There was plenty to keep us on our toes this year as these results would give us a first meaningful look at how our businesses were performing in this period of heightened inflation and we would get to hear if weaker consumer confidence was having a negative effect on trading.

Two businesses that we are shareholders in and that the market has been particularly pessimistic on  are Greggs and Howden Joinery. These are two businesses that earn the great majority of their earnings from the pocket of the UK consumer and that have experienced significant increase in the cost of their raw materials, from pork, to timber, to energy and just about everything in between. Surely it was all doom and gloom when these businesses reported recently? No. We are pleased to say that in both cases, both we and the market were surprised at just how resilient performance was. To pick out a few highlights from each statement:

• Greggs: grew sales by 23% over 2022, they opened 186 new stores and there were 1.1 million individual active users of the Greggs app by the end of the year – they added 700 thousand new users in 12 months, 1% of the UK population!! Evening trade is their fastest growing period of trade and almost a quarter of their stores are now open until 8pm, for all your pizza and chicken goujon needs. If you can’t beat them, join them!
• Howden Joinery: are far and away the leading kitchen supplier in the UK and, given weak consumer confidence and falling house prices, one would have thought kitchen sales would have taken a hit. Not so. In fact, revenue rose 22% and although the management are mindful of the current macroeconomic environment, they repeated plans to increase market share from their rivals, and with a 24-hour turnaround between order placed and collection they remain the go-to supplier for the building trade.

Despite the daily pessimistic macroeconomic news flow that is splashed across our newspapers and the ten o’clock news, we reiterate that the best place to be invested in is, and will always be, a portfolio of high quality UK names that will still outperform in spite of the short-term macroeconomic pessimism.

The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.