Asprey shares down by a third after profit warning

MORE than a third was knocked off the market value of Asprey, the upmarket jewellery retailer which owns Mappin & Webb and Watches of Switzerland, after it warned that interim profits would be significantly below market expectations.

The shares dropped from 310p to 200p, having touched a low of 178p, when Asprey said that the six months to the end of September would be 'marginally profitable at best'. Last year, it made pounds 12.2m interim pre-tax profit.

The group blamed the expected shortfall on a decline in sales at Asprey and at Garrard, the crown jewellers.

'In previous periods, the Asprey business has enjoyed a significant level of high-value sales to certain customers in the export market. The volume of these sales has been very low so far this year, with no signs of an upturn,' Asprey said.

'Garrard has also suffered a reduction in export sales which is likely to eliminate its contribution to group profits in the first half.'

Asprey has been trying to reduce its dependence on a small number of well-heeled customers by buying businesses like Mappin & Webb and Watches of Switzerland. It has been adding to both these chains.

The group said yesterday that Mappin & Webb, bought from Sears in 1990 for pounds 75m, was 'trading in line with expectations with a better performance than last year'.

Watches of Switzerland - acquired from Signet, formerly Ratners, for pounds 23.2m in 1992 - was suffering from an increase in overheads, partly because of an expansion in the number of branches.

It added that full-year profits would depend on the Christmas period. 'However, in the absence of any signs of improvement in the Asprey business, it is likely that sales and profits for the full year will fall well below current market expectations.'

Naim Attallah, chief executive, said it was too early to comment on the dividend, for either the interim or full-year results.

Smith New Court, the company's broker - which placed a 25 per cent stake in Asprey on behalf of Sears at 267p just over a year ago - is pencilling in between pounds 5m and pounds 10m for the full year. In the year to March, the company made pounds 25.4m.

Mr Attallah said the disappointing performance from Asprey vindicated the group's strategy of broadening its base. He rejected suggestions that the acquisitions should already be reducing the volatility of the Asprey results. 'If we had acquired a thriving business, then that would be right. But we acquired an ailing business, which has never made money. We saw the potential for the future.'

Asprey accounted for more than three-quarters of the group's profit for the year to March.