Top UK Stocks to Watch: Whitbread shares rise as bookings improve

Whitbread remains confident even as the UK delays its roadmap out of lockdown, Trainline ticket sales rebound to their highest level since the pandemic began, Halfords reinstates its dividend after a stellar year while Dr Martens prepares to make its maiden payout.


Top News: Whitbread sees pick up in bookings as lockdown eases

Whitbread said virtually all of its hotels and restaurants in the UK are now reopen and that it has seen ‘encouraging trends’ and ‘very strong forward booking trends’ since lockdown restrictions were eased.

Around 98% of all its UK sites were open during the 13 weeks to May 27, but sales remained well below pre-pandemic levels as lockdown restrictions continued to bite. Accommodation sales were 60.9% lower than pre-pandemic levels in the period while sales of food and drink were down 86.0%.

However, Whitbread said things have improved since May 17, when restrictions were eased and overnight stays were allowed once again. It said forward bookings have improved across the business, particularly in areas popular with tourists, but that sites at airports and in central London continue to struggle due to the restrictions on international travel.

‘The group traded significantly ahead of the market during the quarter, despite the impact of the UK government restrictions that were in place for the  majority of the first quarter. Trading in the UK since May 17, when overnight leisure stays were permitted, and when our restaurants fully reopened for indoor service, has been encouraging. Additionally, our forward bookings continue to improve, benefiting from the anticipated post-lockdown bounce in leisure demand, and a continued gradual improvement in business bookings. During the first quarter we opened 10 new hotels in the UK,’ said chief executive Alison Brittain.

Whitbread said it has not changed its outlook for the rest of the year despite the UK’s decision to delay easing the last of restrictions by four weeks.

‘We expect leisure demand in coastal and other tourist locations to remain very strong throughout the summer, while the full recovery of leisure demand is dependent on the final release of lockdown, and the return of unrestricted events. Trades business demand remains resilient, albeit at prices some way below pre-COVID levels, and our expectation is that office-based business demand does not start to recover in earnest until the Autumn,’ Whitbread said.

Whitbread also announced that it is aiming to become net-zero by 2040, a significant acceleration from its previous 2050 target.

Where next for the Whitbread share price?

Whitbread share price has been trending lower since hitting a post pandemic high of 3720p in late February. After finding support at 2950p the share price has been picking up. A bullish MACD indicates that there could be more upside to come. 

The price has cleared its 50 dma at 3280p. Bulls will be looking for a breakout above the descending trendline resistance at 3430p. A breakthrough here brings 3580p high April 19 into play ahead of 3720p. 

Failure to break above the descending trendline could see the share price move back towards support at 3280p the 50 sma and ascending trendline, which could prove a tough nut to crack. A break of this technical level brings 3160p June low into play. 

Trainline ticket sales reach highest level since pandemic began

Trainline said net ticket sales reached their highest level since the start of the pandemic during the first quarter of its financial year, particularly in the UK as lockdown restrictions eased.

The news sent Trainline shares 4.5% higher in early trade this morning to 280.8p, rebounding after hitting an eight-month low a week ago.

The rail and coach ticket selling platform said group net ticket sales were up 324% in the three months to the end of May to £334 million from just £79 million the year before, when the pandemic started to bite.

UK ticket sales are ‘significantly outperforming the market’ and were up 269% in the quarter and improved every single week during the period. Sales in the early stages of the second quarter are also higher year-on-year. It said more Brits are buying their travel tickets digitally, with online penetration having risen to 37% in the quarter compared to just 21% in the last financial year.

International sales were up 432% after its four largest markets returned to pre-pandemic levels of growth in May.

Still, there is a long way to go before the business is back at pre-pandemic levels. Overall quarterly net ticket sales remained almost two-thirds lower than before the crisis hit.

‘It's very encouraging to see people returning to train travel as lockdowns and restrictions gradually ease. By the end of May we were selling more tickets than we were in the same period two years ago,’ said chief executive Jody Ford.

‘Having maintained our investment in product and tech throughout the pandemic, we are uniquely placed to support the industry recovery while leading the market shift to online and digital channels. This is reflected in the step up in eticket penetration and the pace of our recovery this quarter,’ she added.

Dr Martens prepares to pay dividends after solid start since IPO

Iconic footwear brand Dr Martens reported its first set of annual results since going public earlier this year, revealing double-digit growth in revenue and earnings, and said it will start paying dividends in the next 12 months.

On Thursday, the company said revenue rose 15% to £773.0 million in the year to the end of March from just £672.2 million the year before, in-line with the 14% to 15% growth target outlined at its IPO.

Ebitda, the company’s core earnings measure, soared 22% to £224.2 million from £184.5 million.

Adjusted pretax profit was up 30% to £151.4 million, but reported pretax profit was down 30% to £70.9 million after the company booked over £80 million of exceptional costs related to its IPO.

Dr Martens said its decision to focus on selling directly to customers and cut out the middle men had paid off during the pandemic as physical retail stores were closed and consumers shifted online. Ecommerce sales were up 73% in the year and accounted for 30% of total sales. It is aiming to make 40% of its sales online in the medium term.

‘Our product durability and timeless design are rooted in a sustainable, long-term approach, and our brand custodian philosophy continues to guide the decisions we take. This underpins the financial guidance we laid out at the time of the IPO which is unchanged. Whilst the global trading environment remains uncertain, the strength of our iconic global brand means we look to the future with confidence,’ said chief executive Kenny Wilson.

Dr Martens said it expects to deliver revenue growth in the high-teens in the new financial year before falling back to the mid-teens in the following year. It also intends to start paying dividends this year.

Dr Martens went public earlier this year at 370 pence per share and have found considerably higher ground since then, but the stock was trading 9.3% lower in early trade this morning at 449.3p.

Halfords reinstates progressive dividend after stellar year

Halfords has reinstated its dividend and promised to significantly grow payouts after posting higher revenue and profits during a ‘transformational’ year that saw the motoring and cycling specialist benefit from being an essential retailer.

Revenue rose over 13% in the year to £1.29 billion. Underlying pretax profit rose 72% to £96.3 million, toward the top end of its £90 million to £100 million guidance range that was upgraded earlier this year. Reported pretax profit at the bottom line jumped to £64.5 million from just £19.4 million the year before, but came in slightly below the £81.2 million expected by analysts.

Halfords shares were down 3.5% in early trade this morning at 392.1p, but are still trading over 50% higher than the start of 2021 and more than double its price a year ago.

Halfords said it gained market share in cycling and motoring services, which achieved record revenue in the year despite lockdown weighing on demand for travel.

‘It was a year in which Halfords' transformation into a service-led business was rapidly accelerated, and we were particularly pleased to achieve a record revenue performance in the strategically important area of motoring services,’ said chief executive Graham Stapleton.

Halfords said it is hiring 2,000 additional staff by the end of the new year to boost the number of people able to service electric vehicles, bikes and scooters as demand for services continues to rise.

‘Demand for our services remains strong in the new financial year, and our touring categories are currently performing particularly well given the trend towards staycations this summer. In the longer-term, we remain confident in the future prospects for the UK's motoring and cycling markets and our ability to compete strongly in both,’ he added.

The positive momentum has continued into the new financial year. Like-for-like growth has exceeded pre-pandemic levels in the first nine weeks. Compared to two years ago, retail motoring and its Autocentres delivered like-for-like growth of 6.6% while cycling jumped 42%.

‘Although we expect a continuation of the volatile and unpredictable trading seen throughout FY21, we are positive on our prospects for FY22. In the short term, we expect the market share gains we have made across our Autocentres business to continue, alongside an increase in more regular and routine motoring journeys. Within our Retail business, pent-up demand and the restrictions on foreign travel will give rise to increased demand for our touring and cycling products, whilst motoring products should benefit from more normalised traffic patterns,’ said Halfords.

Halfords said it is aiming to report pretax profit of ‘above £75 million’ in the new financial year. Although it expects to make more progress, Halfords has warned of headwinds beyond the pandemic this year. There remains supply challenges in the cycle industry and it is expecting consumers to seek out more value when shopping, which could cause tighter margins.

The strong performance prompted Halfords to reinstate its dividend with a final payout of 5.0p per share for the year. Payouts had been suspended when the pandemic erupted to preserve cash and because profits were expected to decline but, with a stronger balance sheet and a rising bottom-line, dividends have returned and look set to grow quickly. Halfords said it plans to raise its dividend to 9.0p in the new financial year and adopt a progressive policy over the long-term.

Safestore on track to deliver 26% earnings growth

Safestore Holdings said it expects to deliver another year of strong earnings growth after its bottom-line boomed during the first half, driven by increased demand for self-storage during the pandemic.

Revenue rose 11.1% in the six months to the end of April to £88.1 million as it benefited from broadly flat prices but higher occupancy rates.

Underlying Ebitda climbed 18.5% to £54.4 million while reported pretax profit jumped 67% to £167.3 million from £99.7 million the year before. The larger jump at the bottom-line was caused by a much larger gain on investments on its properties during the period.

Safestore said cashflow improved by 23% to £43.9 million, prompting it to raise its interim dividend by 27% to 7.50 pence from the 5.9p payout made the year before.

‘I am pleased to report a very strong performance in the first six months of the year with trading momentum accelerating in the second quarter driven by the strength of our UK performance combined with continued robust results from our French and Spanish businesses,’ said chief executive Frederic Vecchioli.

‘The accelerating momentum in our second quarter performance gives me confidence in relation to the outlook for the full year and I anticipate that the business should deliver Adjusted Diluted EPRA Earnings per Share for 2020/21 at least at the top end of our previous guidance of 37p to 38p, which would represent growth of at least 26% compared to the prior year."

Safestore said like-for-like sales in the new financial year came in ahead of expectations, with like-for-likes in May up 16%.

Safestore shares were trading 1% higher in early trade this morning at 948.3p.

How to trade top UK stocks

You can trade a variety of stocks with Follow these easy steps to start trading the opportunities with UK stocks.

  1. Open a account, or log-in if you’re already a customer.
  2. Search for the company you want to trade in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade 

More from Equities

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account