The Lendlease Group (ASX: LLC) share price has fallen slightly today after the company advised its earnings for FY21 will still be subdued due to uncertainties surrounding COVID-19. At the time of writing, the Lendlease share price is trading 1.62% lower at $14.59. During Lendlease’s annual general meeting (AGM) this morning, the company also announced that it has multiple pipeline projects to be executed in FY21 and beyond.

What’s in the pipeline?

Landlease says that while the financial result announced in August was disappointing, it has made substantial progress on its strategic agenda, including the development of its project pipeline, and creating new investment partnerships.

The company says it added two new major residential projects to its portfolio – Thamesmead Waterfront in London and a partnership with Alphabet Inc‘s (NASDAQ: GOOGL) (NASDAQ: GOOG) Google in the San Francisco Bay Area. These projects have a combined estimated end development value of $37 billion.

Landlease also announced today that several other pipeline projects have emerged that will produce profit and investment grade product beyond FY21. The most notable is the major urbanisation project, Java Street New York, alongside its partner, Aware Super. This project, with an estimated end value of $1 billion, will transform a full city block into more than 800 residential for-rent apartments. The company says it is also making good progress in securing additional projects in Los Angeles and Singapore.

The group says its plan to divest non-core assets was executed after the sale of its engineering business to Acciona in September. This sale follows separate divestments in United States telecommunications and energy businesses. Potential buyers of Landlease’s services business are also in the pipeline for the the new year after the sales process was paused in the wake of COVID-19. 

Despite all these upcoming projects, Lendlease still expects earnings in the first half of FY21 to be subdued due to the pandemic.

However, Lendlease Chief Executive, Steve McCann, remains optimistic for the year ahead, saying:

Despite these impacts, we remain confident that the significant growth in the secured pipeline, the achievement of planning milestones, and expected investment partner appetite, provides the foundation for accelerating development activity to our target of more than $8 billion of completions per annum. That is an increase of more than 80 per cent on our historical completion rate of $4.3 billion per annum over the last 5 years.

How has the Lendlease share price performed in 2020?

In August, Lendlease posted a net loss of $310 million in its full year results for FY20. Like most property companies with international operations, this was mainly due to its exposure to markets with mandated coronavirus shutdowns. The company also said that, at the time, about 207 of its workers had tested positive to the virus, but fortunately none had died.

The Lendlease share price has lost almost 19% in 2020, as the depressed property market took its toll on the company’s business model. The Lendlease share price began the year at $17.95 before dropping to $9.50 in March during the height of the pandemic. Based on its current share price, Lendlease commands a market capitalisation of $9.9 billion.

More reading

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• Why the Downer (ASX:DOW) share price is outperforming today
• Are these beaten down ASX shares bargain buys?
• Why REITs led the pack on the ASX today
• Elections, pandemics and rate cuts. Where to next for ASX share prices?

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The takeover bid didn’t only send the Regis Healthcare Ltd (ASX: REG) share price soaring. It triggered a re-rating among its peers with at least one leading broker upgrading the whole sector.

The Regis share price surged 21.4% to $1.79 in morning trade when the retirement accommodations operator rejected a $1.85 a share bid by Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Takeover bid triggers rally in ASX aged care stocks

With the cat out of the bag, Regis’ rivals like the Japara Healthcare Ltd (ASX: JHC) share price and Estia Health Ltd (ASX: EHE) share price leapt 23% and 17%, respectively.

In contrast, the S&P/ASX 200 Index (Index:^AXJO) is trading 0.2% higher after reversing its morning loss.

It seems opportunistic suitors may be scouring for targets ahead of the aged care Royal Commission’s final report next February.

ASX aged care sector gets an upgrade

“While the recommendations and the resulting Govt policy and funding decisions are uncertain we believe it is reasonable to assume FY21 will be a low point,” said JP Morgan.

“We believe investors should consider building a position in the sector now despite the continuing uncertainty.”

Based on this belief and the prospects for mergers and acquisitions (M&As), the broker upgraded its recommendation on the Japara share price and Estia share price to “overweight” (or “buy).

Royal Commission’s final report not a big risk

What’s more, the release of the Royal Commission’s findings may hold some positives for the aged care sector.

Given that around 60% of aged care facilities are running at a loss, the Royal Commission is likely to recommend increased government funding for the sector.

This doesn’t mean there aren’t risks. The biggest is increased regulation, which JP Morgan warns may offset the benefits from increased funding.

Risk-reward starting to look appealing

However, the broker doesn’t believe this is a key risk as regulators will not want new rules to lead to poor care outcomes.

Two other risks to the sector also looks to be easing. These are occupancy and property price risks.

“Falling occupancy has been a key challenge over the last year. While pressure remains, we believe it has likely bottomed given the non-discretionary nature of the demand and reduced negative media coverage,” said JP Morgan.

“Concerns over the impact of a drop in residential property prices have also receded as asset prices have stabilised and the pandemic has been well managed in Australia.”

Further, the ongoing rotation into value stocks may provide an extra tailwind for the sector.

More reading

• ASX 200 up 0.1%: CBA’s APRA update, Mesoblast rockets, Oil Search sinks
• Why the Atlas Arteria (ASX:ALX) share price is falling today
• Here’s why the Regis (ASX:REG) share price has soared by 21% today
• Harmoney (ASX:HMY) share price drops lower following IPO
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) has fought back from a weak start and is pushing higher. The benchmark index is up 0.1% to 6,556.8 points.

Here’s what is happening on the market today:

CBA’s APRA update.

Commonwealth Bank of Australia (ASX: CBA) is the only big four bank pushing higher today. Australia’s largest bank was given a boost this morning when APRA gave it a thumbs up for its progress with the Prudential Inquiry Remedial Action Plan. As a result of this, the operational risk overlay imposed on the bank has now been reduced from $1 billion to $500 million with immediate effect. Commonwealth Bank notes that this reduction represents an increase in Common Equity Tier 1 capital of 17 basis points.

Mesoblast share price rockets.

The Mesoblast limited (ASX: MSB) share price is rocketing higher on Friday after announcing a major deal with pharma giant Novartis. The two parties have signed an exclusive worldwide license and collaboration agreement for the development, manufacture, and commercialisation of its mesenchymal stromal cell (MSC) product remestemcel-L. Novartis will make a US$50 million upfront payment and could pay over US$1.25 billion in milestones.

Sydney Airport traffic update.

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is dropping lower after releasing its traffic update for the month of October. During the month, Sydney Airport’s total passenger traffic was 94.3% lower than the prior corresponding period. A total of 225,000 passengers were passing through its gates during the month. Domestic traffic was down 92.6% on the same period last year.

The best and worst ASX 200 performers.

The Mesoblast share price is far and away the best performer on the ASX 200 today with a 15% gain. This follows its agreement with Novartis. The worst performer has been the Oil Search Limited (ASX: OSH) share price with a 6% decline. Oil price weakness and a broker downgrade are weighing on its shares.

More reading

• Takeover battle for Regis (ASX:REG) share price triggers sector-wide upgrade
• Sydney Airport (ASX:SYD) share price resilient despite plummeting passenger traffic
• Why the Atlas Arteria (ASX:ALX) share price is falling today
• Mesoblast (ASX:MSB) share price rockets higher on major Novartis agreement
• CBA (ASX:CBA) share price in focus after APRA Remedial Action Plan update

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Orthocell Ltd (ASX: OCC) share price is 17% higher this morning, after the company released positive results in its CelGro nerve repair study. At the time of writing, Orthocell shares are trading at 44 cents per share.

About Orthocell 

Orthocell is a regenerative medicine company dedicated to the development of novel collagen medical devices and cellular therapies for the repair and regeneration of human tendons, bone, nerve and cartilage defects. 

The company’s regenerative medicine products include CelGro, a naturally derived collagen medical device for tissue repair. CelGro is designed for use in multiple indications to augment the surgical repair of tendons, bone, peripheral nerves and articular cartilage.

The product is approved for sale within the European Union for a range of dental bone and soft tissue procedures and is being readied for its first approval in the US and Australia. 

Positive results in CelGro nerve repair study 

On Friday, the company announced that its patient enrolment for the CelGro nerve regeneration trial is now complete. To date, this includes the repair of 35 nerves in 19 patients. Positive long-term clinical data shows nerve repair with CelGro results in predictable and consistent restoration of upper limb function. 

Patients in the clinical trial suffered traumatic nerve injuries following motor vehicle, sporting and/or work-related incidents, resulting in partial or total loss of use of their arms and, in more severe cases, also their legs and torso. 

Results from 10 participants (19 nerves) 24 months after treatment with CelGro showed upper limb function was restored in 17 of 19 (89%) nerve repairs. These results follow the clinical data of the same ten participants 12 months after surgery, announced on 9 October 2019. Patients ceased, or significantly reduced, prescription pain medication, and in many cases returned to work and participation in recreational activities. 

This news was well received by the market, with the Orthocell share price up 17.33% at the time of writing. 

Next steps 

Orthocell managing director Paul Anderson said:

Following these positive results validating the interim data, our team is progressing regulatory applications in Australia and will commence the US regulatory study shortly to make this treatment accessible to the millions of people who experience nerve damage annually.

CelGro’s global addressable market in peripheral nerve repair is estimated to be worth more than US$7.5 billion per annum, with approximately 3,000,0000 procedures that could use CelGro completed each year. 

More reading

• Why the Nanosonics (ASX:NAN) share price is edging higher today
• Sydney Airport (ASX:SYD) share price resilient despite plummeting passenger traffic
• Stock market crash part 2: why investor fear could create buying opportunities
• Why the Atlas Arteria (ASX:ALX) share price is falling today
• Here’s why the Regis (ASX:REG) share price has soared by 21% today

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Nanosonics Ltd (ASX: NAN) share price is trading ever so slightly higher on Friday after the release of an announcement.

In late morning trade the infection prevention company’s shares are up a touch to $6.45.

What did Nanosonics announce?

This morning Nanosonics announced that I-MED Radiology Network has signed an agreement to upgrade their entire fleet of over 200 trophon EPRs to the new trophon2.

According to the release, I-MED is Australia’s largest and one of the world’s most respected imaging specialist groups.

It was also one of the first adopters of trophon EPRs and today is the largest user of the trophon technology in Australia.

In addition to upgrading its entire trophon EPR fleet, I-MED is further expanding its trophon installed base. This is to ensure all clinics in their growing network have a group wide standardised practice for automated high level disinfection of ultrasound transducers, as well as state of the art disinfection traceability.

Nanosonics’ CEO and President, Michael Kavanagh, commented: “We are proud to continue our partnership with I-MED as they upgrade their entire fleet of over 200 trophon EPRs to the new trophon2. The trophon2 brings enhanced clinical workflow as well as full traceability for ultrasound probe decontamination to their entire network.”

“Nanosonics has over 24,000 trophon units installed globally, the majority of which are the first generation trophon EPR model. In 2018 Nanosonics introduced the trophon 2 model which delivers a range of important benefits to customers across usability, clinical efficiency and traceability. These customer benefits present a significant opportunity for upgrades from the trophon EPR to trophon 2 over time,” added Mr Kavanagh.

The company didn’t provide any details in relation to the financial impact of the move, nor did it say when the upgrade will commence or complete.

More reading

• The ASX shares to shine during AND after the COVID-19 recovery
• 2 top ASX healthcare shares that could be market beaters
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• Latest ASX small cap buy calls from top brokers
• Top brokers name 3 ASX shares to buy today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is up 26% so far in November. 

That’s despite passenger traffic through the airport remaining a tiny fraction of its pre-COVID levels, as revealed in the company’s latest traffic report for the month of October.

Like most every ASX travel share – think Qantas Airways Limited (ASX: QAN) and Webjet Limited (ASX: WEB) – investors rushed to sell their Sydney Airport holdings in the first months of the global pandemic.

From 17 January through to 19 March, the Sydney Airport share price plunged 48%. But, following the strong performance of the past few weeks, shares are now down less than 19%, year to date.

By comparison the S&P/ASX 200 Index (ASX: XJO) is down just over 2% so far in 2020.

We’ll look at the October traffic figures below. But first…

What does Sydney Airport do?

Sydney Airport Holdings owns a 100% interest in Sydney Airport. The international gateway connects to more than 90 other airports around the globe.

The company is headquartered in Sydney. Its two main business units – Aviation (Sydney Airport) and Leasing & Advertising Opportunities ­– provide aeronautical, retail, property, car rental, and parking and ground transport services.

Sydney Airport shares first began trading on the ASX in 2002.

Sydney Airport share price defies short term gloom

In its October traffic report released this morning, Sydney Airport revealed that the return to normal travel volume looks to be some ways off yet.

The company stated that its total passenger traffic in October was 94.3% lower than in October 2019, with only 225,000 passengers passing through its facility last month.

Not surprisingly, international travel is the most impacted, with international passenger numbers down 97.4%. But the domestic figures were nothing to celebrate yet either. The 187,000 passengers Sydney Airport reported for October represents a 92.6% fall from the year before.

Sydney Airport did report a “modest recovery in domestic traffic in October” which it said came thanks to travel restrictions between New South Wales and South Australia and New South Wales and the Northern Territory being lifted.

It noted that it doesn’t expect passenger traffic to grow strongly until government travel restrictions are eased.

Despite another month of sluggish traffic, investors clearly appear to be looking beyond the gloomy data and towards the eventual reopening of one of Australasia’s most important transport hubs.

In morning trading, the Sydney Airport share price is down 0.5%.

More reading

• Why the Webjet (ASX:WEB) share price is up 48% in November
• Macquarie (ASX:MQG) picks best ASX stocks to buy for 2021 post-COVID recovery
• The ASX shares to shine during AND after the COVID-19 recovery
• ASX 200 Weekly Wrap: ASX continues to hit post-COVID highs
• 3 ASX dividend shares rated as buys by brokers

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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There is a very real threat that a second stock market crash will take place in the coming months. Risks such as heightened political uncertainty in Europe and North America, the ongoing coronavirus pandemic and a challenging economic outlook could weigh on the prospects for a wide range of businesses over the near term.

However, the existence of such a threat could create buying opportunities for long-term investors. Many stocks appear to be undervalued at the present time. This may mean that they offer recovery potential as the economic outlook gradually improves.

A second stock market crash

There is always the potential for a stock market crash to take place. Indeed, they have previously occurred without prior warning on many occasions.

However, at the present time it could be argued that a market downturn is more likely than is usually the case. Risks such as heightened political uncertainty in Europe and North America could act as a drag on investor sentiment. Similarly, the coronavirus pandemic remains a known unknown in terms of its impact on the wider economy. This may prompt weaker investor sentiment over the coming months.

Therefore, the occurrence of a second stock market crash would probably not be viewed as a surprise by many investors. This does not mean that it is guaranteed to take place. However, the threat of a market downturn may mean that the idea of buying stocks becomes less popular among some investors.

Buying opportunities in an uncertain market

The potential for a further stock market crash means that many high-quality companies currently trade at low prices. Certainly, some share prices have recovered from the lows reached earlier this year. However, many other companies continue to have valuations that are significantly below their long-term averages. This suggests that investors are very cautious about their prospects, which could create buying opportunities for their long-term peers.

In some cases, investor caution is warranted. Some companies have weak balance sheets and may fail to benefit from a long-term economic recovery. However, other companies have sound financial positions and are likely to return to positive profit growth over the long run. Such businesses trade at prices that are below their intrinsic values in some cases. This could indicate that they are among the most attractive buying opportunities available at the present time.

A long-term recovery

Of course, some investors may feel that there is no guarantee of a recovery from a stock market crash. While that may be the case, the past performance of indexes such as the S&P 500 Index (SP: .INX) and FTSE 100 Index (FTSE: UKX) suggests that a return to previous record highs is very likely.

Therefore, investors who build a diverse portfolio of high-quality businesses when they trade at low prices could generate impressive returns as the economy recovers and investor sentiment improves.

More reading

• Why the Atlas Arteria (ASX:ALX) share price is falling today
• Here’s why the Regis (ASX:REG) share price has soared by 21% today
• Why the City Chic (ASX:CCX) share price is edging lower today
• The Orica (ASX:ORI) share price falling, profits down 31%
• Could the Aristocrat (ASX:ALL) share price be a leading ASX 200 growth share?

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Atlas Arteria Group (ASX: ALX) share price is falling in morning trade today after the company released a business update regarding COVID-19 movement restrictions. At the time of writing, the Atlas Arteria share price is sinking 1.47% to $6.72. In comparison, the S&P/ASX 200 Index (ASX: XJO) is marginally down 0.2% to 6,546 points.

Let’s take a closer look at what is dragging the Atlas Arteria share price lower.

France

Recent lockdown measures taken by the French Government in late October resulted in softer traffic levels across the APRR network of roads. As COVID-19 cases continued to increase, the country entered a nation-wide lockdown in an attempt to halt community transmission of the virus. Essential businesses, such as factories, farms, construction sites, public administration offices, schools and childcare, remain open. People have been urged to work from home wherever possible and restrictions on movement is being enforced.

Despite the above, Atlas Arteria noted that traffic has been more resilient during the first two weeks of the second lockdown than when the pandemic first struck. In percentage terms, traffic is down roughly half of the reductions that were recorded in March and April. The company pointed out that November is seasonally one of the lowest traffic months for light vehicles on its roads.

Heavy vehicles using APRR’s toll road networks is tracking along very well, matching Q3 performance.

Germany

Similar to its neighbour, Germany entered a ‘lockdown light’ for a period of four weeks in early November. The measures taken involve the restriction of private gatherings and the closure of all entertainment venues. As a result, traffic levels have experienced weaker demand, around 20% to 25% lower than 2019.

Atlas Arteria noted that the current lockdown isn’t as strict as the earlier March-April lockdown in Germany.

United States

At the end of Q3, the company reported traffic at 44.8% below 2019 levels. However, in the past two weeks alone, traffic has been slowly improving to record at 40% below the same period last year.

Until recently, restrictions in Virginia had continued to relax from July 2020. Authorities have encouraged people to work from home, but schools and kindergartens have progressively opened.

Atlas Arteria share price summary

The Atlas Arteria share price has steadily been catching up to where it was in February, during which it reached an all-time high of $8.54. Currently trading at a discount of 21% to this high, Atlas Arteria has a market capitalisation of $6.4 billion.

More reading

• Harmoney (ASX:HMY) share price drops lower following IPO
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises on mixed Thursday
• Why ASX bank share dividends might be surging soon
• China is a much bigger threat to the ASX bull run than COVID

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Regis Healthcare Limited (ASX: REG) has shot up 21% after the company officially rejected a buyout offer from Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

After the bell last night, Washington H. Soul Pattinson had tabled an offer of $1.85 per share to acquire the aged care company Regis.

The Regis share price is now up 21.36% to $1.79, while the Washington H. Soul Pattinson share price has dropped by almost 3% to $28.09 at the time of writing.

What was offered in the deal

Washington H. Soul Pattinson had proposed that Regis shareholders can either accept the offer in cash, or a scrip/share alternative in a new company, which will allow them to retain an exposure to Regis as a privately operated business.

The proposed offer price of $1.85 represented a 25% premium to the closing price on 19 November 2020. It’s also a 59% premium to the average share price over the past month.

Why Regis rejected the offer

Regis says that today’s offer of $1.85 follows another rejection by the Regis board of an earlier proposal from Washington H. Soul Pattinson and Skip Capital in September of $1.65 per share.

The company says both offers “materially undervalued the company having regard to its medium to long term prospects.”

In an announcement released to the market today, Regis says its decision to reject the offer was based on three underlying factors:

• the Aged Care Royal Commission is due to deliver its final report on 26 February 2021, with substantial policy and funding reform expected to be recommended to the Commonwealth Government
• the Commonwealth Government has committed publicly that it will respond to the recommendations of the Aged Care Royal Commission in the May 2021 Budget and has foreshadowed substantial additional funding for the aged care sector
• the easing of the impact of COVID-19 resulting in improving trends in the aged care sector performance.

Regis also advised its shareholders not to take any action in relation to the proposal.

How did the Regis share price perform in 2020

The company has been ripe as a takeover target as the Regis share price lost almost 30% this year in a difficult period faced by aged-care facilities due to the pandemic. In August, the company reported poor full year results with a drop in net profit after tax (NPAT) of 54%. With the current share price of $1.79, the company has a market cap of more than $444 million.

More reading

• Washington H. Soul Pattinson (ASX:SOL) launches Regis Healthcare (ASX:REG) takeover
• Get real: 2 ASX dividend shares to boost your income stream
• 3 top ASX dividend shares to buy
• The Soul Patts (ASX:SOL) share price just hit a 52-week high
• 2 ASX dividend shares growing their dividend every year

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The City Chic Collective Ltd (ASX: CCX) share price has come under pressure on the day of its annual general meeting.

In morning trade the fashion retailer’s shares are down 1.5% to $2.70.

What did City Chic reveal at its annual general meeting?

At the meeting City Chic provided investors with a trading update for the first 20 weeks of FY 2021.

According to the release, the company’s comparable sales are up 18.7% financial year to date excluding its temporary Victorian store closures.

Including these temporary store closures, its comparable sales growth would have been 7.9%.

While these figures include its online business, which continues to grow strongly in the ANZ market, management notes that its stores (excluding Victoria) also delivered positive comparable sales during the 20 weeks.

Management also provided an update on its Avenue business. It advised that Avenue continues to trade well. It was included in its comparable sales from mid-October, with positive comps for the four weeks up to the annual general meeting.

One side of the business not performing so positively was its City Chic website in the United States. While its performance continues to improve, it is still down versus last year. Though, City Chic product sales on the Avenue website are delivering growth for the City Chic brand in the United States.

Another work in progress is its gross margin. Management notes that its gross margin has improved significantly since the peak of COVID disruption but is still slightly lower than the corresponding period last year.

Outlook.

No guidance was given for the remainder of the year, but City Chic’s CEO, Phil Ryan, appears cautiously optimistic on the future.

He commented: “As our customers have adopted a more casual style, we have been able to facilitate the expansion of these categories through our agile design process and supply chain. This expanded range has reduced our reliance on the dress business to drive growth, and as dress sales recover into FY22 and beyond, we expect this to provide incremental growth as we maintain the casual share of wallet we have captured.”

“We are just about to enter the critical trading period that includes Black Friday, Cyber Monday and Christmas and we feel comfortable with our stock position. Given the large trading months in this quarter for all our geographies, our earnings in the first half traditionally outweigh earnings in the second half of the financial year,” he concluded.

More reading

• Top ASX shares to buy in November 2020
• 3 great ASX growth shares to buy in November
• 2 great value ASX shares I’d buy in a heartbeat
• 3 small cap ASX shares I’d buy with $3,000 right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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