Aga to sell retailer as America fails to warm to iconic cooker

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The Independent Online

The oven and fridge manufacturer Aga Foodservice is to offload its US retail arm Domain after the upmarket home furnishing business made losses of £2.8m last year.

Shares in Aga slipped 6.5 per cent, making it the biggest faller in the FTSE 350, due to the greater-than-expected loss. But analysts said the market had over-reacted to yesterday's trading update and the underlying business was sound.

Aga said it was in talks with local management and advisers Ernst & Young about a number of strategic options for the Domain business, with a sale to a US rival seen as the most likely outcome. Aga acquired Domain in 2003 in a move that it hoped would boost sales of its popular country-style stoves, which it subsequently introduced into Domain stores. But Domain has suffered from severe competition and a slowdown in the US housing market.

In a trading update before year-end results, Aga said 2006 operating profit across the group is likely to be about £46.5m before losses, up from £41.7m in 2005.

The company has also taken a £1m hit from its proposed £798m merger with the deep-fat fryer manufacturer Enodis, which has been a takeover target for a number of companies for months. Talks collapsed in December after Aga failed to reach agreement with its shareholders.

Paul Compton, an analyst at Collins Stewart with a buy rating on the stock, said: "The shares have been hit by losses from a business that will be quickly sorted in 2007."

Analysts are forecasting pre-tax profits, once Domain is sold, to be about £51m in 2007, compared with £44m in 2006 and £43m the previous year.

The underlying business is performing well with orders for Aga cookers, cast-iron stoves and refrigerators up 5 per cent over the year.

Aga's chief executive William McGrath said 2007 was shaping up well after good progress made last year.

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