Retail investors are racing to dump stock after massive profit warnings spook the markets. Flooring business Carpetright (CPR) and funerals provider Dignity (DTY) are both hammered, while poor Christmas trading at Bonmarche (BON), the fashion chain for the maturer shopper, drags its share price heavily lower.
Carpetright sees its shares plummet 45.3% to 90p as a ‘significant deterioration’ in UK trading in the 11 weeks to 13 January 2018.
This will have a significant impact on profits for the full year to 28 April 2018. The company now anticipates between £2m and £6m of presumably pre-tax profit, way down on the £12.3m the market had been expecting.
Read Shares’ exclusive web story here.
FUNERALS PRICE WAR
Funeral service provider Dignity suffers an even bigger collapse in its share price. Its stock falls by half (down 50%) to 958p, slashing the firm's market value buy close on £500m.
A vicious price war has emerged in the industry with overcapacity putting massive strain on operators, forcing Dignity to rethink its strategy. It plans to slash the cost of simple funerals by 25% in a bid to remain competitive.
There will also be a freeze on the cost of other funeral packages, moves that will have serious implications for profits going forward. So while full year results to 31 December 2017 will be in line with expectations, that will not be the case in 2o18, which will be ‘substantially below the market’s current expectations.’
Analysts estimates for 2018 had been pitched at £76.1m of pre-tax profit on £90.4m revenue, but these forecasts clearly face steep cuts now.
Read Shares’ exclusive web story here.
QUIET CHRISTMAS SALES
Mature female fashion retailer Bonmarche (BON) is also in the wars on Friday. Shares in the company slump 22.5% to 98p after releasing a trading update for the 13, and 39, weeks to 30 December.
The figures will make painful reading for shareholders, with like-for-like in-store sales down for both periods. The only bright spot is online buying, where sales jumped 35.5% over the 39 week period, although we suspect these form a modest part of the total.
The wider market makes modest progress in early trading on Friday, the FTSE 100 making high single-digit gains to 7,709.91.
SMALLCAP MOVERS
Reinsurance and fund manager CatCo Reinsurance Opportunities Fund (CAT) is down 16.9% to $0.82 after revealing that its shareholders were exposed to the Californian wildfires in October last year.
The total losses incurred came in at $12.5bn. The fund says this is more than four times the cumulative insured losses recorded in any previous year due to wildfires in U.S.A. history. As a result the fund manager has increased loss reserves by around 14.4% of net asset value.
On the AIM market, oil producing minnow Global Petroleum (GBP:AIM) gushes 14.7% to 2.65p as it reveals that is farming out its Namibian interests using Stellar Energy Advisors to handle the process. Global Petroleum has an 85% stake in the asset.
Moble device diagnostics company Blancco Technology (BLTG:AIM) drops 12.5% to 66.5p on saying that revenue for the first half of the year will marginally behind where it was a year previously.
In 2016 the company’s results included a number of non-repeating volume sales deals which were not due for renewal during December 2017 negatively impacting its comparative year-on-year revenue./ New client wins have not been enough to fully mitigate the lost revenue.
Alternative fuels company AFC Energy (AFC:AIM) powers up 18.6% to 12.75p After telling investors that the quarter ending December 31 was important as the company ‘achieved very significant improvements’ for its fuel cell system.
Currency specialist asset manager Record (REC) gains 2.9% to 44.25p on revealing its assets under management increased by 4.4% to $63.9bn in its third quarter to 31 December. The company also announced it has gained a new client during the period.
