Pressure mounts on Peacocks to discount its flotation price

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The Independent Online

Pressure is growing on the £150m flotation of Peacocks, the high street clothing discounter, as City pessimism deepens on the outlook for retail stocks.

Pressure is growing on the £150m flotation of Peacocks, the high street clothing discounter, as City pessimism deepens on the outlook for retail stocks.

City fund managers now expect the price of the offering to be cut in order to get the float away with some suggesting it may be pulled altogether.

CCF Charterhouse, which is advising on the flotation, has priced the offer at 140p to 170p per share. But some analysts and fund managers suggest the price may have to be reduced to around 120p for institutions to be tempted. "I would think they will find it very difficult at the current level," one fund manager said.

Another commented: "They have priced it quite high and I think a lot of people are wondering, 'do we need to own stock in another retailer at the moment?'." The company remained upbeat yesterday, saying that the company had seen around institutions and received a "generally positive" reaction.

Private investors only have until this morning to submit their applications but the issue will not be priced until Friday. Institutions are likely to wait until the last minute topush the price as low as possible.

Some have been deterred by the company's admission that £1.4m of its first-half profits came from reverse rental premiums from landlords. The company's method of calculating its like-for-like sales figures has also been criticised. It includes stores which have received an element of refurbishment but claims only run-of the mill upgrades are included and that this is standard practice.

Peacocks has been accused of attempting to ride on the coat-tails of Matalan, the out-of town-discounter, whose shares have soared since it floated last year. But analysts say Peacocks is a different proposition, trading from smaller stores on secondary high street locations.

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