Market report: Friday close
Shares of Mike Ashley's Sports Direct International, floated at 300p back in February, have been falling ever since. Today they closed at 143½p, as another broker warned they may have further to fall.
Nick Bubb, retail analyst at Pali International, has begun coverage of the sportswear retailer, which includes Lillywhites and the Sports World chain, with a sell rating and a 125p target and had some scathing comments about the way the company has been run.
'The bazaar-like state of the company's stores has been matched by the bizarre corporate governance and investor relations since the shares were floated. Mike Ashley keeps on saying he wants to play the long-term Plc game and become the most profitable sports retailer in the world and that the City is being too short-term, but everything he says and does seems designed to get the share price down — which makes one wonder what his intentions are.'
He adds: 'Management blames the bad summer weather for poor trading. We think that sales at Sports World were simply pumped up to unsustainable levels throughout most of 2005 and 2006 by aggressive promotions and discounting as the stores turned into sports bazaars.'
Ashley, who netted almost £1bn from the sale of a 43% stake in the company he founded when it floated, has since embarked on a massive spending spree.
He recently bought boxing products supplier Everlast Worldwide for more than $170m. He also paid £5m for a 60% stake in leisure chain Field & Trek as well as minority stakes in German sportswear producer Adidas and Finnish rival Amer Sports, which owns the Wilson and Salomon sports brands.
Bubb says the end game is likely to be that the company will go private. But more weakness can be expected in the share price before then.
Shares posted modest gains in early trading with investors drawing some comfort from a positive performance by Wall Street overnight. But many were still licking their wounds from the heavy sell-off during recent days that has been prompted by the worsening situation in the subprime mortgage market.
The FTSE 100 index tumbled 76 to 6224.
British Airways repaired some of the damage to its share price and reputation that has been inflicted on the company this week with the price rising slightly before closing 1p down at 402¾p.
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Royal Bank of Scotland closed 16½p down at 575p. Miners enjoyed a brief revival before posting falls with Anglo Americandown 10p to 2759p after announcing plans to sell its Tarmac division.
Another bad day for the Dow in New York saw the market trading down 74.5 points at 13,388.8.
In Tokyo today, prices traded within a narrow range as a few bargain-hunters tested the water and the Nikkei 225 closed down 4.25 at 16,979.86.
But in Hong Kong, which has suffered hefty falls this week, the Hang Seng index was 51.92 higher at 22,495.17 by the midday break.
Taking stock... sectors at a glance
BANKING AND FINANCE
Neil Badger, director of Dowgate Capital, has bought 64,180 shares in the company at 15.4p a share.
The financial services group says the latest purchases stretch his holding to 675,000 shares, or almost 2% of the AIM-listed company.
BUILDING AND PROPERTY CONSUMER
Dresdner Kleinwort has raised Alfred McAlpine from hold to buy and increased its target from 482p to 550p following the proposed break-up of the construction group. DK reckons the construction side will be snapped up by rivals.
CONSUMER
Advertised internet connection speeds don't match up to the service, research by Which? has found. A survey by the consumer group reveals broadband packages promising speeds of up to 8Mbps achieve far less.
ECONOMICS
Zimbabwe has put a 200,000 dollar note into circulation — an attempt to reduce the highest inflation rate in the world. The new note is worth US$13 at the official exchange rate or US$1 on the black market. Inflation in the country is 4500%.
ENGINEERING
KleenAir Systems International, a provider of vehicle pollution filters, has won a pilot contract to supply systems to the City of London Corporation's refuse collection vehicles. This is KleenAir's first local authority contract.
HEALTH INDUSTRIALS
Bear Stearns has lowered Astra- Zeneca from 3300p to 3000p to reflect the sector's de-rating. But it keeps its outperform rating, saying the company's medium-term growth is underestimated while it has improved its longer-term outlook.
INDUSTRIALS
Mondi has lost 14% of its value since floating last month, even though the business performance of the paper and packaging group is improving. Credit Suisse has raised the shares from neutral to outperform and its target from 515p to 555p.
LEISURE
Chief executive Rooney Anand has bought an extra 5000 shares in Greene King at 957.155p each, worth an estimated £48,000. It takes his holding in the East Anglian brewer, famous for Abbot Ale and Old Speckled Hen, to 34,138 shares, or less than 1%.
MEDIA
BSkyB says football fans in the UK and Republic of Ireland will be able to watch live English Premier League football on their mobile phones from next Saturday.
A total of 92 fixtures a season will be aired on the Mobile TV service.
NATURAL RESOURCES RETAILING
ABN Amro has begun coverage of BowLeven with a buy rating and 320p target. The broker expects good news soon from the group's drilling programme in Cameroon.
It reckons BowLeven represents a balanced play on west Africa.
RETAILING
Full marks to Debenhams, which has successfully executed a difficult spring/summer clothing season.
So says Credit Suisse, following a visit to a number of stores last week. It still has a neutral rating and 160p target.
SUPPORT SERVICES
Stonemartin has not found a buyer for its Limited Partnership investment vehicle. The managed-space office provider says strong demand continues in Birmingham with a robust pipeline, while in Manchester, conferencing activity remains strong and occupancy is up to 78%.
TECHNOLOGY
Non-executive director Dimitri Goulandris has bought 50,000 shares in Volex Group at 202p a share (£101,000), raising his stake in the electronic and fibre-optic cable producer to about 12.64 million shares, or almost 23% of the company.
TELECOMS
Dutch telecoms regulator Opta has told mobile phone operators to cut the tariffs they charge other operators for calls into their networks.
Opta is forcing KPN and Vodafone to lower the wholesale tariff to seven eurocents a minute by 1 July 2009.
TRANSPORT
Discount airline easyJet is offering passengers the opportunity to offset their carbon emissions by investing in United Nations-certified carbonoffsetting projects. The funds will buy carbon credits from the Perlabi Hydroelectric Project in Ecuador.
UTILITIES
Yesterday's first-half numbers from Centrica, showing an 80% jump in operation profits to £1.24 billion, exceeded most expectations.
However, JPMorgan concedes the loss of a further 200,000 customers at the British Gas services group is a cause for concern.
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