Market Report: Travis Perkins' profit warning hammers DIY firms

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If you’re looking for a useful barometer of the housing market, DIY sales are not a bad place to start.

A profit warning from Travis Perkins suggested things are not quite as rosy as they appear.

Shares in the Wickes owner tumbled 151.17p, or 8%, to 1811.83p, as Brits downed tools over the summer with a slowdown in DIY.

That’s usually a sign that not as many people are moving house — typically, we spruce up our homes before a sale or after a purchase.

The tough trading in July and August means annual profit growth will be at the lower end of market expectations.

Despite the slowdown, Travis Perkins, which relies on home improvement for about 80% of its sales, said that third-quarter sales rose 5.5%, while like-for-likes sales picked up by 2.6%, with a recovery seen in  October.


Knock-on effect: DIY chain B&Q (Picture: Reuters)

The gloomy outlook dragged B&Q owner Kingfisher down 13.7p to 352.7p and plumbing supplies group Wolseley down 112p to 3690p.

The DIY downturn also hit FTSE 250 home insulation specialist SIG, which slumped 38.5p, or 22%, to 140p after its own profit warning. 

Stocks carried on where they left off yesterday with low volumes, causing the FTSE 100 to sink 17.21 to 6331.21 ahead of a speech from European Central Bank president Mario Draghi which could give clues to whether it might extend its quantitative easing programme.

Accendo Markets analyst Augustin Eden said: “With US and UK central banks having undertaken three rounds of bond-buying each, it’s evidently pretty difficult to exit a money printing mentality.”

Tool rental firm Ashtead Group topped the blue-chip leaderboard, up 28p, or 3%, at 978p after strong results from US rival United Rentals.

Extending its cancer immunotherapy work with American drugs giant Eli Lilly boosted AstraZeneca by 31.46p to 3978.46p, while Irish rival Shire shifted 22p higher to 4484p ahead of tomorrow’s third-quarter results.

A reassuring second-quarter update from Mothercare, which saw UK like-for-like sales grow 6.5%, soothed investors and the retailer’s shares advanced 7p to 230p.

Private equity firm Advent cashed in on a rise from sofa retailer DFS’s share price, which after March’s float at 255p is now up at 302p.

It was 3p lower today after Advent dumped shares worth £94 million, leaving it with a 38% stake.

On the junior market, lettings agency group Martin & Co, up 59% this year, saw its shares surge another 4.4p to 169.9p after a 47% rise in revenues in the first nine months of the year.

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October 22, 2015 |
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