Even Mike Ashely isn’t immune to the weather.
The Newcastle United owner’s retail goliath, Sports Direct was sent tumbling today as Citi trimmed its first-half profit forecast for the chain by £5 million to £165 million.
The bank blamed the cut on recent warm weather which has already provoked a profit warning from High Street bellwether Next, off 35p at 6622.5p.
Citi’s Richard Edwards also cut his estimate for Sports Direct’s full-year earnings by £15 million to £293 million, this time due to its planned spending spree. The company wants to set up a chain of budget gyms across the UK, as well as a push into Europe, and is experimenting with a partnership with Debenhams.
Edwards subscribes to the old maxim that you’ve got to spend money to make money, believing all this will be positive in the end, but investors took a more short-term view, sending Sports Direct down 13.5p to 640p.
The FTSE dipped 30.87 points to 6665.73 after disappointing Chinese manufacturing figures overnight hit miners. The mining sector knocked a collective 9.53 points off the index.
Johnson Matthey climbed 91p to 3241p as it posted a 2% rise in underlying, pre-tax profit despite revenue tumbling by 25%. The catalytic convertor maker, which also refines metals, was hit by the end of a long-standing agreement with Anglo Platinum. But investors were heartened to see a jump in revenues and profitability at its emission controls technology division.
Contractor Babcock surged 53p to 1170.5p as it revealed a 24% jump in first-half revenue, with much of that down to the recent £1.6 billion acquisition of helicopter company Avincis. The engineering-services company has also been named as the preferred bidder for the soon-to-be privatised Ministry of Defence agency which maintains that army’s tanks.
Property specialist Grainger climbed 3.4p to 195.9p after outperforming the market with a 26% rise in pre-tax profit. Chief executive Andrew Cunningham also reported “more sustainable rates of growth” in house prices after the recent runaway performance in London and the South-East.
Cloud-computing group Outsourcery jumped by 7.5p to 17.75p on AIM thanks to a partnership with Microsoft which will see it sell subscriptions to Office 365 directly.
