Yesterday's trading: Baugur 'shelves stake in Woolies'

By Geoff Foster for MailOnline
Updated: 02:34 EDT, 28 September 2007

Word is Baugur, which already owns a big slug of the High Street and such names as Goldsmiths, House of Fraser, Hamleys, Karen Millen and Oasis, has given up the ghost at Woolworths and decided to sell down its 7% stake in the struggling pic'n'mix retailer.

Dealers fingered the Icelandic investor as the probable seller of a line of 3.665m shares late on Wednesday at prices ranging from 18.73p to 19.37p. Selling continued yesterday and the shares closed ½p easier at a record low of 17¾p on turnover of 27.4m.

Woolies was recently described as a 'living dead' retailer as it launched its own-label, £5 a bottle champagne called Worth It. That after announcing plans to sell Christmas trees at £2 a time.

Baugur has attempted to get chief executive Trevor Bish-Jones and the board to agree on a demerger of the group's wholesale and retail arms but Bish-Bosh said the retail arm had to stand separately before the board would consider selling off the wholesale division.

Baugur apparently wants to wash its hands of Woolies to refocus on desperate department store group Debenhams, 1¾p dearer at 91¼p. It has increased its shareholding in Debs to 12.5% and could be ready to pounce should the highly indebted group suffer a further sharp deterioration in sales during the crucial run-up to Christmas.

As for Woolies, it narrowed first-half losses to £59.2m from £66.8m but always makes most of its money in the second half. But Bish-Bosh has put the mockers on that by warning that Christmas consumer spending will be hit by the current credit squeeze.

It's been dire for shareholders ever since private equity group Apax Partners left Woolies at the altar in April 2005 after bidding £837m or 58.2p a share. The group is now valued at a paltry £260m. Shrugging off weak CBI retail sales figures, Marks & Spencer responded to hopes of an early cut in UK interest rates and to off-the-wall takeover gossip to touch 627½p before closing 24p higher at 612½p. Rival Next, which starts a three-day 'half-price or less' sale today, jumped 61p to 1981p.

Luxury goods group Burberry bounced 40½p to 646p on talk of a pending circular. Earnings growth has been hit by the fall of the Japanese Yen. Burberry derives only around 8% of its business from the UK and so should not be too affected by a decline in spending ahead of Christmas.

The Footsie climbed above 6,500 for a short time before closing 53.4 points better at 6,486.4. Shocking US new home sales figures showing that the US housing market is getting worse raised expectations that the Fed will shave US interest rates again soon.

It slashed them by 50 basis points on September 18 - the first cut in four years - to help bail out markets. New home sales slumped 8.3% to a seven year low of 795,000 and prices plunged by the most in almost 40 years. Wall Street rose 42 points before easing on profit-taking.

Hopeful that Northern Rock (11½p up at 193½p) will eventually be rescued, rival mortgage banks continued to regain lost ground. Alliance & Leicester rallied 62p more to 795p, to stand 32% above its recent low. Bradford & Bingley rose 18¾p to 310p.

Tooled up buyers chased Speedy Hire 53p higher to 1090p following a bullish trading update. Turnover in the first five months of the year remains strong, rising by a third compared to last year.

Acquisitive Silverdell, where entrepreneur David Williams is chairman, rose 3p to 152½p ahead of a trading statement which should say that it is trading well ahead of the year-end.

Arsenal shares were changing hands at £1,300 each two years ago, now look at them. They closed a further £100 higher at a record £10,200 on PLUS Markets on continuing consideration of this week's stonking full-year results.

The club reported record profits of £51m on record turnover of £200m. Dealers say a bid from either one of its large American or Russian shareholders would now have to be pitched around £15,000 a share for starters.

Sigma Capital, the specialist fund manager which has entrepreneurs Vincent Tchenguiz and Sir Tom Hunter on its share register, firmed 1¾p to 50¾p following good interims.

News of a 29% jump in interim profits to a record £55.8m and an extensive drilling programme of more than 30 wells planned over the next two years helped Dana Petroleum gush 28p to 1093p.

Geoff's tip

• Wallpaper maker Walker Greenbank (unchanged at 49½p) is worth buying ahead of next Thursday's interim results, says Killick. It expects confirmation of July AGM's bullish comments that trading in the first-half was materially ahead of internal projections with all business units performing strongly. The broker finds the shares attractive, trading on just 10.9 times January 2008 and 8.9 times 2009 earnings before potential upgrades.