Shares tumble at McCarthy & Stone amid earnings warning and boss to quit

RETIREMENT HOUSEBUILDER McCarthy & Stone has seen shares tumble after it warned over full-year earnings and said its boss will leave in August.

Shares in the group dropped 15 per cent after it said it was now braced for lower-than-expected profits for the year to August 31 after a slowdown in sales reservations amid uncertainty caused by Brexit and weaker property prices.

Chief executive Clive Fenton will also leave the group on August 31 as he said it needs to “embark on a new strategy to carry it safely through the next five years and beyond”. The company has launched the search for his successor.

McCarthy revealed that it now expects full-year completed sales to fall by up to 9 per cent – to between 2,100 and 2,300, down from 2,302 the previous year.

It said there had been a marked slowdown in demand during the key spring selling season.

“There has been a noticeable decline in reservation rates as potential customers have exercised more caution due to ongoing economic uncertainty, a slower secondary market and a softening of pricing, particularly in the South East,” said McCarthy. The Bournemouth-based group warned that the drop in sales was set to see full-year operating profit fall to between £65m and £80m.

This compares with earnings of £96m the previous year and analyst expectations of £105.5m.

The group’s forward order book, including legal completions, currently stands at £706m, up from £639m the previous year, but lower than the group expected.

Outgoing boss Mr Fenton said: “Unfortunately, since Brexit, in the absence of any government support and now with the additional challenges posed to the business by the proposed ban on ground rents, it is clear that the group must embark on a new strategy to carry it safely through the next five years and beyond.”