Travis Perkins and Mulberry are today’s big share-price movers: here’s why

Travis Perkins and Mulberry issued market-moving updates today. Roland Head explains the impact on each company’s share price.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shares in two well-known UK brands moved sharply when markets opened on Wednesday. The Travis Perkins (LSE: TPK) share price fell by 10%, trimming its 12-month gain to 38%.

Meanwhile, luxury goods retailer Mulberry Group (LSE: MUL) saw its stock climb 20%. Shares in the fashion firm have risen by more than 50% over the last year.

What’s happened — and why are shareholders seeing these big moves today?

Travis Perkins share price falls on Wickes split

Shares in FTSE 250 builders’ merchant Travis Perkins are falling today, but this isn’t due to any bad news from the company. What’s happened is that the Wickes business, owned by Travis Perkins, has now been spun out into a new company.

Travis Perkins’ shareholders will shortly have shares in Wickes credited to their share accounts. Wickes shares will trade on the London market under the symbol WIX.

Today’s share price fall reflects the loss of the value of the Wickes business. But Travis Perkins shares could rise again in the next few days, as the firm plans to carry out a share consolidation.

This means Travis Perkins’ existing shares will be replaced with a reduced number of new shares. The number will be calculated to try and “maintain broad comparability” in Travis Perkins’ share price before and after the demerger.

All of this will happen automatically — existing shareholders will see the TPK shares in their accounts replaced with new shares. The overall effect should be that the combined Travis Perkins and Wickes shares will be roughly equal to the value of Travis Perkins shares before the split.

Of course, the two companies will trade independently now, and their values may move in different directions, over time. Shareholders who don’t want to own shares in both businesses can choose to sell either Travis Perkins or Wickes.

Why split?

The reason given for the split is Travis Perkins is focused on larger trade customers, whereas Wickes is focused on DIY, home improvement and local trades — the “do it for me” market. Travis Perkins’ management believes both companies will be able to perform better independently.

Even before today’s split, both companies were said to be trading well. On 15 April, Travis Perkins issued a first-quarter trading update reporting “an encouraging start to the year.” Management said first-quarter sales at Travis Perkins and Wickes were significantly ahead of the same period last year.

Mulberry share price rockets 20%

Luxury handbag group Mulberry has been through a tough time in recent years. Mulberry’s pre-tax profit has fallen from a high of £36m in 2012 to a loss of £48m in 2020. This slump wasn’t just due to the pandemic — the group reported a £5m loss in 2019.

Finally, shareholders have had some good news. The company says that sales during the year to 31 March have been better than expected. This is due to stronger online sales and reduced discounting.

Mulberry had been expected to report a loss for the year just ended, but the company now expects to report “a small underlying profit before tax” for 2020/21.

Mulberry’s share price remains more than 85% below the highs of over 2,100p seen in 2012. But the company’s performance does seem to be improving. More details are expected in July, when Mulberry will publish its 2020/21 results.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »

Investing Articles

3 ideas to help investors aim for a million-pound Stocks & Shares ISA

The UK has a growing number of Stocks and Shares ISA millionaires, and this plan may be one of the…

Read more »

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »