Debenhams dives after Ashley dashes hopes
SHARES in Debenhams tanked after Mike Ashley, the billionaire owner of Sports Direct, dashed hopes that he is preparing a takeover bid.
Soaring costs, squeezed household incomes and the shift towards online shopping have hit sales at most retailers, forcing department stores chain Debenhams to issue a string of profit warnings this year.
It was boosted recently by rumours that Ashley, who has a 29.7pc stake through Sports Direct, was interested in adding it to his portfolio following the takeover of House of Fraser for £90m.
But Sports Direct poured cold water over that after the market closed on Wednesday.
Investors made their feelings clear yesterday, sending shares down 9.1pc, or 1.22p, to 12.18p.
That could leave the door ajar for Debenhams to implement its own controversial rescue plan, possibly even a company voluntary arrangement.
‘But maybe that’s what Mike Ashley ultimately wants,’ said Mike van Dulken, head of research at Accendo Markets.
‘To pick up Debenhams on the cheap. With all the stock and without the debt, just like he did with House of Fraser.’
Debenhams’ plight wasn’t helped by John Lewis reporting a 99pc plunge in half-year profits.
Marks and Spencer was dragged lower too, with the food-and-clothes retailer dropping 2.1pc, or 6.1p, to 287.2p, having climbed on Wednesday on the back of Zara’s solid start to autumn trading.
The FTSE 100 closed the session down 0.43pc, or 31.79 points, at 7281.57, as the woes of the retailers were largely offset by a strong showing for London’s heavyweight miners. Meanwhile the broader
FTSE 250 index dipped 0.67pc, or 136.92 points, to 20,243.61.
Metals prices picked up on news that President Trump and his team had reached out to China to schedule more trade talks between the two superpowers.
Warm US-China trade relations are important for the miners, given China’s standing as the largest consumer of raw materials. De Beers owner Anglo American, which mines everything from iron ore to diamonds, topped the Footsie, rising 1.7pc, or 24.6p, to 1510.6p, although Chilean copper miner Antofagasta wasn’t far behind, up 1.7pc, or 13.2p, to 772p, helped by a reported upgrade in rating from HSBC.
Heading the other way were UK tobacco stocks, which went up in smoke as market watchers took in news that US regulators are looking to clamp down on some of their vaping products.
Among those on the end of the tongue- lashing were British
American Tobacco, owner of the Vuse e- cig brand, and Imperial
Tobacco, which is the company behind Blu.
Despite an initial spike higher late on Wednesday, the tobacco giants pared those gains as officials said their brands would be among those in the spotlight’s glare. BAT dived 1.9pc, or 71.5p, to 3691.5p, while Imperial fell 2.5pc, or 67.5p, to 2624p. On AIM, ecommerce group
Attraqt was en vogue after it won a £ 640,000 contract with an unnamed British luxury brand.
It caps off a lucrative couple of months for the software group, which announced two other deals worth £1.2m in July.
Shares zipped 7.5pc higher, or 2.5p, to 36p. Elsewhere, investors put Malvern International in detention after another six months of losses. Improvements in London and Singapore offset a decline in Malaysia, pushing revenue for the six months to June up to £2.61m from £1.65m a year ago. But it still posted a loss of £370,000. Shares fell 14.3pc, or 1.1p, to 6.6p.