FII profits warning wipes 40% off shares

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The Independent Online
Marks & Spencer shoe supplier FII Group stunned its shareholders with a profits warning yesterday that sent its shares crashing 185p to 283p.

The 40 per cent fall means the shares, which rose from a low of 260p at the time of the January 1995 management buy-in, gave up nearly all of their last 15-month gain in a single day.

The warning that margins remained "very unsatisfactory" and would lead to a pounds 1m operating loss in the year to May accompanied news that Charles Ryder, who led the buy-in, would be giving up his role as chief executive to become non-executive chairman.

The collapse was the second piece of bad news within days from the troubled footwear industry. Since shoe component maker Chamberlain Phipps warned on profits on Friday its shares have halved in value.

Mr Ryder, the former boss of textile company Claremont Garments, moves upstairs in the middle of a transformation of FII that has led to large exceptional write-offs in the past 15 months. Last year it lost pounds 8m loss and reported another pounds 4.3m deficit in the half-year to November.

FII said yesterday that sales growth in the second half of the year was satisfactory, especially within the context of a continued decline in the overall retail footwear market, but the return on that turnover was still poor. Sales in the second half are expected to be 9 per cent ahead of last year.

Even so, turnover is still expected to fall short of internal targets. That has been largely due to generally poor trading conditions, the late onset of spring and the particularly weak performance of a number of other high street retailers.

FII expects to return to profit in the year to next May.

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