MARKET CLOSE: NZ shares fall; Warehouse dips on sales, retailers down

Tuesday 18th May 2010

New Zealand shares fell for a third straight day, as Warehouse Group paced a slide in retailers after reporting weaker sales. Guinness Peat Group fell to its lowest level since late November.

The NZX 50 Index declined 19.068, or 0.6%, to 3151.676, near a three-month low. Within the index, 24 stocks fell, nine rose and 17 were unchanged. Turnover of $138 million was bolstered by trading in Telecom Corp., which had the biggest daily volume since February 22 at 26.8 million shares.

Warehouse, the biggest retailer on the index, fell 2.2% to $3.49. Full-year adjusted earnings will be similar to 2009’s $85.2 million, the company said today, reiterating an earlier forecast. Third-quarter sales fell 1.9% because of weak demand for music, DVDs and winter items, chief executive Ian Morrice said.

Among other retailers, Michael Hill International, the jewellery chain, fell 2.7% to 71 cents and outdoor equipment retailer Kathmandu Holdings fell 2.4% to $2.

“There’s no indication that profits are going to be doing anything exciting in the short-term, especially retailers,” said Alan Moore, who helps manage $600 million at Milford Asset Management. Warehouse’s results were “pretty ho hum” and the retailer is “under a bit of attack at the moment with the likes of Briscoes and Farmers lifting their game.”

Restaurant Brands, the fast-food franchise that prospered during the recession, gained 1.4% to $2.23. Clothing chain Hallenstein Glasson Holdings gained 0.9% to $3.38.

Telecom, which is fighting to protect its network franchise as the government rolls out its fibre plan, was unchanged at $2.07, scraping the lows it last hit in the early 1990s. The company today lost one of its most senior executives, joining other recent departures, as chief financial officer of two years Russ Houlden resigned to return to the UK.

Guinness Peat Group fell 2.4% to 80 cents. The shares have been wallowing in the absence of any news of a return to shareholders.

Moore said the local market doesn’t offer much value currently. “You go down the list - stocks are too dear because they are on very high P/Es,” he said. “The odd one that might be alright, it’s already in the price.”

Nuplex Industries fell 2% to $3.19 and Sky City Entertainment Group slipped 1.7% to $2.96. Pan Pacific Petroleum was the biggest gainer, rising 3.2% to 32 cents.

Businesswire.co.nz

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