Market Report: Booker Group suffers as tobacco sales slip

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Fewer smokers nipping to corner shops for emergency cigarettes causedsales at Booker Group to run out of puff.

The food wholesaler, which completed the takeover of Budgens and Londis last month, saw tobacco sales slip 3.7% in the 24 weeks ended September 11.

That took its toll on overall sales, which slipped 1% to £2.2 billion amid the “challenging consumer and market environment”, even as pre-tax profits jumped 10% to £74.1 million.

The company hinted that the Aldi and Lidls of the world are eating into its margins, proving that it is not just the big supermarket groups who are at the mercy of the discounters.

Booker also revealed the Budgens/Londis deal will cost it £3 million in earnings this year – something the City didn’t much like the look of as it sent the shares, which have risen 15% this year, down 3.6p or 2% to 176.5p.

The FTSE 100 was back on the front foot, up 51.37 points to 6320.98, lifted by heavyweight mining and oil firms, which were boosted by strong Chinese lending figures.

Anglo American gained 11.4p at 692.4p, while BP was 7.2p firmer at 384.85p.

Restaurant Group’s shares made ground on the FTSE 250, up 20.5p to 715.5p after Jefferies upgraded the Frankie & Benny’s owner to buy, favouring restaurants over watering holes.

Ted Baker lost its appeal, down 113.25p or 4% at 2761.55p. The fashion brand has lost 13% of its value since its half-year results last week.

TedBaker-models.jpg

Out of fashion: Ted Baker (Picture: Ted Baker)

Early gains from Game Digital were replaced by a 0.32p fall to 199.68p after the gaming retailer revealed adjusted profits tumbled 4.5% last year.

However, chief executive Martyn Gibbs reassured the market that his company is ready for Black Friday next month, after suffering a massive profit warning from the sales-slashing madness last year.

A downgrade to reduce from HSBC on Serco trumped an upgrade from Peel Hunt to hold as the troubled outsourcer fell 3.1p to 101.8p.

Asos shares could see a return to form if Barclays’ prediction is on the money. The broker is betting on a rise to 4,500p for the online clothing retailer, but that’s still a long way off last year’s all-time high of 7195p. It rose 91p to 3021p.

Blinkx bounced 2.19p to 28.44p as Toscafund’s stake in the beleaguered online ad business topped 25%.

Toscafund, run by activist investor Martin Hughes, dubbed “the Rottweiler”, is notorious for manoeuvring takeovers behind the scenes.

Source Article from http://www.standard.co.uk/business/market-report-booker-group-suffers-as-tobacco-sales-slip-a3091521.html

October 15, 2015 |
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