Market Report: Mothercare struggles despite new arrival
It looks like it is going to take more than a buggy assault course and an in-store coffee shop to persuade the Square Mile that Mothercare is worth buying. The struggling baby products retailer recently launched a new-look store in an attempt to revive its fortunes, but it has not stopped the attacks from scribes in the City.
As well as an area to test buggies and prams plus a Costa Coffee, the north London shop – opened by the former pop star, now television personality, Myleene Klass – also provides ultrasound services and an area for activities such as yoga.
All of this impressed Panmure Gordon's Jean Roche, but not enough for the analyst to change her opinion that the stock should be sold. Saying that while "one could be tempted to upgrade the shares on the back of an attractive new store concept", she claimed if such an overhaul had been brought in a couple of years earlier then "this might have been enough to halt the brand's decline".
Ms Roche went on to slash her profit forecasts for the financial year by more than a fifth, highlighting increasing competition from rival retailer Kiddicare as well as supermarkets and websites. She also cast doubt over management's aims to return the UK business to profitability, saying there was "little chance" of this happening within the time frame targeted. Following the attack, and despite data showing retail sales last month were higher than expected, Mothercare closed 4.25p worse off at 210.75p on the small-cap index.
With the FTSE 100 creeping up a mere 1.47 points to 5,834.51, it continued to be a quiet week for dealing rooms as some turned their thoughts across the Atlantic. Recent reports claimed Apple has held talks with Twitter over buying a stake in the social network site, and the latest speculation doing the rounds revived the idea the world's largest company could be interested in attempting a full takeover – numbers bandied around value Twitter at more than $10bn (£6.3bn).
Comments from China's Premier Wen Jiabao over the state of the country's economy were being taken as bullish by those hoping for more stimulus action. This, unsurprisingly, was received well by the miners, as Kazakhmys and Vedanta Resources climbed 20p to 735p and 18p to 937.5p respectively.
Vodafone was among the blue-chip losers, diving 3.2p to 185.55p, as the mobile phone giant's Austrian peer, Telekom Austria, issued a profits warning, which it blamed partly on price wars.
Just before the bell it was revealed Kate Bostock, Marks & Spencer's former clothing boss, had cashed in around £876,000-worth of shares, about half of which were from a performance-related bonus, as the retailer advanced 5.7p to 360p.
There was a rush for the yellow metal producers following Canadian giant Barrick Gold's announcement that it has been talking with China National Gold over a potential sale of its 74 per cent stake in London-listed African Barrick Gold (ABG). With Liberum's Kate Craig suggesting that if a deal was struck she "would expect a 40 per cent premium", ABG charged up by 31.4p to 425p.
The company's peers were following in its footsteps, including Avocet Mining which ticked up 4.4p to 92.75p after Ms Craig claimed the West Africa-focused operator was among the "likely candidates for further M&A activity" in the sector.
Hikma announced it saw a 13 per cent jump in adjusted profits over the first half of the year, which pushed its shares up by 24.5p to 749.5p, with the performance of the pharmaceuticals group's injectables division particularly impressing.
Lonmin fell 47p to 648p as violence at its Marikana mine in South Africa continued to escalate. The platinum producer warned it looks set to miss output targets for the year and said it was monitoring "the additional pressure which the current disruption to production may put on its bank debt covenants".
Elsewhere, the revival of vague takeover speculation failed to prevent soft drinks maker Britvic creeping down by 0.6p to 311.7p, with traders sceptical over the chatter.
Down on Aim, property group Orchid Developments slumped 1.62p to 1.62p after admitting that it was "likely not to be able to operate as planned, unless additional capital is raised" as it said a recent disposal had not gone ahead as planned.
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