nearby, incorporate that feedback into their creations.This has all added up to spectacular growth. But, not only is the company maturing, the competitive landscape has become more difficult. Progress from here will be much harder work.Social media makes it easier for all retailers to see what is hot. Just take those polka dots: Even Topshop, now widely regarded as a bit of a fashion has-been, also managed to produce a stand-out spotty dress. At the same time, retailers from Britain’s Next Plc to Gap Inc. in the U.S. are finally shortening their supply chains. They are still not as speedy as Inditex, but they are narrowing the gap.Another risk is the rise of online shopping. Most stores find that the high cost of fulfilling these sales squeezes profitability. But Inditex’s process is not all that different from what it’s already doing, and that helps shield its margins from the digital onslaught. Store managers telling the head office that they need three puff-sleeve blouses and two pairs of chunky sandals is similar to an individual placing the same order from her laptop. Indeed, Inditex is fond of pointing out that it was a digital company long before the rise of e-commerce.Despite all of its advantages, Inditex’s operating margin has been shrinking for the past six years. Consequently, the group is opening fewer, larger stores, and plans to increase space in prime locations by 5-6% this year. This is the right strategy, but it means that it won't be able to count on large-scale store openings to boost revenue growth. The company is also overhauling its management. Pablo Isla, executive chairman since 2011, will cede his chief executive officer role to Carlos Crespo. By elevating the chief operating officer to the top job, Inditex is clearly trying to wring the maximum benefit from the business model, in order to continue to stay ahead of rivals.At its heart is fashion. We’re at a moment in apparel retailing in which technology is often framed as the lynchpin of any success or turnaround. Investors have been dazzled by newcomers StitchFix Inc. and Revolve Group Inc., which tout their ability to use algorithms to create and buy the right product selection. Executives from the likes of Gap and American Eagle Outfitters Inc. emphasize more personalized digital experiences as a way to win over customers.And while Zara counts on technology, such as by using radio frequency identification to know exactly where every organza halter-neck top and utility boiler suit is, much of its dominance is actually due to something more old-school: it knows how to make clothes that people want – even before they do.Though cost control is always important, what will be crucial for Crespo is ensuring that Zara’s fashion compass stays perfectly calibrated. Putting style at the center of everything the company does is essential, not only to ensure that Zara can continue to charge a premium for the latest looks, but also for ensuring it doesn't emulate rival Hennes & Mauritz AB and end up with a pile of unsold stock.As sales growth has slowed in recent years there have been questions as to whether Inditex has retained its fashion flair, particularly with fewer discernible trends to chase.That polka-dot dress shows that it is still capable of churning out the blockbusters. To stay ahead of increasingly nimble rivals, it must produce a steady stream of equally Instagram-friendly fashion hits.To contact the authors of this story: Andrea Felsted at firstname.lastname@example.orgSarah Halzack at email@example.comTo contact the editor responsible for this story: Jennifer Ryan at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Based on Associated British Foods plc's (LON:ABF) earnings update in March 2019, analyst consensus outlook appear...
(Bloomberg Opinion) -- That pile of unsold clothes at Hennes & Mauritz AB just keeps on growing.The retailer said its inventory level reached $4.4 billion on May 31, up from $3.9 billion a year ago.But look past all those unwanted off-the-shoulder dresses and denim cut-offs, and the drop in pre-tax profit, which reflected the strength of the U.S. dollar and investments in stores and online. H&M is finally showing signs of going in the right direction.Firstly, that inventory pile is becoming more manageable. It was 18.3% of sales at the end of the second quarter, compared with 18.6% at the end of the first quarter. In fact, H&M said that the reduced need to discount to offload excess stock should add 1.5 percentage point to its gross margin in the third quarter.Secondly, the changes that H&M is making, such as upgrading its namesake chain to be more like its Arket and & Other Stories outlets, appear to be chiming with customers.The company said it expected local currency sales this month to be 12% higher than a year ago. That sent the shares up about 10%.But there are challenges. Investors are at risk of getting ahead of themselves.It must sustain the recent increase in demand. That may be possible if the current heatwave continues, but it is not guaranteed.Analysts at RBC also point out that sales may be have been flattered by comparisons with the year-earlier period, when the company suffered from disruption as it implemented a new logistics system.The company also faces risks from the foreign exchange environment, given that its current stock was purchased when the U.S. dollar was stronger. H&M is more at risk from the currency escalating than rival Inditex, because it sources more of its products from Asia.And the competitive landscape is not getting any easier. Associated British Foods Plc’s Primark is continuing to expand across Europe and the U.S. and when it does so, it is opening ever more sophisticated stores.H&M’s shares are up 25% so far this year, and trade on a forward price earnings multiple close to that of Inditex.As I have argued, H&M is doing all the right things. Investment in its emerging brands is necessary to expand the top line, while the group is also now giving more attention to its core chain, which is squeezed between Primark at the low end, and Zara at the more premium level.There is also always the possibility of a buyout lurking in the background, given that chairman Stefan Persson and his family own about half of the shares.Sales growth must be sustained, and inventory shrunk substantially to demonstrate that H&M is finally out of the fashion wilderness.To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Jennifer Ryan at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Associated British Foods plc (LON:ABF) is a company with exceptional fundamental characteristics. Upon building up an...
Associated British Foods plc (LON:ABF), a large-cap worth UK£20b, comes to mind for investors seeking a strong and...
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift...
The FTSE 100 index lost 0.7 percent on its worst day in a month, but the midcaps gained 0.4 percent with gold miner Centamin leading gains after a strong quarterly update. The blue chips, which had touched a near seven-month high in the last session, lagged European markets where strong earnings from the likes of SAP and Credit Suisse kept a lid on losses. Bellwethers Shell and BP dropped from multi-month highs as crude prices retreated after having jumped to their 2019 highs this week as the United States pushed to tighten sanctions against Iran.
It reported flat adjusted earnings per share of 61.1 pence for the 24 weeks to March 24 with a near wiping out of profit from its sugar operation offset by growth in its other businesses. Group revenue rose 1 percent to 7.53 billion pounds. The group had cautioned that sugar profit would be significantly lower this year, reflecting lower European Union prices for contracts negotiated at the end of the last financial year.
In 2005 George Weston was appointed CEO of Associated British Foods plc (LON:ABF). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Then we'll look at...
Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card! Today we'll evaluate Associated British Foods plc (LON:ABF) to determine whether it could have potential as an investment idea...
Babcock, a key supplier to Britain's ministry of defence, said on Wednesday Cairnie will assume the role on Turner's retirement at the annual general meeting on July 18. Turner's resignation in January came amid a decline in Babcock's share price and company warnings that income from nuclear decommissioning would fall sharply.
Farmers in western Europe have begun sugar beet planting, with first indications pointing to a drop in area for the next harvest after a price slump fuelled by the end of European Union production quotas. The market downturn has prompted Europe's biggest sugar refiner Suedzucker to announce the closure of several factories by 2020, which could lead farmers in affected zones to make further cuts to beet planting next year. This year's expected decline in planting should curb EU production and help to turn a global sugar surplus that has been pressuring prices into a net deficit, analysts say.
We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examplesRead More...
The FTSE 100 closed 0.1 percent higher, lagging other major European bourses where investors took comfort from U.S. President Donald Trump's decision to delay raising tariffs on Chinese imports. Lloyd's of London insurer Hiscox, which recently joined the FTSE 100, added 3 percent after reporting a profit for the year that beat market expectations. The pound gained after European Council President Donald Tusk said delaying Brexit beyond the planned March 29 exit date would be a "rational solution" as there was no majority in the British parliament to approve a divorce deal.
It is "unbelievable" the British government is contemplating leaving the European Union next month without a deal to smooth its exit, the finance chief of Associated British Foods, one of Britain's biggest food producers, said on Monday. With only 32 days until Britain is due to leave the European Union, Britain's parliament is deeply split over how, or even whether, the country should leave the bloc. AB Foods owns the Primark fashion chain and food brands such as Ovaltine, Ryvita, Twinings and Jordans.