4:00 AM 25th September 2021
Market Analysis: Kingfisher Group, DraftKings, PA Cussons & Playtech
Ross Hindle, retail sector Analyst at Third Bridge comments on Kingfisher Group’s results:
"Kingfisher experienced strong sales growth yet again, with H2 LFL sales up 22.8% y/y driven by a strong demand for home improvement across both retail and trade channels. What is further-more impressive is that both transaction volume and average basket size is up on a 1-year and 2-year basis."
"Before Covid-19 double-digit growth in the DIY space was something of an anomaly, however a few months on and growth remains stronger than ever."
"Lockdowns were a boon for the group but with online sales still low it looks like more needs to be invested into digital and data.”
“A structural change towards working-from-home have made people look at their homes differently. Many families have spent months redirecting money into home improvements, especially home offices, outdoor spaces, and garden sheds."
"With a September surge of commuters now returning to the office and new leisure opportunities available, the pace of Kingfisher’s growth is likely to dwindle. Ultimately these results are being announced in the context of second-half headwinds and an elevated comparison from last year."
"The big questions for Kingfisher are: how do they retain the newfound consumers they picked up during Covid and how do they get Millennials more comfortable with DIY? Kingfisher's investment into digital is therefore doubly important as they seek to capture the data and the hearts of young people who don't see DIY as something relevant."
Harry Barnick, Senior Analyst at Third Bridge reports on the DraftKings’s bid for Entain:
“DraftKings has made a USD 20B offer to acquire Entain. The offer almost doubles the bid made by MGM earlier this year, which was rejected by shareholders.
“Entain is an attractive asset based on its experience in online gambling, where it is European leader in sports betting and online casino.”
"Draftkings audacious bid indicates it’s willingness to go head-to-head with Flutter owned FanDuel.”
“As shareholder’s mull over the deal, three key questions remain. What will happen to the MGM partnership under DraftKings ownership? Could we see a counter offer lead to a bidding war? Then with the wave of consolidation we are seeing in the market, including 888’s recent acquisition of William Hill’s international assets, investors’ will simply be wondering: which company could be targeted next next?“
Alex Smith, Senior Analyst and Global Sector Lead at Third Bridge comments on PZ Cussons:
“In its first year under its new turnaround plan, PZ Cussons has reported results delivering sales growth for the year in all bar one of its 'Must Win' brands and in all of its geographic regions. A good start albeit undeniably benefiting from pandemic tailwinds early in the financial year.”
"Under CEO Jonathan Myers the group has gone back towards its roots of personal care. This strategy, along with a focus on fewer geographic markets, has helped restore investment levels in priority ‘Must Win’ brands."
"Recent geographic and category disposals have helped PZ Cussons get closer to its customers, speed up decision making and improve agility. However, the company still has a way to go on its digital strategy, where it is seen as being a little late to the party."
"There is no doubt PZ Cussons has benefitted from increased consumer awareness around hygiene due to Coronavirus."
"Sales may be coming off their peak, but our experts say the amount we spend on hygiene and personal cleansing products will be sustained at higher levels than before the pandemic."
"Along with most consumer categories, PZ is having to wrestle with commodity cost inflation. Investors will be watching how successfully the group protects margins and what impact this might have if competitors take a more aggressive approach to market share."
Finally Andrew Garrod, Analyst at Third Bridge reprots on Playtech following company results:
“Playtech has largely reinforced the optimistic message from its May and July trading updates, highlighting that progress is being made against its strategic objectives in the B2B segment.
“Substantial growth in the Americas has been bolstered by LatAm performance, and while the US strategy appears to be gaining traction with license applications pending and partnerships launched, execution remains to be seen. The UK still appears challenging, though good progress is being made in Europe.
"Playtech has gone through a period of intense change, with adjustments to its board, a portfolio rationalisation, and attempts to improve its disclosures.
"Investors will now be looking for signs of sustained growth after a period of underperformance.
"Our experts report that despite a slow entrance to the US market relative to its peers, Playtech's product set - in particular its IMS platform - is well placed to gain market share once more states open up. However, the competitive challenge in core developed markets such as the UK is likely to remain sustained.
"Playtech's competition in the B2B segment is forming something of a pincer movement. On one side Evolution Gaming is wielding an advantage on the live casino side. On the casino piece, Red Tiger, Microgaming, and Blueprint have closed the gap significantly on content quality."
Third Bridge is a global primary research firm that interviews more than 6,000 internationally recognised industry experts and business leaders a year to compile 360-degree market intelligence for institutional investors. www.thirdbridge.com