U.K. stocks tumbled by the most in almost a month after Mulberry (MUL) Group Plc unexpectedly warned that profit will drop for the full year and as company earnings from the U.S. and continental Europe disappointed investors.
Mulberry plunged 24 percent, its biggest selloff in 14 years, as the luxury-handbag maker said a tougher climate in Asia has led to declining shipments to wholesale customers. Burberry Group Plc (BRBY), Britain’s largest luxury-goods company, dropped 3.2 percent. Mining companies sank with metal prices.
The FTSE 100 Index (UKX) dropped 1.4 percent to 5,797.91 at the close in London. Only two stocks on the equity benchmark climbed today. The volume of shares changing hands on the gauge was 7 percent lower than the 30-day average, according to data compiled by Bloomberg. The broader FTSE All-Share Index and Ireland’s ISEQ Index both lost 1.4 percent.
“There is no doubt that concern over the falling quality of earnings is beginning to get under investors’ skin,” said David Buik, a market strategist at Cantor Index Ltd. in London. “That does not necessarily signal a selloff, but it does keep the market makers’ light on their feet. An adjustment cannot be ruled out.”
Stocks fell yesterday after Japan’s exports tumbled and U.S. companies reported sales that trailed forecasts. The benchmark FTSE 100 has still climbed 10 percent from this year’s low on June 1 as the European Central Bank and the U.S. Federal Reserve introduced unlimited bond-purchasing programs.
U.S. companies from 3M Co. to DuPont Co. cut their earnings forecasts today, citing slowing demand in their respective industries. In Sweden, Alfa Laval AB lost more than 5 percent after its order intake fell short of some estimates. Norsk Hydro ASA retreated after the aluminum maker reported a loss in the third quarter.
Mulberry plunged 24 percent to 1,006 pence, its biggest drop since 1998, after the luxury company said full-year profit will drop because of a 4 percent decline in wholesale shipments to 30 million pounds ($48 million) in the six months to the end of September.
The unscheduled announcement compares with analyst estimates for full-year pretax profit to rise to 41.8 million pounds from 36 million pounds in the previous 12 months. Revenue growth will also miss estimates, the company said.
“There is a systemic trend that the whole luxury sector is getting hit,” Bill Blain, a strategist at Mint Partners Ltd., said on Bloomberg Television in London. “Any companies seen as being slightly niche are the first to suffer from a change in spending patterns. That is part of the reason for this enormous collapse this morning.”
Burberry slid 3.2 percent to 1,134 pence, its biggest decline since Sept. 11. when the retailer warned that full-year profit will disappoint as sales growth slows.
A gauge of U.K. mining companies slumped 2.3 percent as copper tumbled to its lowest price in more than six weeks. Tin, nickel and lead also retreated on the London Metal Exchange amid concern about global growth.
Kazakhmys Plc (KAZ) dropped 4.6 percent to 721.5 pence, Antofagasta Plc (ANTO) slid 3.4 percent to 1,265 pence, while BHP Billiton Ltd. (BHP), the world’s largest mining company, retreated 2.4 percent to 1,981.5 pence.
Whitbread Plc (WTB) lost 0.8 percent to 2,305 pence after the company said second-half sales growth at its Premier Inn chain will moderate because of a flat consumer market. The shares fell even as Whitbread’s first-half results met analysts’ estimates.
Chief Executive Officer Andy Harrison predicted that revenue per available room will continue to decline in Premier Inn’s regional market.
Numis Securities downgraded the owner of Costa Coffee shops to hold from add, citing the shares’ strong recent performance. The stock has soared 47 percent so far this year.
Trinity Mirror Plc (TNI) sank 10 percent to 64.5 pence after four people sued the publisher of the Daily Mirror and the Sunday Mirror tabloids, accusing the newspapers of phone hacking. The claimants include Sven-Goran Eriksson, the ex-England soccer manager, according to Mark Lewis, the lawyer for the four people.
Trinity Mirror said today that lawyers have not provided it with any substantiation of the claims, adding that all its journalists work within the criminal law and Press Complaints Commission’s code of conduct, according to a statement.
Chemring Group Plc (CHG) tumbled 9.1 percent to 314.9 pence after the board ousted chief executive officer David Price, raising concern that a takeover approach by Carlyle Group LLP will fail.
“The move potentially flags that the deal is collapsing,” Oriel Securities Ltd. analyst Guy Brown wrote in a note today. “It would appear odd to appoint a new CEO with the belief the group is going to be taken over within a matter of weeks.”
Chemring appointed Mark Papworth as the new CEO who will join the company on Nov. 5. Carlyle has until Nov. 9 to make an offer for the company.
ARM Holdings Plc (ARM) posted the biggest rally on the FTSE 100 today, climbing 7.7 percent to 640 pence, after reporting a 19 percent jump in third-quarter sales to 144.6 million pounds. That beat the average analyst estimate.
The company, whose chip designs are used in Apple Inc.’s iPhone, forecast a strong fourth quarter for licensing revenue and said it starts the final quarter of 2012 with a “record backlog and a robust opportunity pipeline.”
Experian Plc (EXPN) climbed 3.8 percent to 1,087 pence, after agreeing to acquire a further 29.6 percent interest in Serasa SA for about $1.5 billion. The company said the acquisition, which increases its stake in the Brazilian credit bureau to 99.6 percent, would increase earnings in the year ending March 31, 2013. Experian will pay in cash.
In Ireland, C&C Group Plc (GCC) gained 0.7 percent to 3.80 euros. The shares earlier jumped as much as 8.9 percent in Dublin trading after the company bought Vermont Hard Cider Co. LLC for $305 million, outweighing first-half earnings that missed estimates.
To contact the reporter on this story: Sarah Jones in London at email@example.com
To contact the editor responsible for this story: Andrew Rummer at firstname.lastname@example.org