THE LONDON TIMES: Wm Morrison leads fallers on fears of sales slowdown: “The FTSE 100 put on 8¼p at 422¼p, led by BG Group, up a further 8¼p at 422¼p on revived hopes that its strong reserve base will make it a target for the likes of Shell…” (ShellNews.net) 16 March 05
Stock markets
By Nick Hasell
Larger capitalisation shares
March 16, 2005
WM MORRISON was left with the worst FTSE 100 fall amid rumours that next week’s full-year figures from the Bradford-based supermarket chain will reveal a further slowdown in like-for-like sales.
Shares in the £5.8 billion food retailer have recently been buoyed by better than expected disposal proceeds from the stores it was required to sell as a condition of last year’s purchase of Safeway.
However, Numis Securities is more concerned by industry speculation that like-for-like sales at the core Morrison chain are running in negative territory, having been 0.1 per cent up at its last trading statement in January.
The broker also believes that Safeway stores that have been converted to the Morrison fascia, while enjoying sales uplifts, do not appear to be having a massive effect on local competition. On that basis, Numis says it intends to cut next year’s pre-tax profit forecasts from £543 million to £465 million — against a consensus range of £500 million to £560 million — which equates to 12.3p of earnings per share. The broker described the 15 per cent earnings revision as raising questions over Morrison’s ability to turn round the Safeway business. It also cites scepticism that the Morrison format can work in some of the more affluent areas of the South East. With Numis moving from “hold” to “trading sell”, Morrison, which files full-year figures next Wednesday, gave up 6p at 213p.
The FTSE 100 put on 8¼p at 422¼p, led by BG Group, up a further 8¼p at 422¼p on revived hopes that its strong reserve base will make it a target for the likes of Shell, up 1½p at 493p, BP, 5½p ahead at 567p, Total or ExxonMobil.
BT Group gave up 2p at 200p on cautious noises from Cazenove, which now expects an underlying decline in earnings of nearly 1 per cent in the next financial year. That translates into a 2 per cent earnings decline over the next three years and a 4.5 per cent reduction in next year’s dividend forecast. Analysts also cited negative sentiment on BT ahead of today’s statement from Ofcom on local loop unbundling.
Scottish & Newcastle improved 7p at 454p as Deutsche Bank repeated its “buy” recommendation on the brewer, citing data from Russia that augurs well for Baltic Beverages Holding, its joint venture with Carlsberg. Capita Group put on 4½p at 373½p as Citigroup moved from “hold” to “buy”, citing the outsourcing group’s “materially increased” bid pipeline.
Carnival, the cruise ship operator, added 56p at £30.67 as Credit Suisse First Boston emerged reassured from an analysts’ dinner with Micky Arison, chairman and chief executive.
NEW YORK: Shares fell on worries over inflation and oil prices. The Dow Jones industrial average closed down 59.40 points at 10,745.10.