Bears leave Marks looking threadbare

By GEOFF FOSTER FOR MAILONLINE
Updated:

 

RETAILING giant Marks & Spencer looked a little down at heel as hungry bears mauled the stock ahead of Tuesday's interim results.

Industry gossip suggests it is struggling again in clothing and that its well-documented recovery story has run its course. Heavy selling saw the stock touch 283 1/2p before closing 6p lower at 287 1/2p on turnover of almost 25m.

M&S has admitted that second-quarter trading was disappointing. September was bad, but October is feared to have been even worse.

The store chain may have claimed it held market share for the half-year, but leading analyst Philip Dorgan at broker Panmure doubts whether that was the case in the second quarter.

He believes the market will now focus on the lack of long-term growth at M&S.

He expects lower first-half pre-tax profits of £300m, down from £306m last year, while an expected downbeat statement about second-half prospects should lead to swingeing downgrades of analysts' full-year forecasts.

Meanwhile, in an effort to boost men's underwear sales and reach the younger end of the market, M&S this week launched a raunchy range called Something for the Weekend.

Black hipsters with the word Stud spelt out in diamante stones on one leg currently appear more attractive than the purchase of one ordinary share ahead of Tuesday's statement.

Renewed selling on jitters over the Competition Commission's long-awaited decision on extended warranties left Currys-to-PC World electrical retailer Dixons 5p down at 134 1/2p. Extended warranties account for up to 30% of group profits.

The rest of the market was caught out by exceptionally strong US third-quarter gross domestic product data. Dealers heard that, fuelled by tax cuts and lower interest rates, the world's largest economy expanded at a 7.2% annual rate, its biggest rise in more than 19 years.

As Wall Street jumped to touch a new peak for the year on growing belief that the US economic recovery is gathering momentum, the Footsie jumped 67.2 points but then hit a brick wall. Some cautious dealers trousered profits and the close was 35.2 points higher at 4300.9.

Amid continuing speculation it may consider a merger with Spanish airline Iberia, British Airways soared 12p to 211p.

Housebuilders were further demolished by growing fears that a rise in interest/mortgage rates next week will pull the rug from under the housing market. Westbury shed 19p more to 368 1/2p and Bovis Homes 21p to 418p.

Mortgage specialists succumbed to nervous selling after the BBC's Money Programme highlighted unscrupulous lending practices within the industry. Punters are apparently urged to lie about their incomes to get huge home loans.

Paragon, which specialises in buy-to-let finance for professional landlords, fell 12 1/2p to 313 1/2p, Kensington collapsed 28p to 306 1/2p and Countrywide Assured 4p to 137p.

Aim-quoted Concurrent Technologies jumped 6p to 29p after being chosen by Intel to be an affiliate member of the Intel Communications Alliance.

Data storage specialist Plasmon advanced 18 1/2p to 214p. It has started initial revenue shipments of its new UDO optical storage technology.

James Fisher rose 3 1/2p to 225p after bolstering its highly profitable marine support services business with two further acquisitions, Air Supply and WM Defence.

Direct display marketing company Premier Direct soared 59p in a thin market to 561 1/2p. Chief executive Barry Moat bought 5,000 at 493p this week.

Ubiquitous fund manager Landsdowne Partners, which recently sold a bundle of Manchester United shares at a tasty profit, is buying again. It has lifted its shareholding to 4%, or 10.45m. ManU closed 3p off at 230p, which compares with the recent peak of 247 3/4p.

• KEEP an eye on Carbo, 1/4p off at 17 1/4p. Dealers believe that the bombed-out industrial abrasives manufacturer and distributor could yet be one of the best recovery plays in the market. We should hear soon about another major refinancing and appointment of new management. With sales last year of £56m and a current market capitalisation of only £1.4m, buyers should soon reappear.

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