Hedge funds smoke out Imperial over vaping woes

THE crackdown on vaping in America couldn’t have come at a worse time for Imperial Brands. Fresh from a profit warning, the company is rudderless, having just parted ways with chief executive Alison Cooper.

It is also battling falling sales in traditional tobacco products, while struggling to grow its vaping business amid increasing scrutiny of e-cigarettes.

Last week, Altria, the US maker of Marlboro cigarettes, wrote down the value of its vaping business Juul Labs by a huge £3.5 billion, less than a year after it bought a 35 per cent stake. Imperial’s annual results on Tuesday are likely to echo concerns around vaping.

UBS analysts reckon the company will report a 2.3 per cent fall in operating profits for its tobacco and vaping products. Others think a dividend cut may be on the cards.

Last week, the first major short-sellers emerged in Imperial as hedge fund Marshall Wace took out a bet against the shares worth £80 million. A dividend cut this week would see the shares – down nearly 30 per cent this year – run out of even more puff. If that happens, the hedgies will be quids in.

A TRADING update from housebuilder Persimmon will provide a timely update on the state of the property market ahead of the Election.

Both t he Tori es and Labour are likely to make housing a key issue in their campaigns (behind Brexit, of course).

The test for analysts is whether the firm can build as many homes as expected – and this update will provide an idea (most predict a fall of around 4.9 per cent this year). Still reeling from an image problem, the firm is also likely to give an update on any improvement in its customer satisfaction score.

MORE bad news for the retail sector is expected this week when store giants Marks & Spencer and Sainsbury’s unveil their interim results.

Sainsbury’s is Britain’s second-largest retailer, but investment bank Jefferies warns its larger rival Tesco has smartened its offering and also said Sainsbury’s has become increasingly exposed as discounters Aldi and Lidl encroach on its heartland in the South East. That will mean a fall of about 17 per cent in underlying profits, or about £50 million, Jefferies said.

Meanwhile, M&S is forecast to unveil an underlying profits fall of up to 25 per cent.