Vegans look away now, but meat is meat whether you eat it in a restaurant or at home. In fact, we seem to eat (or waste?) more meat at home than in meals out, which is great news for sausage-maker Cranswick (CWK), which saw sales soar by 22.8% in the 13 weeks to 27 June, the company’s first quarter. The improvement was 19.2% even stripping out acquisitions. All sites remained fully operational during lockdown.
The Government scheme to subsidise eating out may stabilise the situation, but meanwhile the better trend has continued into Cranwick’s second quarter and already it is talking of the outlook for the full year being ahead of previous expectations. Not many companies can say that.
Cranswick shares had shot ahead of pre-coronovirus levels to top 4,000p but for no obvious reason have slipped back to 3,730p, below the level they traded at in mid-February. This represents a buying opportunity.
Food for Thought
Nothing much changes at Marks and Spencer (MKS), except that the Covid-19 outbreak has exaggerated the figures. Food continues to prosper with total sales up 2.5% despite the closure of hospitality and travel franchise units. Like-for-like sales were up an impressive 10.6%. The trend is improving as more locations recover and the supply agreement with Ocado (OCDO) for home deliveries starting in September will bring a further boost. So will the launch of 500 new products.
Clothing and home is also said to be on an improving trend, though you would hardly notice. In the eight weeks since the reopening of stores, sales have been down a mere 29.9% on a year earlier, compared with a 38.5% fall in the past 13 weeks, and 49.5% over 19 weeks.
Meanwhile, international sales remain volatile.
Although the outcome is not quite as bad as the scenario M&S painted in its last update, it is hardly inspiring. M&S shares fell on the announcement to stand at around 110p - less than half the level they reached just before Christmas. They were above 500p less than five years ago.
The low point was 85p in May. I can see them slipping back below 100p unless there is a dramatic improvement in clothing and home sales in the next update.
Building Blocks
It’s good to see dividends being restored, even when at a small fraction of the previous pay-out. So let’s be thankful for small mercies at housebuilder Persimmon (PSN), which is proposing to pay an interim dividend of 40p. Given that it paid a total 235p last year, this year’s effort will fall well short, but at least it is a signal that life for housebuilders is getting back to normal.
Sales and profits were naturally well down in the first half to June 30, but at least the average selling price rose. Since the start of July, however, sales per site are up 49% compared with the same period last year and the forward order book is 21% higher than it was 12 months ago.
Persimmon has had a further boost with news that new chief executive Dean Finch will be released from his current post at National Express (NEX) in 10 days time and will be joining sooner than the end of the year as previously expected.
I hold shares in three housebuilders (though not Persimmon) and I feel this augurs well for the sector, where shares have suffered along with the general stockmarket. Persimmon now stands at around 2,710p. I believe it will head back towards its pre-crisis level of 3,300p over the rest of this year.
