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Luxury brand Mulberry saw its shares soar more than 11 per cent this week after Sports Direct owner, Mike Ashley, bagged a 12.5 per cent stake in the firm.
Shareholders are probably hoping the buy-in from prolific entrepreneur Ashley will be the shot in the arm the brand needs after a troubled few months. In November, the brand announced desultory results, revealing it had made a £9.9 million pre tax loss for the six months to the end of September.
Mulberry’s share price stands at 259p, since Ashley’s purchase was announced so he could he be the stakeholder that the one-time catwalk favourite needs to turn things around?
Billionaire, Ashley has been making a U-turn in his acquisitions of late, moving away from his fixation with value brands towards higher price point products. He already owns department store, House of Fraser, which is a big stockist of Mulberry products with a number of concessions in its stores, and Frasers has announced it is looking forward to ‘working more closely’ with the high-end brand. Mulberry is still facing turbulent times though – it blamed its latest figures on the tough UK retail climate which hasn’t eased yet, and over the last three years its earnings per share have decreased by an average of 82 per cent per year. Ashley has either acquired or has taken a strategic stake in many firms over the years, including Debenhams, Goals, Game Digital and Evans, with varying degrees of success, so how his involvement in this British stalwart will play out remains to be seen.
Tesla investors may need to fasten their seatbelts as the electric car manufacturer continues its rollercoaster ride. Shares in Elon Musk’s firm had risen up to 36 per cent earlier in the week, but on Wednesday they slumped by 17 per cent before rising another five per cent on Thursday. The stock now stands at $734.37 after a turbulent couple of weeks by anyone’s standards. Overall, the car manufacturer’s stock has gained 134 per cent in the past three months but some analysts have expressed concern that its profit expectations for the first quarter of 2020 are unrealistic. Tesla revealed great Q4 results, with delivery outpacing production to the tune of 7,000 vehicles and the firm’s reclassification as a technology company gave it a larger market cap than the other three major auto firms combined. Analyst, Greg Munster from Loup Ventures, thinks there could be road blocks ahead however saying that Tesla needs to take into account typically poor sales across the car market in the first quarter of the year, small margins on some of its Chinese models and the potential impact of the Coronavirus on Shanghai production. Other analysts also seem to fear that Tesla’s bubble may be about to pop with Barclays forecasting a 65 per cent drop saying that “the recent price action brings to mind Nasdaq c.1999.”
Royal Mail looks unlikely to deliver for shareholders again as it announced it probably won’t reach its transformation targets by 2024, sending share prices falling by 9.7 per cent. Its ambitious turnaround plan looks like it could be scuppered by threat of further strike action as the Communication Workers Union gears up for a ballot. Industrial action has put the postal service under pressure over the last few years and coupled with lower volumes of letters and an increasingly competitive marketplace, it has faced some challenging times.
Royal Mail’s latest trading update revealed its group operating profit for 2019-20 was likely to meet expectations but the threatened strike action is an undeniable blow. Royal Mail had outlined a turnaround plan for the next four years, which included several automated hubs to increase productivity and new initiatives to harness technology. Royal Mail’s share price has lost around 30 per cent in the past year, now standing at 178.90p at the time of writing, so what are the chances that things could pick up for the beleaguered postal service?
Analysts are pessimistic, with Russ Mould from A J Bell saying that: “Royal Mail’s future is pinned on making improvements to productivity through increased automation and arguably better staff morale. It seems to be struggling on both fronts.” Analysts from eToro have also pointed out that Royal Mail’s dividend, one of the highest in the and a big pull for investors, is likely to come under threat if the group does not deliver on some of its promises soon.
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