Market report: JJB Sports pays penalty for fears over trading

Market Report

JJB SPORTS was as sick as a parrot yesterday after falling victim to a bear raid.

Britain's biggest sports retailer went down to a 15p defeat to close at 332.5p as talk of poor trading in May did the rounds. Market watchers said the slump was started by an early-morning seller who ditched a sizeable line of stock at around 331p, when the shares were hovering around the 338p mark.

The big sale put JJB at the top of the midcappers' fallers table and sparked rumours that the company will produce a gloomy trading statement at its June AGM.

Disgruntled fans of the stock are muttering that sales in May have been held back by poor weather and consumers' lack of interest for sports gear. The high street is a tough place these days, just ask Marks & Spencer and Storehouse, and consumers are more fickle than ever.

Fashion is what young people want and the market fears that high-spending teenagers might have swapped JJB's football shirts for combat trousers and designer shoes.

According to the pessimists, JJB's problems are compounded by its recent trading difficulties. Since buying rival Sports Division in September last year, the group has scored a few own goals. At last month's annual results, the group admitted that a blunder with stocks pushed Easter like- for-like sales down 6 per cent down at JJB and an incredible 16 per cent lower at Sports Division. The feeling on the stockmarket terraces is that the losing run will continue. Sports fears also took their toll on Hilton, the old Ladbroke. The bookmaker and hotelier checked out a 10.25p loss to 257.5p on fears of a pounds 10m payout to punters if Manchester United won the Champions' League last night. Bearish figure from an overseas hotel operator did not help.

The rest of the market was more a spectator than a player, mirroring Wall Street for most of the day. The FTSE 100 finished 12.5 easier at 6,236.8 after an uncertain session. The blue-chip index opened lower following the Dow's overnight tumble, but rallied after the futures market hinted at a strong start of the new day on Wall Street. When that failed to materialise, sentiment deteriorated and a losing close became an inevitability. The second liners were quieter, with the FTSE 250 ending 1.3 down at 5652.4 and the Small Cap moving 7.5 lower to 2549.9.

A huge deal in Scottish-Power excited dealers. At around lunchtime, 20 million shares were pushed through by a large house, believed to be Merrill Lynch. The trade was rumoured to be part of a large derivative-linked deal, which also involved ten other blue chips.

Some traders speculated that a large investor might have sold the stocks to buy the FTSE 100 future as a hedge against a market correction.

Later, Scottish ran into profit-taking and finished 1p down to 532p despite a strong recommendation from WestLB Panmure and talk that Energis, down 41p to 1,559p, could buy its Scottish Telecom unit.

Panmure also pushed United Utilities up 33p to 727p ahead of today's results. An update on the future acquisitions strategy is expected.

BP Amoco, also believed to be part of the derivatives deal, closed 15p higher at 1,146p. Rival Shell firmed 1p to 461.75p in good volume on persistent rumours of a takeover of BG, down 4.75p to 349.5p.

BAT puffed 29p higher to 590.5p - the biggest riser in the FTSE 100. Dealers said that the start of grey trading in rival RJ Reynolds highlighted how cheap BAT was. Active option trading also signalled that some big funds are buying the tobacco group ahead of this summer's completion of its takeover of Rothmans.

Whitbread jumped 38p to 1,078p on optimism over the purchase of the Allied Domecq pubs and the sale of its breweries to Heineken.

Hopes of banking consolidation pushed HSBC 66p higher to 2,105p on vague rumours that it might bid for a UK bank.

Revived takeover whispers circulated around Norwich Union, 7.75p higher at 441.75p.

A two-way pull left Rentokil Initial unchanged at 250p in high turnover as rumours of overseas stakebuilding and a share buyback persisted.

Developer Land Securities' good results prompted upgrades and sent the stock 18p higher at 821.5p.

Cable companies were unsettled by Microsoft's decision not to buy one of them. The US software giant is a shareholder in Telewest Communications which lost 10p to 268.75p on the news. Microsoft was also keen to buy a stake in Cable & Wireless Communications, down 29p to 625p, possibly from parent Cable & Wireless, 19.5p lower at 777p.

Mobile phone maker Filtronic buzzed 30p lower to 772.5p on worries about delayed orders from its big customer Motorola.

First Choice stole the show in the midcap. The shares shot 42p higher to an all-time high of 242p after the UK competition authorities' decision not to vet the pounds 852m bid from Airtours, 28p higher to a 12-month peak of 512p. The judgement now rests with Brussels and the market believes that the European watchdog will approve the deal.

The plasterboard group BPB rose 21.25p to 297.25p after a big seller left the market, while perennial bid target United Biscuits climbed 5.5p to 201p as three brokers said "buy" after a visit to its French factory.

It was bid bonanza for the minnows. Multimedia group Systems Integrated Research soared 13.5p to 45p after receiving an approach. Caird, a waste recycler, jumped 58p to 290p after raising the prospects of a 305p bid. Water utilities and rival Waste Recycling, up 7p to 419.5p are the potential predators.

The paper distributor Salehurst rose 27.5p to 155p after an management buyout at 158p per share. China maker Denby was 12.5p up to 117.5p after a 120p MBO. Among the fallers Ilion, the computer group, lost 7.5p to 95p after saying an irregular deal would cost pounds 500,000.

VOLUME: 1 billion

TRADES: 66,097

GILTS INDEX: 108.13 -0.18

BALTIMORE, the old Zergo, is believed to be close to a major contract win. The software group's shares soared 37.5p yesterday to an all-time high of 905p amid hopes that an announcement will be made soon. The whisper is that Baltimore has won the contract to supply several US and UK banks with the kit to protect their Internet transactions. The company is the leading provider of encryption software.

THERE IS talk of activity at Surrey Group, a tiny bookmaker. Some believe that the company is working on a project to offer bets on the Internet. The alternative rumour is that Surrey, unchanged at 1.25p in heavy volume, is to complete the sale of about 6 acres of land to gym group Next Generation for over pounds 2.3m. Completion of the deal hinges on whether the fitness clubs operator wins planning permission to build a gym on the site.