Patisserie Holdings fights for survival after ‘£20m black hole’ found in accounts. The owner of Patisserie Holdings (CAKE) faces a battle for survival after discovering an estimated £20 million-plus black hole in its accounts and being hit with a winding-up petition by Revenue & Customs over unpaid tax. Patisserie Holdings, where Luke Johnson is chairman and a 37% shareholder, is understood to have alerted the Serious Fraud Office after discovering “significant, potentially fraudulent, accounting irregularities”.
Fevertree slump puts cap on a miserable month. Fevertree Drinks (FEVR) lost a tenth of its value yesterday amid concern that demand for its pricey mixers among middle-class devotees is going flat. The sell-off capped a miserable month for the business, whose share price has fallen by a third since hitting a peak of £39.56 four weeks ago. The company has been a favourite of small investors and has ridden the fad for artisan gins and spirits. However, it has come under pressure recently over fears that the rampant demand for its tonic water is petering out. Sales growth in its home market slowed from 75.2% in the four weeks to August 12 to 37.7% in the subsequent four-week period, according to data from Nielsen, the research firm.
Tesco boss tells court of ‘shock’ over profit error. The boss of Tesco (TSCO) said he felt “genuine shock” when three weeks after joining the group he was presented with a document alleging that the supermarket had materially misstated its profit forecast by nearly £250 million. Dave Lewis, chief executive of Britain’s biggest grocer, told Southwark crown court that although aware that Tesco’s business was under enormous pressure soon after joining in September 2014, he had no hint from senior management that any figures reported to the City may have been misstated.
Ocado has fallen by a third since its peak at nearly £11.50 a share in July, as the bull market run sees investors rotate out of already highly-valued growth stocks. The stock, up 126% in the first three quarters, more than any other FTSE 350 stock, has been sold off as investors unwind positions in a “risk-off” market. Share sales by directors, totalling £150 million in the first eight months of the year, signalled the high value of the stock to investors, sparking a cooling of dealer sentiment. Barclays upgraded Ocado Group (OCDO) to “equal weight” from “underweight” yesterday morning, on the basis that its valuation is now “more reasonable”. It noted that Luke Jensen, chief executive of Ocado Solutions, has spent £100,000 buying shares this week, bucking the run of director share sales.
The pound gained 0.5% to $1.321 as UK markets closed, on rising hopes of a Brexit deal. Stronger sterling weighed on overseas-earning companies. However, it gave a boost to British retailers, with the B&Q owner Kingfisher (KGF) up 9¼p to 261p. Marks & Spencer Group (MKS) closed up 8½p at 295¾p. Defensive sectors such as telecoms were in favour. BT Group (BT.A) gained 8¼p to 237p. Dixons Carphone (DC.) closed up 5¾p at 159¼p, after HSBC upgraded the retailer to “buy”, suggesting its management under the new chief executive Alex Baldock is more ambitious than the current price suggests. “It is a strong market leader with a well advanced multi-channel platform and right-sized property portfolio,” HSBC analysts said. “This arguably makes it lower risk than many stocks in the sector.”
The paper and packaging sector was weak for a second day amid concerns of a glut of supply from the US after a $300 million investment by Nine Dragons, a Chinese papermaker, in US mills. Mondi (MNDI) was the biggest faller on the premier index, closing down 170p at £17.76.
Signs of recovery emerged for Funding Circle (FCH) and Aston Martin Holdings (AML) after their poor start on public markets, with their shares having fallen well below the float prices. Funding Circle, the peer-to-peer lender which floated at 440p, rallied to close at 384½p. Aston Martin, floated at £19, perked up to £16.10.
Dealers will be getting fed up with Revolution Bars Group (RBG) after another round of merger talks with Deltic Group Ltd was terminated. Deltic, the biggest UK nightclub operator, abandoned a £100 million bidding battle with Stonegate Pub Company for the London-listed bar chain late last year. It emerged last month that Deltic had rekindled those discussions in what would have been a reverse takeover, sending the share price up 10.9% on the day. But in a statement released after market close last night, Revolution said talks had ended. Deltic said it still believes there is a case for a merger but respects the decision. It said it remains a shareholder and will follow developments closely.
A cautious trading statement by LVMH, the world’s biggest luxury goods group, and a Morgan Stanley downgrade for Europe’s luxury sector chilled the high-end fashion sector yesterday. Shares in Burberry Group (BRBY) fell more than 8% to close at £17.28 after LVMH, which owns Dior, Louis Vuitton and Moet & Chandon, said it was facing an “uncertain geopolitical and monetary context”. Even though sales at LVMH were up 10% in the third quarter as expected, its bearish sentiment raised concerns. These fears were heightened after analysts at Morgan Stanley wrote in a note that luxury goods were “no longer in vogue”, raising questions about valuations in the sector, slowing sales momentum and demand from China, adding: “Our economists see a slight decline in China retail sales in the second half but remain constructive on a modest rebound in the first quarter of 2019.” Kering, which owns the Gucci and Yves Saint Laurent brands, and is listed in Paris, ended the day down nearly 10% at €381.3. Moncler, which is listed on Milan’s Borsa Italiana, closed down 10.85% at €31.73.
Tempus – Whitbread (WTB): Hold. The new business has a stronger balance sheet and good long-term growth options
Tempus – Marston’s (MARS): Buy. Next year’s trading shouldn’t be as tough and the dividend feels safe
