Supermarket trends, Entain update and Hut Group’s big pitch on offer on Tuesday

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Tuesday should offer several titbits for investors of various tastes to get their teeth into, including new supermarket industry data, an update from Ladbrokes owner Entain and a capital markets day for under-fire THG.


There’s also the much-anticipated pre-feasibility study for Greatland Gold’s Havieron prospect in Western Australia, which should determine the future of the project.


Grocery list


With deep-pocketed potential buyers still sniffing around after Asda and Morrisons have been snapped up, the monthly Kantar report comes at a time of heightened interest for the grocery sector.


A month ago, it revealed how shopping habits are changing again now that people are returning to the office and to school and generally spending more time outside of the house.


The single weekly big shop, encouraged by the government throughout the lockdown, will progressively be abandoned in favour of more frequent top-up buying, the data analytics group predicted, with average basket size shrinking in shops and online.


“We shouldn’t expect to shift from habits learned in lockdown straight back to pre-COVID patterns overnight,” Kantar said.


“More people returning to towns and cities should also provide a boost for cafes and coffee shops, where spending last September was GBP187mln lower than in 2019. We anticipate that a good amount of that lost cash should return to the high street this year but that means it will move away from the grocery sector.”


Tesco PLC (LSE:TSCO) was the only other grocer to increase sales value year-on-year, up 0.2% for the preceding 12 weeks compared to the same period in 2020, with number-two Sainsbury’s sales falling 1.6%.


Ocado Retail, the online joint venture between Ocado Group PLC (LSE:OCDO) and Marks and Spencer Group PLC (LSE:MKS), was hit by the online trend, falling by 1.5% compared with a year ago.


Entain multitudes or damp squib?


The third-quarter trading update from Ladbrokes and Sportingbet owner Entain PLC (LSE:ENT) comes as the board continues to mull a GBP15bn takeover offer from US-based DraftKings on 22 September.


A major reason that directors are likely to be taking so long considering the bid is that the FTSE 100’s business in the US is tightly tied up with partner MGM Resorts, which has stated that “any transaction whereby Entain or its affiliates would own a competing business in the US would require MGM’s consent”.


What’s more, Entain is likely to still harbour significant growth ambitions in the US and around the world, with some investors and commentators calling for the group, which has proved its expertise in the online gaming market over several years, to look the Draftking gift horse in the mouth and continue on its own path – or at least see if it can wrangle a better deal from MGM.


The third-quarter results “could prove a bit of a non-event” if there is no progress on the deal, says analyst Nick Hyett at Hargreaves Lansdown.


The MGM joint venture reported net gaming revenues of US$357mln in the first six months of the year and all being well should do even better in the second.


Signs of strong progress would not only be welcome for investors but “might convince management to turn down the offer on the grounds that it undervalues the business”, Hyett said.


THG tries to get investors back on side


THG PLC (LSE:THG), parent of the Hut Group, is holding an online capital markets event focused on its Ingenuity arm and its new FIR/ST concept, which stands for Fulfilment & Inventory Retrieval/Storage Technology.


Boss Matt Moulding and chief financial officer John Gallemore, who runs Ingenuity, are using this event to try and get investors back on side after the shares were floated at 500p January, quickly rose above 700p but have since tumbled to below 440p.


Already held back by some investors not being entirely clear why an online retailer that made less than GBP20mln of first-half revenue commands a market cap north of GBP5bn, the company’s reputation has been further dented by a negative write-up by boutique equity analysis firm, The Analyst, which forecast the shares will continue to dwindle to 260p within two years.


Significant announcement expected on Tuesday 12 October:


Finals: DX PLC, Maestrano Group PLC (AIM:MNO), YouGov PLC


Trading announcements: Entain plc


Economic data: UK BRC retail sales, UK unemployment rate, Kantar grocery data

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