Sector movers: Trading updates hammer retailers
Retailers received a double whammy today in the form of pessimistic trading updates from electricals group DSG and fashion retailer Next.
Shares in DSG International fell by more than 20% after the owner of the Dixons and Currys chains warned that full-year pre-tax profits will be some £40-£50m lower than expected due to weaker trading and a more cautious outlook for the remainder of the year.
Total sales were up 5% in the 11 weeks ended 29 December, but like for like sales were down 1% reflecting "generally weaker consumer environments" across many of the group's markets.
Kesa Electricals, which owns rival brand Comet, fell sharply in sympathy.
Shares in fashion retailer Next fell to a 52-week low as investors and analysts homed in on the company's gloomy outlook for high street retail sales in 2008.
With consumers facing increasing demands on their finances the company remains "extremely cautious" about the outlook for 2008. Though the company will continue to open new stores in the UK when profitable locations become available, it is not anticipated that Next Retail will register like for like sales growth in 2008.
The share price fell back despite the company predicting that full year pre-tax profits will be slightly ahead of expectations, coming in somewhere between £492m and £502m. Operating profit is expected to show a 4% to 6% rise on the previous year's figure of £507.5m, while earnings per share, boosted by the company's share buyback scheme, should jump by 14% to 17%.
With the price of crude oil breaking briefly through the $100 barrier on the futures market yesterday, oil and gas stocks are predictably in demand.
Oil explorer Island Oil & Gas is wanted after it emerged that Supernova Ireland Resources, a member of the Dutch Bluewater Group, took up its farm-in option for the Frontier exploration licence operated by Island.
Supernova has also purchased 3.75m Island shares at 60p each, giving it a 3.22% stake in the enlarged share capital of the company. Prior to the announcement Island shares were trading at around 34p.
Top performing sectors so far today
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Oil & Gas Producers 8,804.80 +2.14%
Electricity 8,072.50 +1.68%
Oil Equipment Services & Distribution 15,769.50 +1.09%
Gas, Water & Multiutilities 5,134.80 +0.86%
Forestry & Paper 4,583.20 +0.77%
Bottom performing sectors so far today
General Retailers 1,819.50 -5.68%
Personal Goods 9,087.80 -2.36%
Travel & Leisure 5,404.60 -2.17%
Industrial Engineering 3,001.80 -1.87%
Automobiles & Parts 4,386.90 -1.68%
