Update on PZ Cussons and Ted Baker

PZ Cussons released a trading update yesterday (12^th June), and, the impact of adverse currency movements was there to be seen.

For its year ended 31^st May, PZ Cussons, whose portfolio includes brands such as Imperial Leather, Carex and St Tropez, expects its pre-tax profit to increase around 6% over last year’s figure of some £108m.

That growth, according to the company, was achieved despite weakening currencies, which dented figures by some £12m. Excluding that impact, the rise in pre-tax profit would’ve been 17%.

Certainly, PZ Cussons’ emerging market woes aren’t unique.

Other players, including global rival, Unilever, whose difficulties were highlighted here recently, have also been feeling the heat of weaker emerging market currencies.

The culprits, in PZ Cussons’ case, were the weaker Australian dollar, Indonesian rupiah and Ghanaian cedi. Meanwhile, the social unrest in the north of Nigeria hasn’t helped the company.

That said, PZ Cussons has an eye on other initiatives to help offset its current challenges: that includes the company’s on-going cost-cutting efforts, as well as its palm oil joint venture with Singapore-based, Wilmar International.

Nonetheless, the company’s shares – which are currently down some 13% from this year’s peak in January – seem likely to remain under pressure as headwinds persist in the interim.

Ted Baker

Expectations leading up to Ted Baker’s market update on Tuesday were that decent momentum would continue, and, that looked to be the case.

For the nineteen weeks from 26^th January through 7^th June, Ted Baker posted around an 18% increase in group revenue.

By segment, sales at Ted Baker’s core retail business rose some 16% over the same period last year. The company’s wholesale business enjoyed particularly strong performance in the period, with around a 25% increase in sales over the same period the prior year.

Meanwhile, the company’s efforts to ramp up its online presence have continued to gain traction –e-commerce now represents around 48% of Ted Baker’s sales.

The company did, however, put a downer on things by announcing that it expects “low double-digit” growth in its wholesale business for the full year.

Ted Baker’s shares…

The company’s shares closed down around 4% on the day and have been trending downwards since – they’re down around 17% from this year’s peak in March. The decline on the day was despite the fact that Ted Baker’s update shows that the company continues to enjoy decent momentum, albeit having slowed somewhat.

Not to mention that the company isn’t resting on its laurels – Ted Baker’s ploughing ahead with its international expansion efforts, and, diversifying its portfolio (its recent move into portable audio equipment, such as headphones, for instance).

Indeed, the company looks to be positioning well to capture further growth.