Investment Column: Stoves disappoints with warning

When Stoves, the designer cooker makers, floated at 163p two years ago the excitement which rapidly took the company to a 330p high is easy to understand. Stoves' niche position selling customised cookers in a staggering 50 million variations of colour, finish and style and its quality after-sales back-up looks like a winner.

Stoves can ask premium prices while made-to-order, flexible production means low stock levels and tight costs. However, the timing was a bit off. The slow consumer recovery, combined with a hot summer last year, took their toll and the shares slumped.

However, with windfall cash around and housing moves on the rise, Stoves should be doing better. So yesterday's trading warning was a disappointment. But there is no fundamental concern. While election nerves left the UK cooker market down 10 per cent in the three months to end May, Stoves' sales fell just 3 per cent. Strong growth in the first three months means the group should still turn in a healthy 27 per cent rise in full-year sales to pounds 80m with profits up a fifth when the figures are published on 19 August.

Meanwhile, a newly appointed MD for the UK business frees up John Crathorne, chief executive, to focus on strategy which includes a cautious step into the US, where upmarket European brands are in demand, expansion in Germany, a merger in France and a move into other hi-tech kitchen appliances.

Mike Costello at house brokers Kleinwort Benson has cut full-year forecasts to May by pounds 400,000 to pounds 5.5m, but has raised 1998 and 1999 numbers by pounds 200,000 to pounds 7.2m and pounds 8.2m. The shares, down 7.5p to 270p yesterday, are trading on 20 times this year's earnings and 14 times for 1998. That looks right.