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UK Equities
Profit warning hits Thorntons stock
From the Financial Times of Tue, 23 Dec 2014 08:55:48 GMT

There were signs of the pressures faced by high street retailers in the run-up to Christmas, but the FTSE 100’s wider rally into its midweek festive break continued on Tuesday.

Shares in Thorntons lost more than a third of their value after the chocolate maker issued a pre-Christmas profit warning, saying cuts in orders by the major grocers had hit sales and problems at its new centralised warehouse had led to lost or late sales. It said it expected full-year earnings to now be lower than the previous year’s.

“Although cash flow will be affected by the downgrade, we do not anticipate any issues around covenants or recently renewed debt facilities. We place our forecasts, target price and recommendation under review until we see further detail,” said Nicola Mallard, analyst at Investec.

Thornton’s stock fell by as much as 35 per cent to 77p.

Bigger retailers made gains toward the end of a year during which their stock prices have been under intense pressure from the impact of growing competition from discount supermarket chains. Wm Morrison, which launched a price matching loyalty card scheme during 2014, rose 1.2 per cent to 178.2p. Tesco rose 1.8 per cent to 184.2p.

Overall, the FTSE 100’s strong run into the two-day holiday continued during the last full session before Christmas. The main London index rose 0.6 per cent to 6,613.04, a rise of 39 points.

The rally was broad, with only 13 of the main index’s constituent stocks making losses. They were led by BG, down 2.3 per cent at 864½p as the torrid run for energy stocks went on even as crude prices showed resilience above $60 a barrel. Tullow Oil was also a notable faller, down 1.1 per cent at 402.4p.

Financial stocks made the best contribution to the gains at sector level, with insurance stocks making the moist notable rises. Legal and General was 1.3 per cent higher at 248.4p, Prudential gained 1.2 per cent to £15.44 while Royal Bank of Scotland was up 0.7 per cent at 390½p.

Additional reporting by Michael Hunter

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